The Trouble With Water: 'ghost' water begins to haunt the Liberal-Nationals election campaign

“It is well understood and agreed that water in the Murray-Darling Basin has been overallocated and extracted at rates that are unsustainable.” [The Australia Institute, February 2018]

Eastern Australia Agriculture Pty Ltd (EAA) owns water entitlements at two properties in the lower Balonne area of the Condamine-Balonne region The Kia-Ora property is situated approximately 7km south of St. George, Queensland, along the Balonne River. The Clyde property is located 10km south-west of Dirranbandi, Queensland.

"Kia Ora" reportedly totals 18,841 hectares and has water entitlements of 36,705 megalitres, while "Clyde" is said to total 18,743 hectares with water entitlements of 30,289 megalitres.

EAA also appears to hold Queensland water licences which allows it to harvest overland flows/flood waters from both properties.

Questions have arisen with regard to the sale of some of this water.......

The Government’s been buying up water at record prices, leading to millions of dollars flowing to offshore tax havens. But now, two of our top pollies are facing questions over just who is making a fortune off our water.@HamishNews and @MichaelWestBiz bring you this report pic.twitter.com/5UTH1NHJzR

— The Project (@theprojecttv) April 18, 2019

Ever wondered how that $79M 'gift' of taxpayers money to a SE Qld irrigator was spent? Wonder no more - this is what 'ghost water' can buy the seller #AusVotes2019 pic.twitter.com/cYOE8CvqJ9

— no_filter_Yamba (@no_filter_Yamba) April 16, 2019

At various times prior to entering federal parliament in September 2013 Liberal MP for Hume and Australian Minister for Energy Angus Taylor was reportedly a co-founder and director of Eastern Australia Irrigation, a director of and company secretary for Eastern Australia Agriculture and was also a paid consultant for EAA.

💧Angus Taylor YESTERDAY: “has never had a direct or indirect financial interest in EAA or any assoc’d company.”

TODAY: He was also a consultant for EAA 09/10 “on normal commercial terms”.

TONIGHT: there’s a difference between ‘an interest’ & being paid as consultant. #auspol pic.twitter.com/AwwWGznyNz

— Hamish Macdonald (@hamishNews) April 19, 2019

The Minister for Energy Angus Taylor, former deputy-prime minister and federal agriculture and water resources minister, the current National Party MP for New England Barnaby Joyce, and the federal Dept. of Agriculture and Water Resources have all issued statements taking issue with concerns being expressed over this particular water sale and denying any wrong doing. Both ministers have threatened legal action for defamation.

The Queensland Government denies being party to this water sale.

The Morrison Government is now facing calls for an inquiry into the Murray-Darling plan water contracts signed off by former minister Joyce.

BACKGROUND

Ghost Water – licences for unreliable/unverifiable amounts of temporary water sold to government for use as environmental flow water.

Overland flow is “water that runs across the land after rainfall, either before it enters a watercourse, after it leaves a watercourse as floodwater, or after it rises to the surface naturally from underground…..You can take overland flow for any purpose unless there is a moratorium notice or a water plan that limits what can be taken.”  [Qld Government, Business Queensland. January 2019]

Applications can be made for a water licence for the capture of overland flow water.

“A water licence is an entitlement to take water which is attached to land therefore, unlike a water allocation, it is not an asset in its own right. Water licences cannot normally be sold independent of land unless there are management rules in place which allow permanent transfers (relocations) to occur…..The relocation of a water licence enables a licensee to transfer ownership of the entitlement, permanently moving the licence from the land to which it is attached, to another parcel of land within the confines of the rules. This process differs from permanent water allocation trading whereby water allocations are traded independently of land titles and have their own registrable title (i.e. water can be held by someone who does not own land).” [Qld Government, Business Queensland. February 2019]

At the time of the water sales EAA has 7 harvesting licences, of which 4 were for water extraction from the Balonne and Narran rivers, 2 were for collection of overland flow waters and 1 was for irrigation water draw on the Beardmore Dam.

Unsolicited offer by EAA to sell overflow water at 

https://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22publications%2Ftabledpapers%2F59682649-2fa2-43b1-955f-ae16caecef45%22.

Austender records of three EAA water sales to the Dept. of Agriculture and Water Resources - the first by transparent open tender and the remaining to by non-transparent limited tender:

At the time of the first water sale (1,980ML at est. $2,175 per megalitre) Barnaby Joyce was an elected senator on the Opposition benchs and Labor's Tony Burke was federal water minister, at the time of the second and third sales (totalling 27,960ML at $2,745 per megalitre) Joyce was the Australian Deputy Prime Minister as well as Minister for Agriculture and Water Resources. 

The first sale under the Labour Government was a result of an open competitive tender, the second and third sales were by unadvertised limited tender which excluded a competitive tender process.

NOTE: In 2008 it appears that EAA sold 10,433ML from its water storage to the Murray-Darling Basin Commission for an unknown amount.

The Australia Institute, March 2018, "That's not how you haggle....Commonwealth water purchasing in the Condamine Balonne", excerpt:

EAAs original asking price was $2,200 per megalitre. DAWR displayed Pythonesque haggling skills and paid a final price of $2,745 per megalitre. DAWR paid 25% more per megalitre than originally requested by EAA, 139% higher than the Commonwealth had previously paid for the same type of licence and 85% higher than the average price for a more reliable type of water licence. The megalitre price was inflated because it included the cost of a storage that the vendor originally offered to transfer to the Commonwealth, but that offer was later withdrawn, without adjusting the price. The storage was used as a justification of the sale, but not as a condition of the sale.

The water purchased was for Over Land Flow (OLF) licences, which cannot be traded between irrigators, because they are attached to land. They have no legal status or any recognition at a location other than where they were originally purchased. That is, there appears to be no legal basis for the Commonwealth to ensure it gets to the places it is intended to be used.

 Austaxpolicy, 28 September 2018, excerpt:

First, tax havens siphon taxable profits away from jurisdictions like Australia. This means either increasing the tax burden on individuals and businesses, taking on more debt, or cutting social services.

These shenanigans are not always illegal. But what is legal is not always moral or economically sound. Australia’s fiscal foundations are threatened by the erosion of the tax base by tricky tax tactics.

Aggressive tax planning can erode public confidence in the tax system itself. After all, one reason most of us pay the taxes we owe is that we believe we live in a society where our fellow citizens do the same.

A fascinating new dataset released by the Australian Bureau of Statistics helps shed light on this problem. Across multinational firms operating in Australia, the bureau reports their operating profit and their taxable profit. What is unique about these data is that they are reported for firms with majority owners in different countries. So it is possible to compare across countries, and ask the question: which nation’s firms have the biggest gap between operating profits and taxable profits?

For the typical Australian firm, the gap between operating profits and taxable profits is 30 percent. The figure is pretty similar for multinationals whose owners reside in the United States (28.4 percent), United Kingdom (26.6 percent) and Japan (28.5 percent).

But for some nations, it’s a different story. If you’re a Bermuda-owned multinational operating in Australia, then on average the gap between operating profit and taxable profit is 88 percent. If you’re a British Virgin Islands owned multinational, the reduction is 92 percent.[3]

So if you start with ten dollars of operating profit, then Australian firms report about seven dollars of taxable profits. The same is true for American, British and Japanese-based multinationals – ten dollars of operating profit produces seven dollars of taxable profit.

But for firms based in Bermuda or the Virgin Islands, and operating in Australia, ten dollars of operating profit produces just one dollar of taxable profit. That’s a startling difference……..

Second, tax havens are the hiding ground..... 

Gabriel Zucman, an economist at University of California, Berkley, estimates that around four-fifths of money in offshore bank accounts is there in breach of other countries’ tax laws.[4] .......

A recent study in the journal Nature Ecology and Evolution found there are even egregious environmental vandals there too. Following the Panama Papers, the study found seventy percent of fishing vessels implicated in illegal, unreported and unregulated catches had been registered in Belize, Panama, or other tax havens at some point. [5]

Third, tax havens increase inequality. Offshore wealth held by Australians in tax havens was approximately 6 per cent of GDP, according to Zucman’s work in 2013. In today’s prices, that would mean over $100 billion in assets held offshore by wealthy Australians. [6]..........

Cayman Islands corporate tax rates appears to be zero.

Michaelwest.com.au, 21 April 2019:

During December 2016, the Tax Office required Eastern Australia Agriculture to enter into a Settlement Deed to reduce the interest charged by EAI on convertible notes issued by EAA.

The interest charges were required to be reduced from June 2011 when Taylor was still a director of EAI. The total amount of excessive interest charges was $14 million.

This from EAA’s 2016 annual report:

“Forgiveness of interest expense – parent entity

“Following a review by the Australian Taxation Office (ATO), the company entered into a Settlement Deed with the ATO on 9 December 2016 and the parent entity agreed to reduce the interest rate on the convertible note from 12 per cent to an average interest rate of 7.97 per cent effective from 29 June 2011, resulting in a forgiveness of interest expense accrued in 2016 and prior years."

The higher the interest rate charged by the parent, the more money flows from Australia to the Caribbean. In the parlance of the tax fraternity, this practice of charging excessive interest rates, in order to maximise the interest payments out of Australia to a tax haven, is called “debt-loading”.

By 2016, Angus Taylor was no longer a director of EAI. He had stepped down from the board of the Cayman Islands company in 2013, the year he entered Parliament. He was a director however when the financing arrangement was established.

London Stock Exchange, EF Realisation Company Limited (EFR) Annual Financial Report, released 22 January 2018, excerpt:

Compulsory Redemption Mechanism

EF Realisation monetised various portfolio assets between February and August 2017 which, in aggregate,  comprised approximately 24% of the NAV as at 30 September 2017. The total net proceeds raised were approximately £4.36 million, made up of £4.26 million in realised proceeds (including £0.1 million from a corporate action involving the Company's holding in Energy Future Holdings) and £0.1 million of investment income (net of expenses). The Company realised its investment in Menhaden Capital plc in February 2017 which raised £1.2 million, equal to 2.3p per Ordinary Share. EF Realisation sold a bond holding in Integradoro de Servicios Petroleros Oro Negro SAPI de CV ("Oro Negro") which raised approximately £0.5m, and it received approximately £2.5 million from Eastern Australia Irrigation Limited which had sold certain of its water entitlements to the Australian Government and distributed a majority of the proceeds to its shareholders, including EF Realisation. On 4 September 2017, the Company announced its intention to implement the Company's first capital distribution, returning £3.0 million to Shareholders of the approximately £4.36 million in total net proceeds; the balance of the net proceeds from asset realisations was retained for working capital purposes…..

All the other investments in EF Realisation are unlisted and valued by the Directors at their estimated realisation values and, with one exception, changes in these valuations have been small. The exception is an upgrade to the valuation of the Company's minority shareholding in Eastern Australia Irrigation Limited following that company's sale of water rights to the Australian Government authorities in August 2017 and the expectations for the amount of proceeds that can now be realised from the sale of its farms…..

Eastern Australia Irrigation Limited ("EAI") is an Australian based company which owns and operates two farms in Queensland, whose main crop is cotton, along with various water extraction rights from the Murray Darling River Basin. During the summer of 2017, Australian Government authorities approached EAI with an offer to acquire some of its water entitlements. EAI was able to negotiate the price for the water entitlements to the highest level ever paid, and in August 2017 it completed the largest ever sale of water entitlements in the Murray Darling River Basin. EF Realisation owns 9.6% of EAI's shares and, along with other holders, supported the sale of the water rights. EAI used the majority of the sale proceeds to return capital to its shareholders, and passed £2.5 million to EF Realisation. This represented a gain on that part of the EAI holding of £0.34 million or 16.0%. We comment below on the plans to dispose of EAI's farms……

EAI was in the process of selling its farms prior to the sale of water rights. Proceeds received for the sale of water rights were attractive compared to the offers received in the farm sale process so the farm sale process was suspended in order to complete negotiations with the Australian Government authorities over the sale of water rights.  EAI has now resumed the farm sale process with the intention of using sale proceeds to repay debt and redeem its shares. Having sold some of the water rights, the effective size of the irrigable land that can be used for cotton farming has been reduced by approximately one-third and it is expected that this, and the decision to sell the farms separately rather than as a package as last summer, will make the farms attractive to a broader range of potential buyers. Cotton prices are supported by low crop harvests in cotton growing regions outside Australia and, at the time of writing, local rainfall on EAI's farms has prevented a return of drought conditions. However, until binding bids are received for the farms, the timing for EF Realisation to redeem or sell its shareholding in EAI and the proceeds from such a redemption or sale are uncertain.

EF Realisation carries its remaining investment in EAI at a conservative estimate of the proceeds that would be received assuming EAI's farms are sold and its shares are redeemed. In particular, the implied valuation of the farms is less than the value of the farms used to secure EAI's loan from the Commonwealth Bank of Australia, a valuation point that has been a floor for proceeds in farm sales. [my yellow highlighting]

In the 2012-13 financial year Eastern Australia Agriculture Pty Limited made a political donation of $20,000 to the Liberal Party of Australia (NSW) and on 29 August 2013 the company made a second political donation of $35,000.

After the September 2013 federal election Barnaby Joyce became the Minister for Agriculture and in September 2015 Water Resources was added to his ministerial portfolio.

Future of the Murray-Darling Basin: “It’s not a political football, it’s life we’re talking about!”

https://youtu.be/R9_H9JbbIjY

There isn't enough water in the Darling River system to avoid catastrophic outcomes

Australian Academy of Science, media release, 18 February 2019:    

Scientists lay out new plan to save the Darling River

  

https://youtu.be/TkpRsY81FIg

Scientists asked to investigate the fish kills in the Murray-Darling River system in NSW say a failure to act resolutely and quickly on the fundamental cause—insufficient flows—threatens the viability of the Darling, the fish and the communities that depend on it for their livelihoods and wellbeing.

The multidisciplinary panel of experts, convened by the Australian Academy of Science, also found engagement with local residents, Indigenous and non-Indigenous, has been cursory at best, resulting in insufficient use of their knowledge about how the system is best managed.

The scientists say their findings point to serious deficiencies in governance and management, which collectively have eroded the intent of the Water Act 2007 and the framework of the Murray-Darling Basin Plan (2012).

Chair of the expert panel, ANU Professor Craig Moritz FAA, said the sight of millions of dead fish from the three fish kills was a wake-up call.

“To me, it was like the coral bleaching event for the mainland,” Professor Moritz said.

“Our review of the fish kills found there isn’t enough water in the Darling system to avoid catastrophic outcomes. This is partly due to the ongoing drought. However, analysis of rainfall and river flow data over decades points to excess water extraction upstream.”

The expert panel recommends that urgent steps can and should be taken within six months to improve the quality of water throughout the Darling River.

“That should include the formation of a Menindee Lakes restoration project to determine sustainable management of the lakes system and lower Darling and Darling Anabranch,” Professor Moritz said.

The panel also recommends a return to the framework of the 2012 Murray Darling Basin Plan to improve environmental outcomes.

“The best possible scenario is water in the Darling all the way to the bottom and in most years. We are hopeful that this could be achieved if the panel’s recommendations are implemented,” Professor Moritz said.

Australian Academy of Science President, Professor John Shine, said the scientific advice of the expert panel is a synthesis of the best available knowledge.

“In undertaking this body of work the multidisciplinary expert panel has collaborated with other relevant experts as required and received extensive data from a number of Federal and State agencies,” Professor Shine said.

These agencies include the Murray-Darling Basin Authority, the Land and Water Division of the NSW Department of Industry, the NSW Office of Environment and Heritage, the NSW Department of Primary Industries, the Queensland Department of Natural Resources, Mines and Energy, and the Commonwealth Environmental Water Office, in addition to data and information provided by researchers in many related fields. The expert panel wishes to acknowledge the cooperation of these bodies and individuals in promptly providing data.

The expert panel also operated closely with the Independent Panel to Assess Fish Deaths in the Lower Darling, initiated by the Government and chaired by Professor Robert Vertessy, including sharing data and a reciprocal review of findings.

The expert panel report

Read the report: Investigation of the causes of mass fish kills in the Menindee Region NSW over the summer of 2018–2019

The main findings and recommendations are in the executive summary. The report was independently assessed by seven independent peer reviewers, including one international reviewer.

Related media releases

Academy to provide science advice on fish kill (21 January 2019)

Panel of experts to review fish kill announced (23 January 2019)

Academy welcomes independent assessment of fish deaths (23 January 2019)

Wealth of data triggers revised reporting date for Academies’ expert advice on fish kills (7 February 2019)

Murray-Darling Basin's historical maladministration continues

The Guardian, 13 February 2019:

Water flows at key environmental sites in the Murray-Darling Basin are unimproved or worse than before the basin plan was implemented, a scientific report has found, raising serious questions about where the $8.5bn of environmental water purchased by taxpayers is going.

The Wentworth Group of Concerned Scientists, a group of eminent environmental scientists formed a decade ago to advocate for the river system, have looked at two key sites which they identified when the plan was put in place in 2010.

They have found that environmental flows are not meeting the government’s own objectives for improving the health of the river at these sites.

At one site flows have actually declined, compared to pre-plan days.

The work, the first time anyone – including the Murray-Darling Basin Authority – has tried to look in detail at progress against the plan’s own environmental objectives, paints a worrying picture of whether the plan is working.

In coming up with the environmental water recovery targets in the plan, the federal government identified 122 indicator sites – sites that needed more flows to ensure biodiversity was preserved or restored.

The Sydney Morning Herald, 16 February 2019:

An unsolicited modification of licences for irrigators on the Macquarie River has allowed water earmarked for protecting one of the most important wetlands in the Murray-Darling Basin to be diverted for a cotton crop.

Documents obtained by the Herald show farmers were alerted a year ago by the NSW Department of Industry's water division to changes of the conditions on their unregulated water licences. That prompted the Office of Environment and Heritage to seek to nullify the changes' impact.

One stakeholder, who declined to be named, said he "sat here in shock" when the letter from the water department arrived. "It was like a gift from heaven."

The change effectively gave permission for the licence holders to extract environmental water flows even though they had been paid for by taxpayers in both NSW and the Commonwealth.

Enabled by the new rules, Michael Egan, owner of the Kiameron farm near the eastern side of the marches, alerted agencies of his plans to pump environmental flows even as the drought across the region intensified.

Between September 9 and October 5 last year, the farm extracted about 600 million litres of a 10 billion-litre flow headed for the marshes, assisting the irrigation of his cotton crop.

"When it's in an unregulated part of the system, [the agencies] lose control of the water," Mr Egan told the Herald. "I'm just running with the rules."

The Commonwealth Environmental Water Office said "most of the flow was protected from pumping by licence conditions". Still, the agency was continuing to work with NSW agencies "to address anomalies in the licencing framework and improve the protection of environmental flows".

The Murray-Darling Basin Authority said it had alerted the NSW Natural Resources Access Regulator (NRAR) to investigate the matter after "satellite monitoring of environmental water picked up images of water being diverted".

It said amendments to NSW's Water Management Act would "allow environmental water to be left in stream for environmental purposes".

A former water compliance officer said, "That's not an anomaly; that's maladministration. How do you get environmental water to grow a cotton crop?"

Tweet of the Week

Why are people turning a blind eye to gross mismanagement of Murray Darling? Why aren’t the people responsible for this facing prosecution? #QandA pic.twitter.com/8V1zgIPIHn

— ABC Q&A (@QandA) February 4, 2019

Water Is Life National Gathering & Action, 12-13 February 2017 at Aboriginal Tent Embassy in Canberra ACT

https://twitter.com/Ruthina75/status/1090941559799861248

Murray-Darling Basin irrigator has cotton farm asset frozen under Criminal Proceeds Confiscation Act - required to pay back $15.7 million

People living along the major rivers on the NSW Far North Coast, particularly those on the Clarence River, will remember that it was irrigators in southern Queensland as well as other areas within the Murray-Darling Basin who made repeated calls to dam and divert one of more of these coastal rivers to fill heir greedy maws with additional water.

The Courier Mail, 25 January 2019, p.27:

Authorities have gone to court to force an award-winning Queensland cotton farmer to pay $16 million to the state’s Public Trustee after a “covert source” told them the accused water fraudster had sold his farm for more than $100 million.

John Douglas Norman, 43, a former Australian Cotton Farmer Of The Year, from Toobeah in southern Queensland, has been charged with defrauding the Murray-Darling Basin water program of $20 million.

The charges are before the Brisbane Magistrates Court.

Last week the State Government was granted an urgent court order, forcing Norman to pay $15.7 million to the state’s Public Trustee, after the police received a tip that his company had sold its Queensland cotton and grain farms to a global corporate giant.

Norman must pay the $15.7 million once his deal with the $43 billion Canadian giant Manulife Financial Corporation settles, a Supreme Court judge has ruled. The order was made under the Criminal Proceeds Confiscation Act.

The mega-deal was due to settle last week, court documents state. Until the $15.7 million is paid, Norman’s share of the giant farms, west of Goondiwindi, will remain frozen by the Supreme Court.

The remaining share of the business is owned by his mother Aileen Joan Norman. She has not been charged with any crimes and has not had her assets frozen.

The farms, spread over 18,000ha, are mostly irrigated and run along or close to the NSW-Queensland border, the court heard. They are in “a core crop production region” and with “significant water entitlements”.

The farms and a $2 million riverfront Southport mansion, owned by Norman’s wife Virginia, were raided and searched by police during the probe, court documents state.

BACKGROUND

The Land, 30 August 2018:

Meanwhile in Queensland, a major alleged fraud in the cotton industry was uncovered by police, with two executives from Queensland's cotton group Norman Farming charged over an an alleged $20 million fraud involving federal funds earmarked for Murray-Darling water savings.

Norman Farming CEO John Norman, 43, and his chief financial officer Steve Evans, 53, were granted bail after appearing in Brisbane Magistrates Court over the alleged fraud.

Police allege the director of the company submitted fraudulent claims, including falsified invoices related to six water-efficiency projects on a property near Goondiwindi, called Healthy Headwater projects.

Police allege the fraud occurred over seven years.

In NSW, the Natural Resources Access Regulator (NRAR) has issued a number of charges in the north and south-west of NSW for various alleged water offences.

The NRAR is the new independent water regulator in NSW. It started operations on April 30, after an outcry over alleged water deals in northern NSW exposed by the ABC's Four Corners program….

NRAR said it was pursuing the following cases:

● A Moree company has been charged with water theft offences. It is alleged the company, involved in irrigation, took water from a river while metering equipment was not working, an offence against section 91I(2) of the Water Management Act 2000. It is further alleged they constructed and used a channel to convey water without approval.

● A Carinda man has been charged with using a channel to convey water without approval, an offence against s91B of the Water Management Act 2000.

● Two men have been charged with water theft offences on properties in Walgett and Mallowa.

● A 35-year-old man from Carinda in Northern NSW alleged he provided false and misleading information to water investigators.

● Two men have been charged after they allegedly carried out controlled activities on the Murray River near Corowa.

ABC News, 13 February 2018:

The Murray Darling Basin Authority (MDBA) is powerless to prevent upstream farmers harvesting overland floodwaters desperately needed to flow through the river system for the benefit of all users, the authority's head has admitted.

It comes as details emerge of massive earthworks built to enable upstream farmers to carry out "floodplain harvesting"…..

Last week, MDBA head Phillip Glyde travelled to Mr Lamey's farm to see first hand what was happening.

"I've learnt a lot," Mr Glyde told 7.30.

"For people like the Lameys, it's very hard to negotiate through and find what's the best way to make sure the problems they're experiencing don't occur."

Although he admitted floodplain harvesting was a serious issue, he acknowledged there was nothing the authority could do in relation to the approval and regulation of irrigation earthworks.

"There's overlapping responsibilities: local, state, different departments," he said.

"Then you've got the Commonwealth, then you've got the Murray Darling Basin Plan."

On Wednesday, the Senate decides whether to pass a proposed reduction in the amount of water Queensland irrigators give back to the ailing Murray Darling River system.

"We don't want the irrigators to be keeping even more water, we want the banks pulled down in Queensland," Mr Lamey said.

"We want the river to run like it should."

Five-year assessment of the Murray-Darling Basin Plan released

Shorter version of the Murray-Darling Basin Plan five-year assessment – behind schedule, badly managed by governments and agencies, based on too many false assumptions, evidence of unintended outcomes, not delivering on environmental needs, past excessive water extraction admitted, key risks not properly managed, expensive and no longer fully fit for purpose so in need of reform.

Australian Government Productivity Commission, 25 January 2019:

Murray-Darling Basin Plan: Five-year assessment

Inquiry report

This report was sent to Government on 19 December 2018 and publicly released on 25 January 2019.

The report makes findings on progress to date in implementing the Basin Plan and recommendations on actions required to ensure effective achievement of Basin Plan outcomes. Most of our recommendations involve incremental improvements to the current arrangements. Others are to provide the strong foundations needed for the Plan to succeed — sound governance, good planning, and effective and adaptive management.

Download the overview

Overview and recommendations (PDF - 1085 Kb)

Overview and recommendations (Word - 490 Kb)

Download the report

Murray-Darling Basin Plan: Five-year assessment - Inquiry report (PDF - 4373 Kb)

Murray-Darling Basin Plan: Five-year assessment - Inquiry report (Word - 1938 Kb)

Tweets of the Week

Yep, they stopped the boats in Tilpa.#MurrayDarlingBasin #auspol #watertheft #fishKill pic.twitter.com/YQ2vmwwDt5

— River Country (@RiverCountryFoE) January 18, 2019

Believe it or not, when the rivers full the need a levee bank at the top of this ramp.

Tilda, NSW#FishKill #MurrayDarlingBasin pic.twitter.com/5dSboH3WyN

— River Country (@RiverCountryFoE) January 18, 2019

State of Play: Australian Water Wars in 2019

Lake Menindee in 43 images pic.twitter.com/bHCn06EXfN

— Chris Rawlins 🚙 (@ChrisBH011) January 16, 2019

Time lapse images of part of the Lake Menindee system in the Murray Darling Basin drying up through mismanagement, 2016 to 2018.

It won't be long before multiple talking heads from the Liberal and National parties will be penning opinion pieces in national newspapers and popping up as guests on radio or television accusing those who are acutely concerned, about water sustainability and the plight of the Murray-Darling Basin, of bashing the poor hardworking farmer and telling us that all irrigators are ethical individuals who are only trying to feed the nation.

Now that may be true of some, it probably isn't true of many and it is definitely not true of all irrigators.

The amount of water being taken from Murray-Darling Basin rivers is eye watering.

According to the Murray-Darling Basin Authority (MDBA); Irrigated agriculture in the Basin consumes about 60% of Australia’s available water.¹

Again according to the MDBA, by 2017-18 this 60% was being harvested by only 9,200 irrigated agricultural businesses. 

In 2017 the National Water Account stated that total surface water and groundwater entitlements in the Basin equalled 19,374 gigalitres.

The whole Murray-Darling Basin receives just 6.1 per cent of Australia’s distribution of water run-off and the MDBA admits that approximately 42% of this surface water run-off is diverted from Basin river systems primarily by irrigators.

Professor Sheldon of the Australian Rivers Institute at Griffith University states that more than 50% of average water inflows into the Murray and Darling rivers are extracted for irrigation.

Overall, the Murray-Darling Basin contains 77,000 km of rivers, with flows said to total some 35,000 gigalitres on average.²  A figure which now appears unreliable. 

At the beginning of the 2017–18 water year, the total volume of held water for the environment was nominally about 2,871 gigalitres (in long-term available water terms).³

Science has been telling the Federal Government and the governments of Qld, NSW, Vic and SA that Murray-Darling Basin rivers cannot sustain the rates of water extraction they have been experiencing since the second half of last century and more water needs to be returned to the rivers as environmental flows.⁴ 

Government does not appear to be listening. Probably because implementing an effective response to years of mismanagement of Basin water resources would mean reducing the over allocation of water rights by commencing a policy of permanently buying back at least 7,000 gigalitres of water entitlements from irrigators and reducing the annual amount of water their remaining water entitlements represent.

Here are just three examples of excessive water consumption in the face of declining national water security.

WEBSTER

Webster Ltd (WBA): “Webster owns a diverse portfolio of over 200,000 megalitres of water entitlements, stretching from southern Queensland, through New South Wales to northern Victoria and Tasmania. It’s also fundamental to our strategy of streaming water to areas where we can generate greatest return for each megalitre of water applied…..  we are able to extract further value by exploiting opportunities in water markets. A significant component of this entitlement holding resulted from the acquisition of Kooba along the Murrumbidgee and the subsequent acquisitions of Tandou and Bengerang with significant water entitlements in the Murray Darling Basin. Our portfolio is a complementary mix of high and general security water with supplementary and groundwater entitlements. This scale, diversity and surety of our water holdings underpins our competitive advantage…”

Webster states that its “primary crop focus is on cotton, using technology and expertise to maximise yield and water efficiency, with capability to produce over 200,000 bales of cotton annually”.

Chris Corrigan is the Chairman Webster Ltd and Joseph Corrigan is the Alternate for Chris Corrigan.

Corrigan (formerly Managing Director of Patricks Corporation Ltd who colluded with the Howard Government's attempt to break a union) became chairman of the ASX listed agribusiness in March 2016, soon after it had completed a major takeover. In that play, Webster bought land and water company Tandou, assembling the nation’s top private water rights portfolio, according to Irrigation Australia.

Webster Ltd landholdings include 40,000 irrigable hectares as well as extensive grazing farmland. 

Webster holds its most of its water rights in perpetuity. As at 30 September 2018 the company listed the value of its water rights as $161.9 million.

In 2017 the company sold the water rights at its Tandou property to the Turnbull Government for $78 million which was reportedly almost twice the recommended value of the water.

Current WBA share price is in the vicinity of $1.565. In 2018 the company listed its assets value as $760.44 million. Combined salary & fees received by Webster directors exceeded $1.49 million in that year.

Its substantial shareholders in 2017-2018 were: AFF Properties No 1 Pty Ltd ATF The AFF Operations Trust (14.41%), Verolot Limited (8.92%), Mr Peter Robin Joy (8.43%), Belfort Investment Advisors Limited (5.89%) and Mr Bevan David Cushing as trustee of the KD Cushing Family Trust (5.60%).

CUBBIE

Cubbie Station is an aggregate of three properties owned by CS Agriculture Pty Ltd, which in turn is 20% owned by RF CSAG & 80% Chinese-owned through Shandong Ruyi Technology Group Co.⁵

Cubbie Station is 93,000 ha in size and sources its water from the from the Condamine and Balonne river systems in the upper reaches of the Murray-Darling Basin. 

Cubbie has annual water entitlements of 460,000 megalitres. In addition it holds back in off-river storage up to 45,000 megalitres of surface water from the flood plain. 

Its water storage area covers 12,000ha configured in a cell arrangements with an estimated capacity of 540,000 megalitres. It is reportedly the largest irrigation property in the Southern Hemisphere.

The company’s water storage dams are said to stretch for more than 28 kilometres along the Culgoa River.

Cubbie's principal crop appears to be cotton.⁶

In 2017 the Australian Taxation Office listed the company’s total annual income as $161,911,344.

The value of the Cubbie Station aggregate is est. $350 million.

NORMAN FARMING

Norman Farming Trust trading as Norman Farming has a combined land area of over 18,000 ha across two properties in the Macintyre River delta of the Border Rivers region.

The company has an entitlement of 76,000 megalitres of annual water diversion capable of being pumped at 7,000 megalitres take-per-day, with the potential for 500 megalitres per day of additional water harvesting from rainfall/runoff without an annual limit. An est.1,218ha are used for water storage.

Norman Farming's principal crop is cotton.

Estimated value of the company is $100 million. 

The owner is currently charged with defrauding the Australian Government of $20 million in Murray-Darling Basin water funding.

Webster, Cubbie and Norman Farming between them have annual water entitlements which exceed the volume of water in Sydney Harbour.

Footnotes

1. MDBA, Water markets and trade:

Water in the Murray–Darling Basin can be bought and sold, either permanently or temporarily.

This water is traded on markets – within catchments, between catchments (where possible) or along river systems. This form of trading allows water users to buy and sell water in response to their individual needs. Water trading has become a vital business tool for many irrigators.

The majority of water traded in the Murray–Darling Basin is surface water, however some groundwater also changes hands.

Irrigated agriculture in the Basin consumes about 60% of Australia’s available water….

There are more than 150 classes of water entitlement in the Basin….

Water trading in the Basin is worth about $2 billion annually.

The New South Wales, Queensland, South Australian and Victorian governments are primarily responsible for managing water markets, and each state has its own process and rules for allocating water.

Irrigation infrastructure operators create and maintain trading rules within their networks.

In November 2018 in the NSW section of the Murray-Darling Basin est. 2,988 megalitres of water was transferred between trading parties.

2. For comparison Sydney Harbour is estimated to hold 500 gigalitres.1 giglitre of water equals 1,000 megalitre. 

3. Water theft appears to be an ongoing issue. In 2018 one NSW irrigator pleading guilty to the theft potentially involving billions of litres at a Mungindi property near the NSW-Queensland border, while another at Brewarrina has been charged with taking water when the flow conditions did not permit it, and breaching licence and approval conditions.

4. Initially a scientific assessment by the Murray-Darling Basin Authority identified that 6,000-7,000 GL per year would be required to return the environmental assets of the Murray-Darling Basin to sustainable ecological health. This was reduced by almost half to 3,000-4,000 GL per year in the Basin Guide. Eventually, the Australian Government considered 2,800 GL, even lower than the minimum proposed, was a reasonable target. This was further reduced to 2,750 GL before the Queensland Government agreed to sign up to the Basin Plan, a reduction from the Northern Basin. Reduction of the target by another 70 GL represents a further significant reduction in environmental flows which will exacerbate environmental decline. [Professor Richard Kingsford, Director of the Centre for Ecosystem Science, UNSW, submission]

In 2018, the Turnbull government won support from Labor to amend the amount of environmental water allocated to the system, while the Greens and some senators were opposed. The amendments cut 605 billion litres a year that were allocated from the southern basin's environmental water flows, and 70 billion litres a year from the northern basin's flows. [ABC News, 17 January 2019]

5. The volume of water entitlements owned by businesses with some level of foreign ownership was 1.9 million megalitres at 30 June 2016 or 12.5% of the total volume of water entitlements for agricultural purposes in Australia. Of the water entitlements with some level of foreign ownership, the majority (1.6 million megalitres or 83%) was held by businesses that were more than 50% foreign owned. [Australian Bureau of Statistics, 7127.0 - Agricultural Land and Water Ownership, 2015-16] 

In 2016 in New South Wales in 847,250 megalitres of water entitlements were 100% foreign owned and in Queensland 744,957 megalitres were totally foreign owned.

6. According to the Dept of Agriculture and Water Resources ABARES, the Murray–Darling Basin accounts for around 91 per cent of Australia’s total cotton farms and cotton area. It is estimated that the total area in the Basin under cotton production is 490,000 hectares.If all of this land was planted for cotton in a given year then it is likely that the crops would require somewhere between 2.19 million to 3.82 million megalitres of water.