Water barons to front ACCC profits probe

The ACCC could compel water investors to give sworn evidence on trading speculation allegations.

Many farmers blame professional investors such as public listed company Duxton Water Ltd for a six-fold rise in the price of irrigation water. Picture: Peter Lorimer.

The corporate watchdog will call “water baron” investors before it to face allegations they have profiteered from speculation on the water market during severe drought, driving a spike in prices and some farmers towards fin­ancial ruin.

The Australian can reveal that executives of at least four large water traders are expected to be “invited” to give evidence to the Australian Competition & Consum­er Commission at its inquiry­ into the water market in the Murray-Darling Basin.

Any individuals who do not appear before the ACCC volunt­arily could be compelled to do so and required to give evidence under oath, and also required to provide information including trading records, with severe ­penalties for non-compliance.

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On Thursday, the ACCC released the issues paper for the inquiry­, which was commissioned by Josh Frydenberg at the request of Water Resources Minister David Littleproud.

ACCC deputy chairman Mick Keogh said his inquiry would investig­ate allegati­ons that big water traders had gamed the market­, buying up huge amounts of irrigation water rights.

As revealed by The Australian, farming groups claim the water barons — some of whom, such as Duxton Water, are pure traders with no agricultural land — have created a squeeze and sent prices up sixfold from a long-term average of $135 a megalitre to more than $800/ML.

“It’s been overinflated because there are some water companies that bought the water for $400 a meg and are holding growers to ransom,” said the president of the Australian Table Grape Association, John Argiro.

Duxton entered the market after governments deregulated it five years ago from the old system, in which water rights were tied to specific agricultural properties, and allowed traders who did not use water or own agricultural land to speculate.

Duxton Water doubled its profits for its most recent reporting period during the most severe drought on record and its invest­ors enjoyed a total return of nearly 30 per cent in the year to June.

Mr Argiro said by deregulating the water market, the government had allowed water barons to lawfully profit at the expense of farmers.

Mr Keogh said the inquiry would investigate allegations of market manipulation. It would also look at whether lawful exploitation of the rules had led to distortions in the market where some traders profit­ed unduly at the expense of others.

“Are there things occurring that are having an undesirable impact­ on competition?” Mr Keogh said. “That may not be a breach of the rules, it may be that people have worked out a way through the rules.”

If that were found to be the case, he said, the inquiry might recommend making changes to the rules.

Mr Keogh did not name those the ACCC would call, but a source close to the inquiry said the watchdog would look in particular at: ­Duxton Water, whose executive chairman is Edouard Peter; Rural­co, whose managing director is Rob Clayton; Tom Wilks, the principal of Wilks Water; and Kim Morrison, the principal of the Argyle group.

Efforts to seek ­comment from those groups were unsuccessful by deadline.

Mr Keogh stressed that the ACCC would use its powers to compel any hesitant water market participants to appear and present information sought.