ACCC call for Water Markets Agency to oversee Murray Darling Basin trade

Stronger laws are needed to stop water market manipulation in the Murray Darling Basin, the nation’s competition and consumer regulator is warning.

Irrigation trade: Water brokers need to be regulated under nationally consistent laws, says the ACCC.

AUSTRALIA’s competition watchdog has called for a new independent Water Markets Agency to be oversee Murray Darling Basin trade.

The Australian Competition and Consumer Commission’s final report into basin trade, released today, recommends a raft of new Basin-wide laws be enforced by the proposed Agency to “deal with harmful market conduct and practices, including bans on market manipulation, stronger insider trading rules, and a mandatory code of conduct to apply to water market intermediaries such as brokers”.

ACCC deputy chair Mick Keogh said “the Basin’s water markets are critical not only to the farmers and businesses that use them, but also to the wider Australian economy and the consumers who rely on the Basin’s agricultural produce”.

“Until now, there has been a lack of attention to ensuring water trading markets are working fairly and efficiently. With an annual average value of more than $1.8 billion per year, water markets in the Murray Darling Basin are now of a scale that warrants serious and focused attention.

“What started as an informal system for transferring water rights between neighbours has grown into a complex set of markets, but unfortunately the normal regulatory framework that would be expected for a market of this scale has not been developed.

“A new independent Water Markets Agency, backed by appropriate legislation, should prioritise making markets work for water users, traders and the economy to deliver the benefits of water trade.”

Mr Keogh also said many water users did not trust that water markets were fair.

“Inevitably this lack of trust will inhibit efficient investment in agricultural production in the Basin, to the detriment of all Australians,” he said.

“The ACCC’s recommendations will help to build trust and market efficiency by strengthening market integrity, improving transparency and information, improving trade services and better aligning market rules and arrangements with the physical characteristics of the river system.”

The ACCC report also recommends the Federal and Basin State Governments work with market service providers to establish and implement new digital technologies to improve the quality and flow of water market data, and provide a hub for water trade applications, data storage and access to information.

“Problems with the design and operation of the Basin’s ‘market architecture’ should also be addressed to make sure market settings and trade impacts relate more closely to the river system’s physical characteristics,” Mr Keogh said.

In particular, the ACCC recommends improving intervalley trade mechanisms, enhancing hydrological modelling capabilities, continuing work to improve metering and monitoring of water take, formalising and communicating plans for managing delivery shortfall risks, updating guidance to address how river operators should manage trade-offs between different objectives, and improving information and transparency to help water users better understand influences on supply.