The Australian Competition and Consumer Commission has released its long-awaited report into water trading in the Murray-Darling Basin.
The 544-page report draws upon water market data from 2012 onwards and considers options to enhance markets for tradeable water rights, including to enhance their operations, transparency, regulation, competitiveness and efficiency.
The interim report said water brokers and water-exchange platforms have been operating in a mostly unregulated environment, with minimal rules to guard against conduct aimed at manipulating market prices, and no particular body to monitor the trading activities of market participants.
There were a range of information failures which limit the openness of markets and favour better-resourced and professional traders who can take advantage of opportunities such as inter-valley trade/transfer openings, the report found.
The report also takes aim at the differences in trade processes and water registries between the basin states which it claims prevent participants from gaining a full, timely and accurate picture of water trade, including price, supply and demand.
Communication around allocation and river operations policies to the irrigators and traders is poor according to the ACCC, which identified a disconnect between the rules of the trading system and the physical characteristics of the river system.
"For example, on-river delivery capacity scarcity, conveyance losses and adverse environmental impacts are not considered in the processing of trades that change the location of water use, except through some blunt and imprecise rules, such as limits on inter-valley trade/transfers," the report said.
"Overarching governance arrangements, which result in regulatory fragmentation and overlapping of roles of different governing bodies, contribute to many of these problems, or prevent them from being addressed in an effective and timely way."
The ACCC is seeking further feedback from stakeholders in response to the issues raised in the interim report, including through submissions.
Submissions to the interim report close on August 28.
To read the full report visit the ACCC website.
More to come.