ACCC warning: Basin buybacks to drive up irrigator charges

Australia’s competition watchdog warns federal buybacks will force up Murray Darling Basin irrigators’ water bills.

The ACCC says federal buybacks of irrigators’ water will increase the costs for those who remain.

The Australian Competition and Consumer Commission has warned the federal government’s bid to strip more water out of Murray Darling Basin communities risks increasing infrastructure costs for water users.

“If there are buybacks within irrigation networks, where a lot of the costs are fixed, there will be an increase in charges,” ACCC deputy chair Mick Keogh said.

The warning comes as Federal Water Minister Tanya Plibersek prepares to re-enter the water market to buy irrigators’ entitlement to deliver another 450 gigalitres of water to the environment, on top of the 2129GL already recovered.

The ACCC’s annual water monitoring report released this week also highlighted more federal buybacks could increase termination charges for irrigators wanting to sell their water and extinguish delivery shares linked to their property.

Nationally agreed water charge rules, overseen by the ACCC, allow state and private water corporations to impose a termination fee equal to 10 times the annual fixed volumetric charge an irrigator pays to help offset the impact of losing that water from a district.

Goulburn Murray Water irrigators on the Shepparton, Central Goulburn, Rochester, Loddon Valley, Murray Valley and Torrumbarry systems currently pay annual infrastructure access fees of $2827 per megalitre/day on their delivery shares, which translates to a termination or exit fee of $28,270 per delivery share.

More federal government water purchasing is set to not only increase each irrigation district’s annual infrastructure access fees, but also the termination fees of those who have sold off water and want to extinguish excess delivery shares or convert to dryland farming.

Irrigators who fail to terminate excess delivery shares face having to pay ongoing annual infrastructure access fees.

Opposition Water spokeswoman Perin Davey said the federal government had repeatedly tried to downplay community concerns about the Swiss cheese impact of its open tender buybacks,

which would drive up costs for those remaining.

“Yet again we see Albanese government policies driving up the cost of doing business in Australia, which is adding fuel to the cost-of-living crisis,” Senator Davey said.

“Mr Keogh’s comments make it imperative the Government reconsider its support for open tender water buybacks or the additional costs will have to be passed on to Australians already suffering from the Albanese Government’s cost of living crisis.”

The report highlights that regulated water charges differ substantially between different Murray-Darling Basin states.

The cost of having one megalitre of water delivered through an on-river network ranged between $7 for a private diverter in South Australia to $487 for the holder of bulk water entitlements in the Bullarook basin in Victoria.

Senator Davey said the report makes it clear pressurised networks have higher energy costs, which makes them vulnerable to the Albanese Government’s broken promises to lower energy costs.

She said pressurised piped networks could become unviable if energy costs continue to escalate and prices for food will need to rise to cover the costs.

The report finds the cost of having one megalitre of water delivered through an off-river network ranged between:

• $67 and $232 for pressurised networks

• $25 and $153 for gravity-fed networks.

Complaints to the ACCC about water matters remain low, receiving just three complaints in 2022–23.