The Federal Government has exempted itself from its own water market manipulation laws despite openly acknowledging the possibility of distortions resulting from its water buybacks.
Already the Government has paid 15-20 per cent above the market to purchase 41 gigalitres under its Bridging the Gap program - and that's before it re-enters the market as early as April to start buying 450 GL promised to South Australia.
NSW Irrigators' Council CEO Claire Miller said the Federal Government has delayed new market rules in its Water Amendment (Restoring Our Rivers) Act 2023 until after 2026, giving itself free rein in the market until then.
"The Government will implement new rules to prevent market manipulation, yet the largest water owner of all has conveniently delayed these rules from coming into effect until mid-2026.
"It is already taking full advantage to engage in the exact kind of anti-competitive and manipulative market activity for buybacks that the Bill seeks to stop others doing."
Ms Miller said this apparent contradiction raises questions about the Government's commitment to upholding the integrity and transparency of the water market.
"This contradiction is concerning as the Government appears to be operating under a different set of rules, potentially undermining the very reforms it aims to implement," Ms Miller said.
It is not just farmers who are concerned about Government buybacks distorting the market.
The Productivity Commission's Basin Plan: Implementation Review 2023 says:
Purchasing large volumes of water in a short space of time risks market disruption and significant socioeconomic impacts on communities. Market liquidity constraints also means that purchasing water quickly risks increasing the cost of purchases to taxpayers (limiting how much water can be recovered for the environment from a given budget).
Food corporations also expressed concerns:
The Bill, as it is currently proposed, is of great concern in terms of the speed at which potential buybacks would happen as well as the magnitude of those buybacks, and the acute disruption that could cause in a short period of time to the water markets.
Paul Serra, SunRice CEO
As I repeated on several occasions, water supply should be managed by science not politics. On the years when there is imbalance in supply and demand, especially in a way that would affect the quantum of supply, is bound to raise the prices of water. When that happens, it is obviously going to impact significantly on food prices in Australia, which will be passed on to the consumer. Frankly, that could put our business, as well as the businesses of the farmers that we buy from, under significant commercial pressure.
Hussein Rifai, SPC Global Chair
