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PUBLIC SUBMISSION TO WATER MARKET
RULES ISSUES PAPER
BY THE BONDI GROUP [ABN 16358861584]
ON THE 9TH MAY, 2008
The Bondi Group
Australian Private Irrigation Entities Incorporated
5 Tapio Street
DARETON NSW 2717
The Bondi Group is an incorporated organisation which represents the interests of Australian locally
owned, private irrigation water supply enterprises in the continuing public debate over water, and the
policy setting which follows that debate. The Bondi Group comprises of a group of successful water
managers operating under local ownership structures.
By representing the interests of private Irrigation Corporations in Western Australia, Queensland,
Tasmania and New South Wales, The Bondi Group works to ensure an informed public debate
with real examples and hard statistics to correct misinformation and misunderstandings.
The Bondi Group was formed to be proactive and assist policy development and commentary as part
of the national water reform process.
The Bondi Group is an incorporated organisation which represents the interests of Australian locally
owned, private irrigation water supply enterprises in the continuing public debate over water, and the
policy setting which follows that debate. The Bondi Group comprises of a group of successful water
managers operating under local ownership structures.
By representing the interests of private Irrigation Corporations in Western Australia, Queensland,
Tasmania and New South Wales, The Bondi Group works to ensure an informed public debate
with real examples and hard statistics to correct misinformation and misunderstandings.
The Bondi Group was formed to be proactive and assist policy development and commentary as part
of the national water reform process.
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INTRODUCTION
It is important to remember that the implementation of the National Water
Initiative and the Water Act 2007 was "to facilitate the operation of efficient water
markets and the opportunities for water trading." Water Market Rules are coming
at the end of a process that commenced with the Committee of Australian
Governments (CoAG) in 1994 and have been prompted by the current drought
and the need to optimise the use of the limited seasonal allocation of water. In
terms of the water market, the ACCC needs to be clear if it is taking into account
the perceived best interest of the Commonwealth Government as this may not
always be the best interests of other parties who are participating in the water
market.
Some individual Irrigation Corporation's are lodging separate submissions with
particular emphasis on their specific irrigation corporation area. The Bondi Group
acknowledges the importance of having water for the environment and for human
consumption. The importance of the water market in times of the recent drought
is also recognised.
This paper seeks to represent the broader views of the Bondi Group and in
particular, Private Irrigation entities of which we are the peak national
organisation.
Commonwealth
The Commonwealth seeks to act in the national best interest. With regard to the
National Water Initiative, a growing economy should have the minimum amount
of barriers to the trading of water. Since 1994 the Australian Government’s aim
has been to ensure that water achieves the 'highest value and best possible use'. In
economic terms the 'highest and best possible use' is considered to be, by default,
the highest achievable price and water pricing is the mechanism by which water
use will achieve this.
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States
Federal Government funds provided an incentive for the States to sign the
National Water Initiative. Even though they have signed it, the States still
continue to act in their own best interests because they want water to be used
productively in their regional area to generate a stronger State economy.
The States have little incentive to upgrade State owned irrigation infrastructure
because it would cost them money and they would consider the benefits to be
minimal. A cost/benefit (votes) analysis does not justify significant spending by
the States and unless they can get the Commonwealth to pay for the upgrades,
with the States claiming the economic benefit, they show little genuine interest in
providing the sufficient funds themselves.
It should be noted that the Bondi Group members own and maintain their shared
infrastructure.
It would appear to us that the States have a valid reason to put up barriers to
trade. The ACCC have not substantiated the Issues Paper with actual trade figures
so it is difficult to determine the volume of interstate trading. In New South Wales
since interstate trading commenced, the NSW Government has underfunded the
Departmental resources needed to make trading efficient. Insufficient funding is
consistently provided to both State Water and the Department of Water and
Energy to enable time efficient water trades. What the ACCC needs to establish is
at what point – if the Commonwealth were to provide some funding - would the
NSW Government be willing to provide sufficient resources, even though NSW
would be likely to suffer a net loss in economic terms as a result of that trade? We
are concerned that NSW has consistently underfunded its departments because
the NSW State Government suspects it will have a net loss of water entitlements
to other States and therefore, their allocated funding is inadequate. There is also a
level of complexity in the interstate trading rules which have been drafted by the
Murray Darling Basin Commission.
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In terms of interstate water trade, South Australia initially thought they would be
net losers and because of this have historically not provided resources to improve
their trading system. Now that the SA State Government believes that they will be
net beneficiaries, the SA State Government is addressing the situation of its
underfunded and under-resourced Departments that are needed to help facilitate
the operation of efficient water markets. This is because they now have a strong
incentive to do this.
In Victoria – where arguably the greatest barriers to trade exist – they have taken
the 4% cap and instead of applying it across the entire authority of the Goulburn
Murray River, they have applied it over separate zones. The result is that the cap is
often reached within a season. The cap also includes water which is separated
from land. This is clearly not a permanent movement of water entitlement and
should not be included in the cap.
There is a disincentive for States to provide resources and improve systems where
there is a belief that there will be a net loss of water and a reduction in their
economy as a result of more efficient trades.
Irrigation Corporations
The Irrigation Corporations act in their own best interest – that of the Irrigator
members. They are self-managed and self-funded and there is a direct relationship
between the money spent on upgrading infrastructure and the benefits to the
Irrigators. The Irrigation Corporations fix and build infrastructure so that water
user efficiency can be maximised and irrigators can participate in water trading
through water savings achieved. Irrigation Corporations understand water trading
between States is important and can be efficient because they understand that the
benefit of upgraded infrastructure makes for cost effective and time efficient
water trades.
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Growers
In uncertain environmental times, growers/Irrigators need to be assured that their
annual crops and permanent plantings will have enough water for the season. In
terms of investment in infrastructure, there is a direct cost/benefit correlation that
does not exist at State Government level. If one State Irrigators has surplus water,
there should not be barriers and red tape that hold that water from them. Willing
sellers should be able to sell to willing buyers. The need to facilitate trade between
the States was what instigated the National Water Initiative. It is the drought that
has been the catalyst for the proposed water market rules.
The pressure for the water market rules has come about by the insufficient
resources to meet the needs of all the participants in the Murray Darling Basin.
Participants include cities, towns, Irrigators and the environment. We believe the
rules should be designed to get the best use out of a limited resource. Whilst the
'highest and best possible use' may be that which pays the most money, it may not
be in the best economic interest of Australia if the use of the limited resource is a
non-productive use. It is in the Commonwealth's best interest to get the 'highest
and best possible use' of the water and in part, that is to ensure that water
generates its productive capacity and that regional and rural communities are
sustained and our food is guaranteed.
The Bondi Group supports the principle that Irrigators add disproportionate
value to the Australian economy whereas the highest price for water may not
generate any production.
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Question 3
The water market and trading objectives set out by the ACCC should be practical,
attainable, reasonable and necessary. However, we submit that the ACCC carefully
look to the interests of third parties. Greater emphasis needs to be placed on the
social and economic impacts of large quantities of water being traded away from
areas and schemes. To date, there has been insufficient attention or recognition of
the potential demographic and economic impacts on community areas that may
suffer as a result of permanent water exports from the district. While Government
is making reference to structural adjustment initiatives, these have not been clearly
defined.
There is unanimous support in favour of protecting the operators, the Irrigators
and the wider community they live in from detrimental third party impacts.
We encourage the ACCC to seek the views of organisations such as Regional
Development bodies and Local Government Authorities regarding the effects on
communities that allowing water to be traded away from the area would have
upon them.
Trading rules should be sufficiently robust to enable sensible trading of water
without leaving communities with devastating effects.
The Harvey Water (Western Australia) and Coleambally (NSW) Schemes
exemplify attention to third party interests and the benefits that come from a well
planned trading platform. We strongly suggest that the ACCC contacts them to
understand how providing tangible benefits to a community can work. If
communities and irrigation schemes are to remain viable in the long term future
of Australia, we must ensure the community's interests are specifically addressed.
Further, given the increasing world wide shortage of food, the agriculture industry
is going to be in demand more than ever.
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Chapter 4.1
The Bondi Group does not as a group support the trade of water to nonlandholders and/or non-water users unless the termination fee liability is paid on
surrendered delivery entitlements. Third parties, such as communities and
townships will suffer severe consequences if water is allowed to be traded away
from their area and to non-landholders and/or non-water users. However, if
water is to be traded to a non-landholder and/or non-water user, the
infrastructure operator must have the ability to authorise the quantity of the trade
and how the delivery entitlements and water entitlements should be dealt with.
This will prevent outside corporations buying water and selling it back at inflated
prices. Anne Rzeszkowski of the Coleambally Irrigation Co-operative Ltd made
the point that we need to clearly understand what and why it is that an outsider
would want water. She asks: Is the water market being developed for those who need, require
or use water? Or is it to promote a change of ownership of yet another natural resource where
outputs are currently being shared by all Australians?
Tony Chafer used the following example to exemplify what would happen if
water was allowed to be traded from an area:
In a channel system, there are 5 farms on a channel and 4 of the farms sell 100% of their
entitlement. Because the final farm has retained their entitlement, a full channel would need to
remain to provide water to the remaining farm. The volume of losses attributed to evaporation,
seepage and operational water (conveyancing, weed treatment etc) would potentially remain
constant but there will be less water delivered to apportion these losses over. In lieu of this, and in
order to comply with the new national standard for delivery system efficiency, the irrigation
provider may be forced to consider piping the water to the remaining farm when there is no
guarantee that the remaining farm won't sell off it's entitlement in the future. This makes
justifying the capital expenditure to convert to a pressurised system and achieving water use
efficiency all but impossible. Also, full maintenance costs for the entire channel would have to be
met by the one remaining farm.
An Irrigator and/or an Irrigator providor should not be disadvantaged by higher
operational charges because his/her neighbours transfer their water from the area.
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Peter Wallis of the West Corurgan Private Irrigation District makes the point
that changing the use of water in NSW – from General Security to High
Security – is acceptable, providing predetermined conversion ratios are adhered
to with no impacts on the security of all other High Security entitlements.
In essence, what is deemed 'appropriate' must have one test: that the purchaser
buying the water will not supply it back at an unreasonable rate, or withhold it and
create consequential damage to Irrigators and third parties or participate in cartel
or monopoly style behaviour. It is for this reason that restrictions cannot apply
generally and across jurisdictions. Any proposals to move water away from
agricultural production should be the subject of detailed social and economic
assessments. Water markets should be developed to enable the most efficient and
productive use of water. Currently the Government is the major purchaser of
water for the environment and it has a cheque book of $3 billion to spend on
buying back water over a number of years. This is hardly competitive behaviour in
a market and has implications for the achievement of an efficient market.
Question 4.2
The constraints on water exports (such as the 4% cap) were put in place to reduce
barriers to trade and to allay the concerns of third parties. Efforts must be made
to ensure that at no time should the constraints adversely affect the very people
they protect – the Irrigators and the Shared Infrastructure.
The main concern, outlined by Less Furness of the Murrumbidgee Private
Irrigators is to ensure that everybody is able to execute their property rights and that everyone
has an opportunity to participate on equal terms. Further, Wallis comments that in
relation to the constraints imposed on water exports, operators should have
discretionary power to limit water exports by means of acceptable restriction parameters. Both
Furness and Wallis agree that whilst individual rights are extremely important, so
too are the rights of those remaining within the operational scope of an operator's
district. Each operator is somewhat unique and therefore, should not be bound by
‘blanket legislation’ that fails to take into account that operators particular
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situation. For example, a scheme which has four members and a total allocation of
2000 megalitres is quite different to the huge capacity and membership of a larger
operator. State owned corporations also have the benefit of subsidies when
required. Small privately owned entities have no “get out of trouble” clauses.
Rzeszkowski submits that the loss of benefits to third parties if water is traded
outside the area can be counterbalanced by acceptable and reasonable termination
fees. This, Rzeszkowski comments, should eliminate any third party impacts on
remaining Irrigators.
There should be a requirement to offer water entitlements to Irrigators first.
Currently there are specified limits as to the volume and percentages of water that
can be traded out of an area. The Inter-Governmental agreement puts this
restriction at 4%.
The requirements for a minimum amount of retained water holdings is an
important restriction that should be made a mandatory restriction. Rzeszkowski
asks:
If a property/properties within an irrigation area are left without water entitlements, who will
bear the responsibility for any environmental impacts – such as salinity and rising salt levels from
surrounding irrigation properties?
To thwart the dilemma, the requirement for minimum water holdings is as
important as it is sensible. As with all water issues and restrictions, the minimum
amount should not be a burden on the irrigator. As each operator and irrigator is
different, there cannot be a ‘blanketed’ minimum amount. The amount must be
relevant to the area and users.
The issue of exit fees seems to have been resolved by the introduction of
termination fees. At this time, termination fees are an adequate cognition of
surrendering water delivery and 'exiting' the water market. Such fees safe guard
third parties from the possible repercussions that would follow such behaviour.
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The Irrigation Corporations require clarification from the ACCC as to whether
the termination fees will be subject to tax. Additionally, they need to be informed
as to whether or not the fees will include GST. If taxes and GST are applicable,
this will add to the considerable costs associated with the terms and conditions of
trading that have already been forced upon the Irrigation Corporations.
Each time the Government changes their position on water trading, the Irrigation
Corporation's incur the costs of changing their policies and constitution to mimic
the Government’s position. What is needed is one position and for an
organisation – whether it be the Government or an appointed committee – to set
fair rules. The costs of disorganised policy-making are rising and those held
financially accountable are those with the least surplus to waste.
As for other rules and penalties that would discourage water leaving an area,
Coleambally Irrigation Co-operative Limited ask whether on top of termination
fees, more restrictions are reasonable to expect:
In relation to exit fees, it is a more reasonable form of restriction as opposed to operators
prohibiting trade of water entitlements or imposing stringent conditions on transfers. The
problems that further restrictions would cause when transferring water from state to state, or
jurisdiction to jurisdiction starts with the very simple issue of how the megalitre is measured.
To transfer water elsewhere, where it is measured differently, will leave a
discrepancy. Coleambally Irrigation Co-operative Limited asks who will cover
such a discrepancy and further, is it part of the river's unaccountable losses? For
example, water used in NSW requires a certain volume of conveyance water to
deliver it but if the water is to be traded from NSW and used in SA there is a
totally different volume required. Once again this demonstrates that a blanket
restriction cannot apply to everyone and instead, restrictions should be placed on
an irrigation corporation on a case-by-case basis.
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Question 4.3
As to other constraints on water and transformation, it is necessary to restrict the
amount of groundwater that gets traded away from an area not only in order to
preserve the financial viability of an irrigator as well as an irrigation corporation's
minimum trading restriction but also because of the unique and different
characteristics of groundwater. Trading significant amount of groundwater can
have quite devastating environmental impacts. The appropriate circumstances
where an operator could impose other constraints (other than the ones mentioned
above) would have to be ascertained and dealt with on an individual basis and as
they arose.
Question 4.4.1
The plausibility and reasonable expectation that there be security for future
payment of access fees and termination fees is an unworkable arrangement. It is
the delivery entitlements that would need to be 'secured' as water entitlements are
no longer attached to the land. Whilst this provides an avenue for an operator to
secure revenue, it increases the financial burden on an irrigator – something the
water market rules should be trying to avoid. Wallis states that there should be no
ongoing tagged access fee or Government charges attributable to the purchaser
when the entitlement is transferred out of an operator's district. Where tagged fees
are fine and work well in theory, there does not seem to be a place for them in
practice however, irrigation entities should be able to have a range of tools which
enable them to collect outstanding monies owed to them for non-payment of fees
and charges.
Question 4.4.2
If water rights are transformed from an operators licence it is presumed that the
only fees applicable to that transferred water are Government fees, which remain
the responsibility of the individual.
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The extent and circumstances where it would be appropriate for an operator to
require security should be based on whether or not that water right is going to be
used within an operator's district. In this event the fees applicable to that use
become a negotiable item, as do the conditions of use of that water. Once a water
right is transformed, the presumption is that the water can then be used – subject
to conditions – anywhere in the area or region.
Question 4.5
Overall, administration fees and charges are negligible to the cost of a water trade
transaction. According to Furness there needs to be scrutiny of Government
prices and costs on transactions. The fees and charges should be set out by the
individual Irrigation Corporation as they vary in size and resources applied and for
this reason, one amount will not suit all. Administration fees and charges should
be applied but based on cost recovery. If the Government continues to adjust its
position on fees, such as termination fees, there will be a further round of
administration necessary and fees will go up. Continual amending and changing of
Government policy and operations increases fees across all aspects of private
water related business.
Question 4.6
The Bondi Group believes that internal trading seasons and cut-off dates
should be able to be determined by an operator. Seasons should be
predetermined before the start of a season and highly publicised throughout
the industry and the membership base of the infrastructure operator.
For temporary trades, the trading seasons are determined by the Governmental
agencies if traded between jurisdictions. Where a permanent trade of entitlement
is undertaken part way through a season, NSW State Water only assigns the
associated allocation to that entitlement at the beginning of the next full irrigation
season. This system of monitoring is inadequate when accounting for the losses in
the river and water storage systems. Although the Irrigation Corporation's keep
track and show changes in entitlements as soon as trades are complete, there is
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potential for changes to be monitored across jurisdictions on one main register.
The benefits of tracking the changes will save time and money and will account
for 'lost' water in river systems and storage dams.
An example of a working register being developed and supported by the Bondi
Group is NICWER – the National Irrigation Corporation Water Entitlement
Register Pty Ltd. In conjunction with the majority of Irrigation Corporation's
throughout Australia, it holds vital information pertaining to water trades and has
created an easy-access portal for anyone seeking information regarding of water
entitlements.
Cut off dates do act as a barrier for trade in timing only. They are necessary to
enable an Irrigation Corporation to account for water movement and balance
water licences at the end of the irrigation season. The problem is not with the cut
off dates, it is the insufficient funding of State Government departments that
render them unable to handle trades efficiently necessitating the earlier interstate
cut off dates.
Question 4.7.1
Irrigators should have a choice of using a registered broker or conducting trades
themselves. It should be a requirement that broker who trades water be a member
of the Australian Water Brokers Association who operate under a licence
administered by the Australian Stock Exchange. There are arguments against this
position with some Irrigation Corporations pointing out that this will give the
exchange operators an advantageous position to monopolise on water sales and
trade.
There is a substantial argument that water sales and/or trade should be an open
market with no restrictions on who facilitates the process. What is agreed is that
the broker and Irrigation Corporation operate independently, with the Irrigation
Corporation acting only as the 'approval authority'. The two should be kept
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separate with separate bank accounts and all money kept in trust. A separate chart
of accounts is also necessary in order to facilitate each part to be fully auditable.
Question 5.1.1
The terms and conditions for transformation of water rights and/or trade should
be comprehensive but not burdening, with a clear distinction between
Government conditions and an operators conditions. As has been the essence of
our submission, the terms and conditions must be relevant to the irrigator, the
irrigation corporation and the surrounding communities. Whilst there may
be 'blanket' legislation and terms/conditions from Government entities, there
should be room for the individual Irrigation Corporations to create their own
relevant terms and conditions. This will better enable parties to be bound by rules
that tailor their specific needs.
At the present time there are no fundamental remedies for trading errors made
and no parties are held accountable for their adverse actions in the market. If
there is to be an efficient water trading system, this issue of appropriate sanctions
for under-performance or negligence must be addressed. An independent body
must exist to deal with water market complaints.
Question 5.3.1 to 5.3.7
In relation to transformation and/or the trade administrative process, an operator
should have the ability to undertake their own checks regarding the application
and approval process. Information pertaining to a trade, not including the
sensitive and confidential aspects of a trade, should be made publically available so
that operator's have correct and rigorous information in order to approve an
application. Application checks should remain the responsibility of the operator.
The Board of an Irrigation Corporation, not its management, should approve all
large permanent trades.
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Question 5.4.1
At the present there is a belief that the timeliness of approval of both permanent
and annual trades is too slow. If other forms of trade – such as shares – can be
traded in three days, procedures should be implemented that allow water to be
traded within three days too.
Permanent transfers and tranformations involve considerable amounts of money
and appropriate care needs to be taken. Solicitors and third parties are also
involved.
In relation to the temporary market, an irrigator's access to their purchased water
as quickly as possible can be critical. Correctly completed applications are vital to
the approval times of the relevant infrastructure operator and the Government
agency. It is at this point that the processing time slows. Experience across
Irrigation Corporations indicates that slow processing times are generally due to
the Government agencies, not the private sector.
Question 5.5.1 to 5.5.4
The establishment of a national register would need to encompass all individuals
within an operator's district, as well as all the individual water right holders. At the
outset, this appears to be an impossibility as the register would contain sensitive,
highly personal and confidential third party mortgage and/or financial
information. This may present a privacy issue.
One register which addresses these security issues is NICWER. Access to
personal information is tightly restricted and at present the overall operational and
maintenance costs of the register are not excessive. If NICWER were to
encompass the registers from the Irrigation Corporations that have not joined, it
would continue to be a successful and efficient tool for the Australian water
market.
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For security and integrity reasons, private operators still maintain their own
registers and provide their information to NICWER. This is due to the fact that
entitlement holders are also shareholders.
Question 5.6
There is a general sense that the market information available at the present time
is sufficient to facilitate the trading process, however, this can always be improved.
Market information should be made readily available to market participants but at
the same time, the cost of this information should not be a burden. Private
enterprises, such as broker's, "tout" for business and they will make market
information available without the need for direct fees. Specified information
should be available to the public on request.
Question 6.1.1 and 6.1.2
The Water Market Rules Issues Paper references an Australian Banker's
Association sponsored paper which discusses the mortgageability of water held as
shares, compared to water held on registers. John Palmer of the Pioneer Valley
Water Co-operative in Queensland states that in his operation:
It is our experience that not all financial institutions that we deal with agree with the ABA
position on this matter and this should be brought to the attention of the ACCC. We have
received comments from various institutions that present the totally opposite view – they feel there
is more security for them where their customers are members of Irrigation Corporations and have
a level of protection form outside forces in water management.
In relation to the processes undertaken by operators to identify whether an
irrigation right has an encumbrance, Irrigation Corporation's generally have
adequate systems in place to identify encumbrances. The NSW Department of
Natural Resources have not allocated enough resources to keep up to date with
transformations and trades. It should be recognised that a water entitlement is a
chose in action – an intangible thing not similar to real property. The closest
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analogy of a water entitlement is a share, which is also a chose in action and you
can have encumbrances over a chose in action.
Question 6.2
The tax implications in respect to transforming an irrigation right into a water
access entitlement for an operator should have nil taxation implications for the
entitlement holder. Government administration should not affect the bottom line
of an Irrigation Corporation.
There are three tax issues that are a problem.
1. Liability for tax on termination fees added to the fees applied by the
Irrigation Corporation. The problem is, we are not sure whether
termination fees are taxed or not and further, we do not believe there
should be tax on termination fees. If an entitlement is terminated, the
Irrigation Corporation needs the termination fee to cover the costs of
maintaining their infrastructure. This is why the termination fee should not
be taxed.
2. The issues of capital gains tax on the sale of water entitlements. We
are aware that capital gains tax is applied on water entitlements but we
believe this is a significant barrier to trade.
3. The issue of stamp duty in Queensland. Queensland is the only state
that imposes transfer duty on permanent water trades. Duty is applicable
for transactions above $20,000 in value and is on a sliding scale up to 4.5%
for transactions over $700,000. Transfer duty on a trade of 100 megalitres
at $2,000/ML would amount to $5,600. This is one of the worst of all
barriers to trade. We believe that in the Border Rivers area, this affects
competitive neutrality between NSW and Queensland border areas
We believe that these tax issues pose significant barrier to trade whereas we do
not believe that transactional costs are a significant problem.
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Question 7.1.1 and 7.1.2
There should be provision for market rules to be flexible enough to permit the
unique situations of all operators to be recognised. Water market rules should be
distinguished on the basis of the size and class of the operator. Smaller operators
could have delayed implementation as they may not have the resources available
to comply if time frames are enforced. There is also the added risk that if one set
of rules were to apply to all, there will be large costs imposed on small operators.
The Bondi Group stresses the ACCC consult widely with the smaller operators to
fully understand the impacts of the draft water market rules.
Legislated regulations that result in compliance costs to operators should be paid
by the Government, not the operator.
Question 7.2.1 – 7.2.3
Current contracts need to have an acceptable period of time before compliance
issues necessitate change. Future uncertainty is a major issue therefore there needs
to be a minimum timeframe before contracts can be varied – the example given
by the West Corurgan Irrigators is five (5) years.
Every operator and irrigator has the right to review and amend terms and
conditions before they sign. If the terms and conditions become unreasonable,
there needs to be a way to review the contract.
The water market rules should take into consideration that the majority of
contracts already signed and implemented were entered into in good faith and the
parties to the contracts have no problems. Such contracts should not need to be
changed. The pre-existing contracts between an operator and an irrigator should
be accounted for but not forced to be amended to fit new terms and conditions.
The water market rules could account for pre-existing contracts with a clause that
states that a pre-existing contract is recognised, as long as both parties (operator's
and irrigator's) agree to it. If a contract is entered into in good faith it should be let
run until it expires when a new contract could be entered into.
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Question 7.3.1 and 7.3.2
Currently, the conduct of operators is monitored by a plethora of Local, State and
Federal Government agencies. With the implementation of the water market rules,
the ACCC will need to provide information as to the types of monitoring it
expects to implement. When the operators know how the ACCC would like to
monitor the compliance of their water market rules, it is then that both parties –
the ACCC and the Irrigation Corporations – can discuss amendments and various
ways of implementation. Whatever the requirements, the ACCC must recognise
the fact that a set of blanket rules will not suit all operators. Small operators
cannot be expected to keep up the same rigorous monitoring scheme that the
larger operators may adhere to.
The monitoring and compliance rules must remain fair and economical. This can
only be achieved if:
1.
Irrigation Corporations are heavily involved in making the rules and they
begin to be included to allow them to protect their interests. At the present
time, the Irrigation Corporations exclusion from Government committees
formed for irrigation and water issues is an obvious oversight.
2.
The ACCC should be aware that one set of rules will not fit all. Room
should be made for individual and private Irrigation Corporations to
implement their own rules.
CONCLUSION
The Bondi Group submits that the water market rules should pressure States to
provide sufficient funding in order to achieve the goals that are set by the
National Water Initiative, which the States have signed and agreed to.
The Bondi Group respects the rights of the individual to deal with its water asset
whilst still supporting the maintenance and use of the shared infrastructure of
Irrigation Entities.
The Bondi Group submission
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The ACCC should aim to meet the best interests of the Commonwealth and we
believe that it is in the Commonwealth's best interest to get the 'highest and best
possible use' of the water by ensuring that water generates its productive capacity.
The Bondi Group believes that it is Irrigators who generate the most productive
capacity, adding value well above anything else that the water may be bought for.
A higher price today for non landholders use can not generate as much value as
water that is used to grow crops and improve the Australian economy.
We submit that Irrigators add disproportionate value to the Australian economy
whereas the highest price for water may not generate any production. We ask that
the ACCC ensures both Irrigators and Private Irrigation Corporation’s are
included in any future Committee or meeting which discusses their interests.
Appropriate time and consultation must be spent by the ACCC in determining the
market rules. Above all, the ACCC should aim to minimise the third party impacts
of the market rules.
The Bondi Group submission
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