NSW Nationals Senator Perin Davey is based in Deniliquin in the NSW Murray Irrigation Districts and was formerly a water policy adviser in the irrigation industry.

Yenda irrigator Chris Morsehead hit the nail on the head when he said of the ACCC report into water markets; “there’s no smoking gun, there’s no silver bullet.”

The water market needs reform. The ACCC found major changes are required to allow open, fair and efficient water trading.

Many; however, will be disappointed the answer is not obvious or simple.

The interim report makes no recommendations at this stage, although it makes some telling observations, including that banning investors or retying water to land would more likely have negative consequences for irrigators and the market than not.

The ACCC finds the water market evolved in state silos and the rules and regulations are no longer fit for purpose. The pace of change has seen some irrigators left behind while large corporate agribusinesses and investors who have time and resources dedicated to monitoring the market have an advantage.

This situation is not helped with the different approaches to managing water accounts. NSW and Victoria require water users to have positive account balances prior to accessing water, but until last year this was not essential in South Australia. The Weekly Times has reported since 2018, South Australian irrigators have had flexibility, not available to others, to use now, pay later – often at reduced spot prices. While the South Australian Government has moved to end the practice, their systems must keep pace as this year multiple infringements were issued to people who fell afoul of the new system.

Another impediment to the effectiveness of the market is the black-holes that are the irrigation infrastructure operators (IIOs) such as Murray Irrigation or Murrumbidgee Irrigation. IIOs hold their customers entitlements against their own bulk water licences and internal trades are not reflected on state registers, while trades into or out of their districts are reported as coming to or from the corporation.

There is no allegation that the IIOs are acting unscrupulously, however, the fact that they own most of the water entitlements in their respective regions means there is a significant amount of unknown data, adding to the transparency and trust concerns across the entire water market.

Water brokers, or market intermediaries, are also a difficult area to follow. Despite brokers and farmers both calling for regulation, they currently operate largely unregulated. There is no licence, no requirement for them to declare whether they represent a buyer, a seller or both, nor are they required to declare if they are using their own accounts to conduct business.
Both the ACCC Interim Report and the earlier Keelty Report, recognise that change leads to change. Changing rules leads to a change in irrigator behaviour leading to change in market activity. To better understand the impact of potential changes, the ACCC is calling for further feedback from stakeholders.

The challenge for the ACCC is to decipher that feedback, forensically sift through further data and recommend change to improve the market, without negatively impacting the end users who produce the food and fibre so valuable for our daily lives and to our economy.

At the end of the day, water in the market is only valuable if there are farmers willing to pay to use it.