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Expensive at half the price: report

Wednesday, 22nd January, 2020

Angus Taylor, Federal Energy Minister Angus Taylor, Federal Energy Minister

By Craig Brealey

The Federal Government paid nearly twice the original asking price for water entitlements owned by a company with links to the Federal Energy Minister, according to a new report on the controversy.

Eastern Australia Agriculture (EAA) had over the years repeatedly offered much lower prices but these were rejected by the Commonwealth as being “not value for money” at $1,495 a megalitre, according to recently released documents.

However, in 2017 the Department of Agriculture and Water Resources paid EAA $2,745 a megalitre for 29 gigalitres of overland flow water rights in the Condamine-Balonne river system in Queensland. 

The transaction was dubbed “watergate” when was it uncovered in 2018 because of the high price - $80 million - the low reliability of the rights purchased and EAA’s connection to the family of Energy Minister Angus Taylor.  

Mr Taylor was a director of EAA before he entered parliament. EAA is owned by a parent company domiciled in the Cayman Islands, a well-known tax haven.

But he also held shares in a company called Growth Farms Australia, the director of which was apparently involved in negotiating the deal between EAA and the Commonwealth, according to a new report by The Australia Institute (TAI) in Canberra.

The Commonwealth repeatedly blocked the release of independent valuations of the EAA water rights but the documents, recently given to the Senate, show that the company offered similar water rights to the Commonwealth several times since 2008/09, the TAI report said.

“There has been very little variability in water prices in the Condamine-Balonne since 2008/09 and the price increase cannot be explained by increased market prices,” said the report written by Maryanne Slattery and Roderick Campbell.

They said that a recently released “negotiation brief” for the purchase mentioned the involvement of Growth Farms Australia, a company Mr Taylor and his family had “substantial interests in”. 

“The Director of Growth Farms Australia says he had consulted with EAA independently of Growth Farms Australia since 2010. He puts the mention of Growth Farms Australia in the negotiations down to error on the part of the Department of Agriculture and Water Resources”, the TAI report notes. 

It said that the full documentation of the transaction should be released by the government, and not just because such an exorbitant price was paid.

“The water right purchased is an overland flow licence that can be extracted by other water users once the water has flowed off the vendor’s property and the structures used to capture the water remain on the property and can still capture the water.

“The details on why the public paid such a high price for low security water remain unclear. The Commonwealth had sought independent valuations for the purchase, which have been requested by the Senate, particularly by Senator Patrick.

“However, all information pertaining to those valuations was redacted in the documents produced. 

“The involvement of Growth Farms Australia in the Condamine-Balonne purchase would appear to contradict claims made by Minister Taylor that he had no interest in, or advisory ties to, the EAA transaction,” said the TAI.

His interest in Growth Farms Australia was declared in the previous Parliament and while he updated his Declaration of Interests several times, there was no change documented in relation to the company. 

“This means he owned a share in Growth Farms Australia throughout the negotiation period of the EAA water sale,” said the TAI.

Minister Taylor is no longer a shareholder in the company, according to the Australian Securities and Investment Commission (ASIC) but it has seven, equal shareholders, including his brothers, Duncan and Richard.

The TAI said the government must release the independent valuations of the water sale without delay if it wanted the public to have any faith in it.

“The opacity around this transaction and apparent lack of value for taxpayers is simply the best known example of the wider mismanagement of the Murray-Darling Basin. 

“The continuing lack of transparency around the Condamine-Balonne purchase highlights the need for a royal commission into the management of Australia’s water resources.” 

The Australian National Audit Office is investigating the purchase and the TAI said it would submit its report to that audit.

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