ACCC inquiry into water markets in the Murray Darling Basin

The VFF welcomes the opportunity to provide comment on the Australian Competition and Consumer Commission’s (ACCC) inquiry into water markers in the Murray Darling Basin.

The water market has rapidly developed since 1989.

The original focus on water trading rules was to remove trading barriers, the water market matured over this time and it now critical the ACCC give due consideration to delivery constraints, environmental and third party impacts as these were less of a focus during the market’s development.

The ACCC must acknowledge that the water market is constrained by the natural physicality of moving water through a natural river system.

It is essential the ACCC and Commonwealth Government ensure the water market is working in the best interests of irrigated agriculture, to maximise returns on the water used to grow food and fibre and to promote water efficiency.

The VFF notes the Terms of Reference adopted by the Commonwealth limit the review of water markets to 2012 and beyond. The VFF believe this is too narrow in scope and should have been widened to 2005 and beyond.

Summary of Recommendations

Recommendation 1: The ACCC should review the total amount of water in the Southern Basin disassociated from land and separate out active irrigator and non active irrigation and those just simply holding water

Recommendation 2 : The ACCC acknowledge its free market positions of 2010 are not without consequence and it must clearly evaluate whether the Water Act’s (2007) water market objective “ to provide protection of third party interests” is being adhered to.

Recommendation 3: The ACCC investigate the depth of the water allocation market and potential excessive market power.

Recommendation 4: The ACCC dispel the confusion associated with carryover by providing a breakdown of carryover volumes in the Southern Basin by active irrigators, non-active irrigators, other water not tied to land, environment and urban authorities since 2012.

Recommendation 5: The ACCC review Clause 12.23 of the Basin Plan Act as it risks third party impacts and environmental damage.

Recommendation 6: The ACCC ensure all States in the Basin provide improved information on the Water Market, similar to that proposed by DELWP 

Recommendation 7: The ACCC ensure greater information is made available on large water market participant’s in the Southern Basin by Zone. This includes their carryover behaviour and participation in the allocation market. 

Non Active irrigators as a large group should also be examined across the Southern Basin to explore how many retired farmers are selling on the allocation market to fund their superannuation. 

Recommendation 8: The ACCC ensure the Australia Tax Office’s information on foreign ownership of water is merged with water market information more broadly 

Recommendation 9: The ACCC review Section 46 of the Competition and Consumer Act (2010) misuse of market power provision and apply to the water market. 

Recommendation 10: The ACCC ensures water brokers and associates do not have Allocation Bank Accounts (ABA’s) 

Recommendation 11: The ACCC recommend a frequency threshold on the number of water trades. 

Recommendation 12: The ACCC take steps to ensure water brokers are regulated. 

Recommendation 13: The ACCC ensure that those purchasing allocation must also have a water use license or water use registration. 

Recommendation 14: The ACCC recommend the establishment of a Southern Basin Exchange. 

Recommendation 15: The ACCC must consider third party impacts of continuing expansion in the Mallee risking existing irrigator’s ability to receive water when they need it. 

Recommendation 16: The ACCC must acknowledge environmental impacts caused by water trade and ensure sufficient protections are established.