Murray Darling Basin water loophole plugged

Plugging a lucrative loophole that bypassed Goulburn Valley trade limits to send Murray River water prices soaring.

MURRAY River irrigation water prices are set to surge to new highs after Victorian Water Minister Lisa Neville yesterday blocked irrigators exploiting a lucrative loophole to bypass the 200,000-megalitre limit on net trade out of the Goulburn Valley.

The loophole allowed irrigators to squeeze $100-a-megalitre profit out of bypassing the intervalley trade limit (IVT) on water moving from the Goulburn to the Murray, below the Barmah Choke.

Irrigators have been bypassing the IVT, which closed in mid-July, by establishing Goulburn Allocation Accounts that are tagged (linked) to their Murray Water Use Licences.

This allowed Murray irrigators to sell their allocation at $630/ML locally and then replace it with Goulburn water brought in on their tagged account for $530/ML.

The only restriction was that the Murray irrigator had to use the Goulburn water on their property.

Cartoon: Chris Rule

Irrigation industry insiders say almost 50,000ML was moved last season (2018-19) from Goulburn Valley ABAs to tagged Murray licences.

The Weekly Times sought answers from Goulburn Murray Water last Friday on why it allowed irrigators to make the transfers outside the IVT, given Murray Darling Basin Plan rules demand tagged and untagged trades be subject to the same restrictions.

But yesterday Ms Neville stepped in, releasing the Government’s response into a review of the Goulburn IVT that committed to closing the loophole by December.

Ms Neville instigated the review in May, due to concerns at the impact — both on the community and environment — of ever-growing volumes of water flowing out of the Goulburn into the Murray, especially during summer.

But irrigators and water brokers warned further restrictions would widen the price gap between the valleys.

Not only is the Goulburn IVT closed, but so is the Murrumbidgee IVT and trade from above the Barmah choke.

“Murray (zone) seven is now locked off, so I’m sure we’ll see allocation prices jump,” H2OX water broker Craig Feuerherdt said.

One Murray irrigator, who wanted to exploit the loophole, said Ms Neville had been “influenced by dairy stakeholders in the Goulburn system who want to diminish allocation prices.”

“It’s all about access to cheaper water. But it is being dressed up as environmental concern.”

But Opposition water spokeswoman Steph Ryan said irrigators were “sick of people profiting from water trade because the Andrews Labor Government has been too slow to close loopholes”.