TIGHTER regulations on temporary water markets is needed for Riverland irrigators to compete with large corporate investors, according to a recent industry inquiry and an independent state senator.
The Australian Competition and Consumer Commission (ACCC) earlier this year released its Murray-Darling Basin water markets inquiry interim report, highlighting the need for improved regulation of current water trading processes.
Renmark Irrigation Trust (RIT) general manager Rosalie Auricht said potential regulations on water trading, recommended in the report, could prevent some irrigators from accessing the market.
“Not unexpectedly, the ACCC is proposing to regulate water brokers and exchanges,” Ms Auricht said.
“The possible extension of increased regulation to entities like RIT would increase our irrigator’s transaction costs and possibly hinder our irrigator’s from leasing out their smaller water quantities.
“The selling and buying of water parcels between trust members, within the trust’s water licence, is very cost effective… external brokers often consolidate small water parcels into large ones that are out of the reach of many of our irrigators members.”
Ms Auricht said increased reliance on buying and selling temporary water would harm the long-term sustainability of Riverland agriculture.
“The (State) Government’s water policy of driving water to the highest value production is fine, until there is a period of low supply due to extended drought or increased permanent plantings,” she said.
“The water market’s shortcomings were recently highlighted by the necessary Water for Fodder Program (where) taxpayer subsidised water was provided to a few select farmers to produce urgently needed livestock fodder, while other farmers paid substantially higher market prices to water their crops.
“The Riverland is an area of high value crops. If our irrigators sell their SA entitlements, affordable water and water security in our community is much less certain.
“Our irrigation community could effectively become long-term renters of water and the wealth from holding water entitlements will move away from the irrigators and thus our community… (but) is that good for the Riverland?”
The report’s release comes as Independent SA senator Rex Patrick revealed the Federal Government had paid almost double the recommended value for water buybacks in 2017.
Mr Patrick – who recently moved a parliamentary motion seeking clarification from Federal Water Minister Keith Pitt regarding these ‘Watergate’ buybacks – said corporate investment in water entitlements had distorted the market for individual irrigators.
“One of the things that I don’t really like is people who are operating in the market without a production connection, so they are there simply to invest,” Mr Patrick said.
“That concerns me that you have people looking at weather systems, crops, commodity prices and right across the river to work out how, in those circumstances, they can make a profit.
“Then you have a farmer looking at it mostly from their crop perspective, without all the sophistication. So I don’t think we should have pure investors in the market.
“The really sophisticated investors are not gambling and the report indicated there may be market manipulation.”
Mr Patrick – who also acts as deputy chair for the Select Committee on the Multi-Jurisdictional Management and Execution of the Murray-Darling Basin Plan – said he still wants the Murray-Darling system managed on a Federal Government level.
“It is our intention to call the ACCC before the committee and to examine them on the nature of that report, as part of our oversight role,” he said.
“I’m still of the very strong view that we would be better served having a national water body, controlled from the Federal Parliament rather than the State Parliaments.
“I have a bill before the senate that seeks to amend the constitution to make it a power of the Commonwealth.”
Member for Barker Tony Pasin said the “regulatory and operational frameworks of state and territory governments have not been developed to deal with current water markets”.
“For a substantial period of time we’ve been hearing that farmers and communities are concerned about the complexity and transparency of water trading… and the behaviour of brokers and investment funds,” Mr Pasin said.
“In order to make necessary changes Government needs more than anecdotal evidence, which is why this body of work is so important. We need to get this right.
“The market has developed over time to become very valuable, particularly in dry times.
“What’s been clear for some time is that the rules around this market have not kept pace.”
Ms Auricht said equitable sharing of Murray-Darling resources was required to ensure the survival of river-reliant communities.
“Personally I cringe when I hear the market term ‘water commodity’ or ‘water products’ (as) these terms imply something to be used up,” she said.
“The Murray-Darling Basin is a national, natural asset.
“There are many shares in this asset and it is how the dividends are determined that impacts the asset’s ability to continue.”
The ACCC’s Murray-Darling Basin water markets inquiry interim report can be viewed by visiting the website (https://bit.ly/3bkYLWh).