Labor’s water election promise to exceed $3bn

Taxpayers face a $3bn bill to help Labor deliver on an election commitment on Murray Darling Basin water, according to the nation’s peak farming body.

Environment Minister Tanya Plibersek is expected to introduce legislation next week to remove a cap on buybacks as part of Labor’s reformed Murray-Darling Basin Pla​n. Picture: Martin Ollman /NewsWire

Taxpayers face a $3bn bill to help Labor deliver on its election commitment to recover 450 gigalitres of water for the environment under the Murray-Darling Basin plan, according to the nation’s peak farming body.

Analysis by the National Farmers Federation reveals the Albanese government is likely to spend up to $2.9bn, as the sector campaigns against Labor’s plan to restart buybacks.

Environment Minister Tanya Plibersek will introduce legislation next week to remove a cap on buybacks as part of Labor’s reformed Murray-Darling Basin Plan, after she struck a deal with NSW, Queensland, South Australia and the ACT.

The legislation will also seek to drive water market reform through new data reporting obligations and strengthened insider trading prohibitions to be enforced by the Australian Competition and Consumer Commission.

Labor will need to formally legislate 450GL of environmental water it has committed to deliver in order to override a restriction under the Water Act preventing it from using controversial buybacks to recover the water.

Victoria has refused to sign up to the plan amid concern it will include buybacks, arguing that the state has done more to recover water through efficiency measures than any other jurisdiction.

But NFF water committee chair Malcolm Holm said caps on buybacks were put in place to protect regional communities and that plans to use them to recover a third of the environmental water would be damaging for the bush.

The NFF’s calculations are based on the market rate for high security licences sitting at about $8000 per megalitre.

Mr Holm said the government “doesn’t care about farmers or communities”, and that Ms Plibersek was asking parliament “to sign a blank cheque”.

“Currently, they still have around 225GL of headroom under the cap, and a gap of 750GL to complete the plan. So by lifting the cap, the Minister is saying buybacks will exceed one third of remaining recovery.

“Those options should be given the time of day before blowing up the Plan and pursuing disastrous buybacks.”

The government on Thursday is expected to table the Australian Taxation Office’s register of foreign water entitlements, revealing about 12 per cent of water rights are held by foreign investors.

Ms Plibersek has seized on the report to attack the Coalition for standing in the way of water buybacks despite allowing 468 gigalitres of water to be sold to foreign owners.

“It makes no sense that the previous government was content to allow water purchase by companies associated with the governments of other nations but doesn’t want to allow the Australian Government to buy water to protect the Australian environment,” Ms Plibersek said.

“Of course, Labor supports foreign investment that is in our national interest but we believe the Australian Government should be able to buy water for the environment too.”

Opposition water spokeswoman Perin Davey said the NFF’s analysis sounded “a bit undercooked” and predicted the actual cost of water buybacks would be much higher.

Senator Davey, who is also Deputy Nationals Leader, said the water price would likely rise once the government enters the market.

“$3bn sounds a bit undercooked to me. It would be the absolute minimum required. Other market players have put a far higher figure on it. What needs to be factored in is the market impact.”