An audit by the Murray–Darling Basin Authority (MDBA) of reporting of the prices paid for water when it is traded in the Murray–Darling Basin has found that much more needs to be done to ensure robust administration supports the water market.
The MDBA Executive Director of Compliance, Brent Williams, said several straightforward steps were required by governments to improve the quality of price data and to increase market transparency and confidence.
“As the regulator, over the past year the MDBA conducted an audit of trade prices recorded in 2017-18, in order to assess how effectively each Basin state collects, validates, records and reports water trade price information,” Mr Williams said.
“A second, independent audit was conducted concurrently to assess water traders’ compliance with the requirement to report accurate price information to the relevant state authority.
“The central finding was that no Basin government has robust arrangements in place to gather comprehensive price information. As a consequence, some of the data reported by the states and published in consolidated form by the Bureau of Meteorology is incomplete and inaccurate.
“Accurate trade price reporting is essential to confidence in the water market and compliance with the Murray–Darling Basin Plan. The Plan clearly requires sellers to tell the relevant state agency the price of their trades and for their part, state agencies are obliged to provide this information to the Bureau of Meteorology for publication.
“Our audit found that water trade data is dispersed across a great many approval authorities that use a multiplicity of processes built around the needs of water managers rather than the needs of the market.
“Mandatory price reporting is relatively new, introduced in 2014, and the audit found compliance and enforcement practices remained sporadic. Of all trades reported in the Basin in 2017-18, for example, 44 per cent were submitted with a $0 price.”
The audit provides detailed recommendations, including that a compulsory trade-price field be included on all trade application forms by 31 December 2019 and a trade price validation process be in place by Basin states by 30 June 2020.
Mr Williams said the MDBA would contribute to the upcoming investigation into the water market by the Australian Competition and Consumer Commission, as announced by the Minister for Water Resources, David Littleproud.
“The water market plays an increasingly important role in the farming sector, and it is in everyone’s interest that participants at all levels adapt their processes to ensure the full range of transactions are reported transparently and accurately.”
Information about the water trade price audit report can be found on the MDBA website at: www.mdba.gov.au/publications/mdba-reports/audit-assurance
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