‘Serious concerns’ raised about risks to compliance, conflict of interest at DCCEEW

Serious concerns have been raised regarding DCCEEW’s dual function as a major water buyer and water policy setter with the ability to manipulate prices.

The Inspector-General of Water Compliance has raised serious concerns about the Department of Climate Change, Energy, Environment and Water’s dual function as a major water buyer in Australia’s largest river system, and water policy setter with the ability to manipulate prices.

Following an independent audit into claims Environment Minister Tanya Plibersek shared sensitive water market information with the ABC ahead of an announcement to restart water buybacks, Inspector-General of Water Compliance Troy Grant said “serious failings” have been uncovered about the potential of wrongdoing if left unaddressed by the Department’s water group, including the potential for criminal or illegal activity.

Federal Water Minister Tanya Plibersek oversees the Labor Government’s policy to recover 450GL of water from irrigators in the Murray Darling Basin for the environment. Picture: Martin Ollman

In March last year, deputy Nationals leader Perin Davey wrote to Mr Grant asking him to investigate whether confidential information was leaked to the ABC ahead of the government’s announcement of its first major water purchases that risked insider trading or the manipulation of water prices.

Mr Grant said he was comfortable Ms Plibersek acted appropriately and no unlawful conduct was uncovered during the open tender process in February 2023.

However, the federal government’s decision to change policy and begin water purchases changed DCCEEW’s role and heightened the risks associated with managing billions of dollars worth of water.

“Of serious concern to me as the independent Inspector-General, the department became a significant participant in the multibillion-dollar water market through its purchase program and water holdings, while also conducting its function as a policy agency involved in setting and reforming the water market rules,” Mr Grant said.

“These multiple functions heighten the risks to compliance, conflicts of interest and also to broader trust and confidence in the water market.”

The independent audit Mr Grant commissioned into the Department’s handling of its water purchasing program found DCCEEW’s Water Group arrangements had gaps in staff training and controls for managing conflicts of interest, but were overall “partly effective”.

The department’s “information barriers” however were deemed “not effective”. It is a requirement of the Basin Plan that anyone who holds market sensitive information must not participate in market activities while any agency with access to market sensitive information must have “Chinese Wall” arrangements in place.

Nationals Senator Perin Davey first questioned the Department of Climate Change, Energy, Environment and Water’s handling of sensitive water market information in March 2023. Picture: Lukas Coch

Ms Davey said her concerns about the potential for information to be misused had been vindicated.

“This is an absolutely damning report about failure of process for a multimillion-dollar expenditure of taxpayers’ funds,” she said.

“The Australian National Audit Office must take up where the Inspector-General for Water Compliance left off and open an investigation into the appalling handling of the Bridging the Gap tender which we now know saw the Government pay 20-30 per cent above the market rate, and in one instance 200 per cent more.”

The Department said most of the recommendations from the audit have been or were being addressed.

“The Department is strongly committed to best practice in the management of water market sensitive information,” it said in a statement.