$140m delivery share liability bites: irrigators left holding debt

Irrigators and dry landholders have been left with 5000 delivery shares they don’t want that will cost $140 million to terminate.

“The federal government should be paying the termination fee on all water they buy,” says Andrew Leahy.

Victorian irrigators are paying more than $40 million a year in infrastructure access fees on 15,826 delivery shares, a third of which they don’t need.

About 5000 shares should have been extinguished at a cost of about $140m in the wake of the federal government stripping 803 gigalitres out of the state’s northern irrigation communities, via buyouts, modernisation upgrades and efficiency gains.

But most irrigators have refused to extinguish their excess shares, despite them attracting an annual fee of $2827 each in Goulburn-Murray Water’s irrigation districts, and $482 to $1051 in Lower Murray Water’s Sunraysia districts.

The main deterrent has been Commonwealth rules that demand any irrigator wanting to extinguish delivery shares tied to their land pays a termination fee set at 10 times its annual fee, equal to $28,270 in GMW districts.

The termination fee was established to offset the loss of water from an irrigation district on those who remain.

But little more than 700 delivery shares have been extinguished since 2008-09, despite Commonwealth Environmental Water Holder records showing it has taken 803GL out of Victoria.

Victorian Farmers Federation water council chair Andrew Leahy said the failure to extinguish delivery shares “means the community is wearing the cost of capital that has been stripped out of irrigation districts”.

Mr Leahy said that costs would rise for those irrigators remaining, with the situation set to get worse as the federal government looks to strip another 450GL out of the consumptive pool over the next four years.

“The federal government should be paying the termination fee on all water they buy,” he said.

In many cases properties have been stripped of water and then sold to unwitting buyers, who have no idea it carries delivery shares that incur annual fees, despite them not irrigating.

The Weekly Times was recently contacted by a Cohuna lifestyle block owner who said she bought the property, not knowing it had delivery shares.

“They (GMW) are chasing us for unpaid bills,” the Cohuna landholder said. “They are charging people for nothing.

“Landholders have been lumped with delivery shares, based on historical irrigation practices. To get these removed one must pay several thousands of dollars.”

As a last resort GMW is able to recover delivery share fees and other debts under the Water Act once a property is sold.