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Issue #1868      May 15, 2019

“Ripe for corruption”

Water sales in the stricken Murray-Darling Basin river system will be of major concern to many voters in the federal elections, following recent shocking revelations over commercial water deals. One deal of particular concern involved Barnaby Joyce, former federal Minister for Water and Agriculture. Two years ago he approved the purchase for $79 million of floodwater rights for two farms in southern Queensland’s Condamine-Balonne region owned by Eastern Australia Agriculture (EAA).

The government claimed the deal would provide extra water for the environment. But the transaction, conducted without a tender process, has raised major issues about corruption in the government’s management of rivers under the Murray Darling Basin (MDB) Plan.

Angus Taylor, current Minister for Water and Agriculture, co-founded EAA’s parent company in 2013 before he entered Parliament and relinquished control of the company. The Condamine-Balonne farm deal provided EAA with a $52 million profit, much of which appears to have been banked in the Cayman Islands by EAA’s parent company.

As part of the deal the government paid $16 million for a dam on one of the farms. However, under the government’s policy of causing minimal impact on local production and employment (i.e. preserving the vested interests of corporate farm owners) the dam is still used by EAA, and the government has no right to store water in it for release during droughts.

And in any case, there’s no guarantee that floodwater from the EAA farms will ever benefit the river environment. Once floodwater leaves the farms flowing back to the river, it’s no longer publicly-owned. It could legally be taken from the river immediately by the giant Cubbie Station just downstream, so long as the amount extracted was within its water entitlement.

A really bad deal

In 2015, EAA’s parent company contributed $55,000 to the coalition. Mike Kelty, northern basin commissioner for the Murray-Darling Basin, describes the links between political donations and water licence transactions as “ripe for corruption”.

Floodwater is notoriously unreliable. In 2015 the Queensland Labor government therefore recommended outright purchase of the farms, including the land and rights to river water extraction, for $123 million, in order to return 57,000 megalitres of water annually to the environment.

However, the federal government only purchased the floodwater rights. It kept its business mates happy by avoiding buying back an entire property, a practice that irrigation companies hate because it could threaten the future viability of the irrigation industry. And EAA should be very happy indeed, having got a top price for the low-value floodwater entitlements, with little if any impact on its future profitability.

In documents provided to a Senator about the EAA transaction the government redacted all financial data. However, the floodwater price for one of the EAA farms is known to have been based on 1922 to 1995 floodwater figures provided by a consultant who was a former EAA director and business partner of Taylor.

If the estimate had been based on independently-sourced 1985 to 2009 figures, which show a sharp decline in floodwater flows, the market value would have been almost nine percent lower.

And if future trends had been taken into account the price would have been even lower. The Bureau of Meteorology predicts that floods in the Condamine-Balonne region will become increasingly rare under climate change.

The EAA water buy-back deal was very good for the company and very bad for the taxpayer.

Time to change course

Apart from Antarctica, Australia is the world’s driest continent. The Murray-Darling river system is a vital national asset, but is now extremely endangered because it has become a greed-ridden corporate market. The water industry is worth $2 billion and the price of 1,000 litres of water extracted from the river is 59 times higher than it was 20 years ago. The prices paid are beyond the reach of many small farmers.

Moreover, in allocating water licences the government places no restrictions on types of agriculture that demand high rates of water consumption, like the cultivation of cotton or rice.

And it deliberately ignores the connection between climate change and drought. PM Morrison has offered farmers drought relief funding, but is blocking essential climate change initiatives, including conversion to electric vehicles and renewable energy production. One coalition candidate has even accused the Bureau of Meteorology of falsifying weather data in order to “perpetuate global warming hysteria”.

The public knows virtually nothing about the many buyback transactions that have occurred since the MDB Plan was introduced. However, the Condamine-Balonne water buyback scandal demonstrates with absolute clarity that the government is obsessed with enhancing corporate profits and preserving the domination of the fossil fuel industries. Protecting the public from the terrible impacts of climate change just isn’t on its agenda, and it must be dumped in the coming elections.

Next article – Global action on shipping

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