Water shambles

Haven’t we already seen farmers express concerns about Macquarie Agribusiness buying up water rights to secure water for its investments?

Privatisation

Not long before Carr took up his post with Macquarie Bank his government laid the ground work for a futures market in water rights. A NSW State Water media release from July 2005 reads:

A water index futures market would provide reliant, or water exposed businesses with an opportunity to hedge their risks to future climatic factors, particularly water availability. An ability to hedge future risks leads to better informed investment decisions and in turn stimulates economic activity, creating jobs and more certain profits for businesses. The establishment of a futures market would enable financial service organisations to develop simple yet effective products for the rural community designed to reduce the impact of drought or flood.

Rubbish! “Financial service organisations” exist to make profit and they will profit by selling water to miners or farmers, who are ultimately the only other real market in rural Australia, at prices that guarantee their profits. The press release doesn’t mention environmental concerns or any limitations on the activities of overseas “investors” or local speculators.

Essentially buying water now operates, it seems to me, like a bet on future scarcity but with a guaranteed "win" for those who have the money to play. In the driest inhabited continent on the planet, its drought conditions exacerbated by climate change, the only way for the price to go is up. It won't be long before only those who can afford to pay for the water will have the luxury of it. And domestic consumers are going to suffer as much as our surviving farmers.

Water brokers

Now with such a wonderful, well thought out scheme to benefit all and sundry one would have thought that the NSW State Government would have had an effective licensing regime in place when it introduced the Water Management Act 2000. After all, everyone else seems to be regulated nowadays.

Apparently not. The National Water Commission did commission the Allen Consulting Group to investigate national and jurisdictional governance arrangements for the conduct of market intermediaries and appropriate governance options, but a "minimalist intervention" approach was recommended.

So the wheelers and dealers are free to wheel and deal, substantially regulated only by the general law: for water brokers that are corporations the (Federal) ACCC has released a publication called Water brokers and exchanges - your fair trading obligations, and for those operating in partnership or as sole traders the equivalent State laws administered by the (NSW) Department of Fair Trading come into play.

If that arrangement is okay why was Waterfind, one of Australia's main water brokers, calling late last year for more regulation of water brokers (i.e. the introduction of a licensing regime for water brokers; brokers to conduct all trading activities through an independently audited trust account which is protected from creditors; brokers to be precluded from buying or selling water for profit on their own behalf; and the requirement for brokers to retain professional indemnity insurance to protect their clients against any business negligence)?

To be a reputable water broker you apparently need to be associated with the Water Brokers Compensation Fund, a member of the Australian Water Brokers Association and follow the Australian Water Brokers Association Code of Ethics and Standards (PDF 56KB). Even so, there have been reports of water brokers double dipping on water trading commissions. But without a licensing regime the shonks can’t exactly be struck off or prevented from operating as a water broker even if they are convicted criminals!

Conclusion

Our new federal government needs to urgently acknowledge that access to an adequate potable water supply is a basic human right, and that Australia's limited water resources need to be closely managed for the benefit of all Australians. Unless it does this it will not be able to gather accurate information and formulate and implement policies which address the needs of Australia. Within the framework of addressing water and food security, the requirements of industry and agriculture have to be met in tandem with the needs of the general population. Private enterprise does not and will not distribute water equitably or in a way that promotes the national interest.

It needs to be recognised that if the federal government does not voluntarily assume the role of conservator and distributor of water, acting without fear or favour to promote the national interest, sooner or later scarcity will force that role upon it. Corrupt and parochial state governments can have no part in such undertakings, and neither can cashed up private companies who grease the wheels of government for their own ends.

What Australia urgently needs, as former diplomat Bruce Haigh has recommended on several occasions, is a national regulatory authority with teeth, answering to the Federal Parliament, that can manage, regulate and allocate water in the interests of the country as a whole.