The Government's $80 Million Water Buyback Scandal Explained
The $80 million water buyback scandal has led to many raised questions and even threatened lawsuits.
Here are the key points you need to understand about water buybacks:
Australia doesn't have enough water for irrigation, the environment, and increasing consumption.
The Murray-Darling Basin that stretches across NSW, Victoria, eastern South Australia and southern Queensland is Australia's primary source of water. Water licences could be bought, either permanently or temporarily, allowing water users to buy or sell water as needed.
Water trading in the Basin is worth approximately $2 billion annually.
The federal government put a cap on the amount of water that can be bought from the Basin, and what we know as water buybacks involve the government purchasing water entitlements.
There is very little transparency as to how much the government is spending on these buybacks.
There is also very little public disclosure made during negotiations, including which companies 'get' the buybacks and how valuable the water is.
READ MORE: Labor Wants Formal Inquiry Into Water Deals
What is the problem with the $80 million deal?
The government spent the record $80 million on a licence for flood water in 2017, when Barnaby Joyce was the Minister for Agriculture and the Minister for Water.
The deal was made without a tender process ( a process where qualified groups could bid on the water).
The licence for flood water was bought from a company called Eastern Australia Agriculture (EAA), which owned two cotton properties in Queensland -- Kia Ora and Clyde.
EAA is owned by Eastern Australia Irrigation (EAI), which is registered in the Cayman Islands and made loans with a whopping 20 percent interest obligations to EAA.
Despite the $80 million purchase, there are allegations the licence for the flood water was worth almost nothing as it would be "overland flow" water, which can only be used for irrigation and exists exclusively during floods.
Documents show that EAA had unsuccessfully attempted to sell the water to the government previously.
As The Sunday Project revealed, the government buyback included a stipulation to decommission levees at the Kia Ora property, allowing floodwater to flow back into the Basin system and sustain the environment.
However, aerial surveillance showed at least some of the decommissioning work has not happened.
Why is the Minister for Energy involved in the scandal?
Energy Minister Angus Taylor has been implicated in media questioning about the buyback because he was the director of EAA from 2008 to 2009.
However, Taylor has denied any financial interest in the buyback and asserted in a statement to Network 10 that he had "no knowledge of the Federal Government's water buyback from EAA until after it occurred. He received no benefit from this transaction."
Taylor has reportedly threatened legal action against journalists who have tweeted posts implicating his alleged financial gain in the buyback scandal.
So, what has Barnaby Joyce said about it?
A spokesperson for Barnaby Joyce provided comment to The Project saying that the former Minister for Agriculture and Water had no contact with Taylor and "no role in determining either the price or the vendor, nor the classification of any purchase of a water entitlement in the area."
Joyce added that the examination of water purchase precedents applied to the previous Minister for Climate Change and Water, Penny Wong, in buying the Twynam Pastoral Company's parcel of water would also be "totally incorrect" and "no such assertion as to the legality of Penny Wong's role has ever been made".
What has Labor's response been?
Labor's environment spokesperson Tony Burke has called for more information to be released about the 2017 buyback.
The party have stated they will "wait and see" if a royal commission is needed -- Joyce stated to Radio Nationa's Patricia Karvelas at the end of last month that he didn't "give a toss" about this possibility.
In response to Joyce's comments about Wong's involvement with the 2009 purchase of 240 billion litres of water entitlements from the Twynam Agricultural group for $303 million, Wong said the ex-minister was a "desperate attempt to deflect blame".
"It's time Barnaby started answering serious questions about his role in this purchase. Barnaby Joyce needs to explain how it could possibly have represented value for money and who received a direct or indirect benefit."
What questions are still unanswered?
- A review of all water purchases from 2008 onwards has not yet been conducted, as was recently promised by the current Water Minister David Littleproud.
- It is still unclear who the beneficiary of the $80 million deal was and who the investors are within the Cayman Islands-based EAI.
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