The ACCC calls for ‘decisive and comprehensive reform’ of the water market


The Treasurer has released the Interim report for the ACCC’s Murray-Darling Basin Water Markets Inquiry. The interim report considers options to enhance markets for tradeable water rights, including to enhance their operations, transparency, regulation, competitiveness and efficiency.

In the words of the ACCC, the report has found that ‘Water markets in the Murray-Darling Basin need major changes to allow for open, fair and efficient water trading that benefits water users, communities and the economy’.

Encouragingly, the 544 page report highlights many of the RGA’s long-standing concerns, and supports our suggested improvements. In particular, the report provides that:

  • water market intermediaries such as brokers and water-exchange platforms operate in a mostly unregulated environment, allowing conflicts of interest to arise, and opportunities for transactions to be reported improperly

  • there are scant rules to guard against conduct aimed at manipulating market prices, and no particular body to monitor trading activities

  • there is a lack of market transparency and public information which favour better-resourced and professional traders who can take advantage of opportunities such as inter-valley trade/transfer openings

  • differences in trade processes and water registries between the Basin States prevent participants from gaining a full, timely and accurate picture of water trade, including price, supply and demand

  • important information, such as allocation policies and river operations policy, which can significantly impact water pricing, are inadequately communicated to the irrigators and traders who rely on these to make business decisions

  • there is a disconnect between the rules of the trading system and the physical characteristics of the river system. For example, in-river delivery capacity, conveyance losses and adverse environmental impacts are not considered in the processing of trades that change the location of water use, except through some blunt and imprecise rules, such as limits on inter-valley trade/transfers

  • overarching governance arrangements, which result in regulatory fragmentation and overlapping of roles of different governing bodies, contribute to many of these problems, or prevent them from being addressed in an effective and timely way. The water market needs decisive and comprehensive reform.

In the coming days the RGA Water Policy Committee will be examining the interim report in greater depth should a further submission in response to the issues raised in the interim report, be required before the cutoff date of 28 August.

The full report can be found here

  • The ACCC’s media release is available here

  • The Treasurer’s media release is available here

  • The National Farmers’ Federation’s media release is available here

  • The NSW Irrigators Council’s media release is available here