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The water sheriffs


Cite as: (2009) 83(03) LIJ, p.42

The ACCC is set to have a big say in how the nation’s scarcest resource is to be used.

Rapidly falling Murray Darling Basin (MDB) water stocks were the catalyst for the Australian Competition and Consumer Commission (ACCC) drafting proposed new trade rules that promise to alter the legal landscape for practitioners working in the area of water trading.

The ACCC handed the Water Market Rules and Water Charge (Termination Fee) Rules report to federal Water Minister Penny Wong in December last year and Ms Wong was scheduled to publicly comment on them by the end of February.

ACCC general manager water branch Sebastian Roberts said the two-fold aim of the report was to develop a blueprint that would:

  • streamline the labyrinth of state regulations controlling state-based catchment areas that had stopped water getting to where it was most needed; and
  • decrease termination fees – the charge set by a network operator on irrigators who sell their water and terminate water delivery rights.

Until now high termination fees have stymied trade by preventing farmers receiving market value for entitlements.

The ACCC involvement is a key aspect of the $12.9 billion federal intervention, introduced under the Water Act 2007, which effectively transferred responsibility for the 1.06 million square kilometre MDB from individual states to the Commonwealth.

The ACCC had been asked to create a whole-of-Basin, whole-of-economy perspective to cover bulk water irrigation infrastructure operators, stimulate trade and regulate water charges.

Ms Wong told the LIJ that whether the advice was adopted without variation or in part, the ACCC would be responsible for monitoring, compliance and enforcement.

Under the proposed changes, practitioners can expect an influx of general inquiries from current owners and potential buyers and work in assisting stakeholders meet obligations. Further work is likely if the ACCC pursues enforcement action.

Experts also predict a flood of legal work in assisting irrigators trade water and terminate delivery access and helping clients deal with wills, estates and new federal authorities, such as the MDB Authority.

Mr Roberts told the LIJ the proposed new rules, formed after a six-month consultation period, should ensure water trading would be improved.

“The Act addresses the legacy of over-allocation of water entitlements and takes into account the previous impact of the actions of operators or governments across states,” he said.

The report argues for a cap on termination fees at 10 times the annual network access charges, as opposed to the current 15.

Operators have also been known to delay or prevent trade with hefty administrative fees, volumetric trade limits and sale bans to non-farmers or those outside defined irrigation districts.

The ACCC report also argues that the Victorian practice of restricting trade out of a district to 4 per cent of volume per annum is an impediment to trade and should end.

LIV president Danny Barlow described water trading and pricing as a “monster issue” affecting rural communities and regional and urban lawyers.

“It will be a great thing if the ACCC is successful in lubricating the water trading system. However, we need to recognise there are competing interests and we need to watch this area very carefully,” he said.

He said if the lifting of trade restrictions was unsuccessful local economies could suffer.

More than three million Australians directly rely on the Murray, Murrumbidgee, Lachlan, Darling, Goulburn and Condamine-Balonne Rivers for their livelihoods and the maze of irrigation systems supports an agricultural industry worth $9 billion a year.

The Commonwealth wants the new rules to be enforceable by September this year.

For more information on the Water Act 2007, see and for more information on the ACCC, see

Jason Gregory


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