LEON BYNER: I have always thought that the idea of corporatising the weather is absolutely stupid but that's basically what we've done with water. We've even separated, when I say we, the Government representing us and this goes back a few offices or elections, separated rain from land.
Now, that doesn't mean that the rain doesn't fall on the land anymore; it still does but we just treat it as if it didn't. Did you know, for example, that there are significant overseas investors who have nothing to do with agriculture that buy water and then sit on it hoping its value will increase? And that's what's been happening recently and what this has done, it's quadrupled the price of water thus forcing farmers broke. Forcing farmers broke. There's a little ditty which I'll give you in a few minutes' time about this privatising or corporatising water. But first, I caught up earlier this morning with the Agriculture Minister David Littleproud.
Minister Littleproud thanks for joining us today. We see that your government is questioning how big corporate investors are making huge profits from selling water at huge prices while sending farmers broke. This is not unexpected, is it? Because that's what investors do in matters like this.
MINISTER DAVID LITTLEPROUD: Well obviously the market's evolved, Leon, and that's why I instigated the ACCC to undertake a review into this. I sat in machinery sheds with irrigators in the southern basin where 93 per cent of the trades take place and six to eight months ago they were telling me this was a concern. So I've acted immediately. We put a terms of reference together. We made the commitment. I now need the ACCC, who are the experts in this, not me, to go away and get underneath the bonnet of this and come back with some recommendations.
We've got to ask the question: when water was separated from land, was this the original intent of where we thought the market would evolve to? And those are questions that the ACCC need to answer and what mechanism is needed to put in place to make sure it's an equitable market.
BYNER: How are you going to stop people deliberately withholding something in order to put the price up? This is not a new concept. And then when it happens, we all act surprised.
MINISTER: Well some of that goes to the rules in which the state administer around carryover water. So that means if you get an allocation given to you for one year and you don't use it or you held it- you hold it over, that's effectively what they're saying, accusing some of these companies of doing.
So the rules around carryover are things that the states own. So while the ACCC will give me recommendations, I don't have the power to institute them all. I'll need the states to come with me, we'll need to work together. And they've been proactive in that and they supported me in instigating this review - all the basin states did. But they may need to look at carryover rules to make sure that this gaming of the system that's been alleged is looked at and is treated.
BYNER: What should the price of water be right now in your opinion?
MINISTER: Leon, I couldn't give a definitive number on that. That'd be very dangerous for a politician to make a number up like that. What our job is to make sure that there's an equitable market and market forces are equal in terms of the balance of equity.
Now, government should only interfere in a marketplace when there is an imbalance in the marketplace and that's the only time we should because there could be unintended consequences if we overreach straight away because you've got to understand there's also farmers out there that use these entitlements as their assets to go to banks and borrow against. And if governments overreach, you can have an unintended consequence of wiping away farmers', family farms’ equity straight away [indistinct]…
BYNER: How much of this speculation is from international owners? We know, for example, there's a considerable water holding by companies registered in the Cayman Islands.
MINISTER: So there's about nine per cent of water entitlements that are owned by foreign entities. However 90- over 90 per cent of those are used by those entities for agricultural production. So effectively, there are 14 per cent of total entitlements that are owned by entities that don't have land attached to it.
So those are the types of things that the ACCC needs to get a very granular understanding; the impacts that's had on the water market, but also the impact that drought has had also on the market. We've got to understand this is- the supply of this market is predicated on what falls out of the sky and there hasn't been a lot that's fallen out of the sky, but we need to make sure there is a balance in the marketplace, and that's why I acted so swiftly with the ACCC.
BYNER: Alright. There's your Water Minister, Agriculture Minister David Littleproud.
*** ENDS ***