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Governments can support this by providing a robust regulatory environment

By: mqf1989 mqf1989
For : "Governments can support this by providing a robust regulatory environment
Date Added : January 5, 2011 Views : 129
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"Governments can support this by providing a robust regulatory environment


The price is far below $2200 a megalitre the Federal Government paid during its drawn-out 2008-09 tender.Brokers told The Weekly Times the Federal Government had learned from past mistakes and now monitored the market and ran short tenders to snare the cheapest water possible.

The Government has dominated the water market, having spent about $1.6 billion of the $3.1 billion at its disposal.Brokers said the price had dropped every time the Government stepped out of the market in the past 12 months.

The Department of Sustainability, Environment, Water, Population and Communities' website shows that since January the price it paid for irrigators' water entitlements has steadily declined.

In January, the department was buying Murray (below the choke) high-reliability water share for an average $2072 a megalitre and Goulburn HRWS for $2054 a megalitre.

By March, the price had dropped to $1957 a megalitre on the Murray and $1953 a megalitre on the Goulburn.

The price fell again during the third-round tender as desperate irrigators jumped at what they saw was their last chance for months to sell to the Commonwealth, with Murray prices falling to $1824 a megalitre and Goulburn to $1862 a megalitre.

But brokers said the latest and biggest $200 million southern basin tender, which ran from November 22 to last Friday night, would deliver water to the department at $1500-$1600 a megalitre.

Brokers said GHD consultants rang them before the tender, on behalf of the Government, seeking feedback on prices.

One Victorian broker said the big issue for irrigators and their banks was the impact the price slump would have on equity.

"I know of one bloke who borrowed from one major bank to buy 600 megalitres at $2400 a megalitre," the broker said.

South Australian-based Waterfind broker Tom Rooney said water markets needed to mature to ensure they were able to continue to help deliver Australia's water reform agenda.

"Governments can support this by providing a robust regulatory environment that limits the potential conflicts of interest with policy-makers who also act as market participants," Mr Rooney said.



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