Australian Competition and Consumer Commission (ACCC) inquiry into Murray-Darling Basin (MDB) water markets – a Victorian irrigation perspective

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28 May 2021

Key messages:

  • Findings from the ACCC report include:

    • Farmer’s water assets make up about 40% of their farm asset base
    • Water markets allow farmers to sell excess water, to secure extra water, and to free up capital for expansion or development
    • Water markets provide increased flexibility for industry transition and farm succession
    • MDB water markets are extremely complex. The result is considerable uncertainty and sovereign risk
    • Market information is fragmented, incomplete, and neither timely nor comprehensive
    • Market deficiencies are resulting in a lack of trust in the fairness of markets
    • The ACCC did not find evidence that investors exercised market power or manipulated prices
    • Poor quality public data contributes to misconceptions, misinformation, and low market confidence
  • Recommendations from the ACCC report include:

    • Create a Water Markets Agency focused on market regulation and surveillance, market information, market evaluation, and market advice and advocacy
    • Improve inter-zone trade processes
    • Implement common water markets data standards
    • Establish a Water Market Education Program
    • Introduce centralised Basin-wide market conduct and integrity legislation, including a mandatory industry code for intermediaries (including water brokers)
    • Comprehensive reporting requirements and digitisation to support market surveillance
    • Improve transparency of allocation decisions, and communicate plans for managing shortfalls
    • Strengthen metering and monitoring, and improve modelling of use, delivery and trade
    • Clarify rules for delivery of environmental water
  • Victoria’s perspective includes:

    • No evidence of market manipulation or other market misconduct
    • The recommendations are consistent with the principles that have underpinned water market development in Victoria
    • Implementation and funding need to be sorted out – around 90% of the ACCC recommendations require coordination and unified action of the Basin states
    • The ACCC report recognises Victoria’s leading position in water markets
    • The priority is for tangible action now that will make a difference for water users
    • Expand the annual Victorian water broker audit to form the basis of government-backed accreditation
    • Strengthen metering across the Basin

For more information, watch the webinar recording above, visit the ACCC website, or contact waterinquiry@accc.gov.au.

Previous webinars:

Securing your future water needs: Harnessing carryover and other water products

Goulburn to Murray trade and Murray delivery risk

Understanding and managing water price variability on farm webinar recording

 

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