An Auditor-General's report has slammed the federal government's handling of Murray-Darling water buybacks, finding they were not maximised to deliver taxpayers' value for money and potential conflicts of interest could have been managed better.

The report found the former Department of Agriculture and Water Resources' administration of $190 million of buybacks was not "fully effective" and bureaucrats "did not consistently apply approved policy, planning and guidance" when assessing limited tenders.