Sheed calls for a review of carryover water

Carryover was introduced to the Murray, Goulburn and Campaspe River systems in 2007 and initially limited to 30 per cent.

Carryover, available to entitlement holders on the six northern river systems, allows water entitlement holders to take their unused allocation from one irrigation season into the next.

Ms Sheed told state parliament a great deal had changed since the rules were first introduced.

She called for a review in light of what she said were market distortions and to achieve better outcomes for irrigators in the Goulburn-Murray Irrigation District (GMID).

"The time has come to review the carryover rules and the impacts they are now having," she said.

"As part of this, the spill rules need to be reviewed and changes made to ensure that carryover is tied to land."

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She said the roll out of the Murray-Darling Basin Plan and water trading policies were some of the fundamental changes that had occurred since the introduction of carryover.

"Speculators have entered the market and there are many water traders who no longer own land," she said.

She acknowledged carryover was a device used by many farmers to help them in the year-to-year management of their enterprises.

"There are major concerns that exist in the community because of the lack of transparency in relation to water trading," she said.

"Many believe that carryover is being manipulated by speculators to the detriment of farmers, who use their irrigation water to grow food."

Governments must recognise extra flows were occurring on an annual basis to South Australia and that the Basin Plan had exceeded its original targets.

"The monumental fact arising out tested and documented information from the Murray-Darling Basin Authority (MDBA) is that there is simply no need now to recover the additional 450 gigalitres of water," she said.

"The recent MDBA report identified that over the last nine years irrigators in the Southern Connected Basin have used on average 1200GL less than the cap allows."

State government figures showed in 2017/18, under the Basin Plan, Victoria used 109.7GL less than its annual cap target.

That 109.7GL was accounted for in the Murray-Darling Basin Authority's Transition Period Water Take Report 2017-18, which reports on cap compliance and transitional sustainable diversion limit (SDL) accounting.

The 109.7GL included water irrigators, or environmental water holders, carried over in storages to provide water security for future years.

NSW irrigator Michael Hughes, Morago, warned against what he said were ad hoc rule changes.

"How about a long-term vision for the irrigation industry with a complete review considering all the rules, targets, climate, entitlement reductions and players in the market?" Mr Hughes said.

"Ad hoc rule changes just create further uncertainty and frustration for people in the industry.

"You cannot underestimate the impact to balance sheets, particularly in the current circumstances, from ad hoc changes to entitlements."

He said such changes remained one of the biggest risks to the industry.

"Water entitlements are valued with their current suite of characteristics and they aren't open for negotiation," he said.

He said the current call from some to change the current rules must stop.

"There is water available to buy, regardless if the economics work or not," he said.

"There were rules in place to prevent this from happening but they were changed."

Waaia dairy farmer Mark Bryant said many primary producers had been calling for the government to look at carryover.

"On the grounds of transparency, let's have a look at it but the big question is who would do it?" Mr Bryant said.

"At least have a look at it.

"It may just go back to its original benefit, which was risk management."

Read more: North Victorian irrigators set up their own carryover review

Boort irrigator Laurie Maxted said some irrigators believed carryover should be reduced to a maximum of 50pc of entitlement.

But he said he had no problem with it reverting to 30pc.

"People can still manage their business as long as there is some carryover there," Mr Maxted said.

"If it was cut back to 30pc, that still makes provision for next year but doesn't fill the reservoirs with carryover water.

"I think something has to happen; investors owning water with no land, that's what's killing the show."

He said carryover was a matter for discussion among irrigators but none wanted it taken away.

Mr Maxted said he had spoken with Water Minister Lisa Neville about stricter limits on the use of carryover by linking it more closely to landholding.

"The applicant must have land to put the water out on," he said.

"Otherwise, it's investing for the wrong reason, it's just just to profit out of the water."

Ms Neville said as irrigators exposed to the water market were facing very high prices, the government welcomed views on the way it was operating.

The government tracked and monitored all water resources in northern Victoria to make sure the state's entitlement framework and policies were working for all users.

In recent years GMID irrigators had received 100 per cent allocations.

"Carryover provides an important tool for irrigators to manage their water and businesses, providing flexibility to adapt to changing conditions," Ms Neville said.

"The Australian Competition and Consumer Commission is currently reviewing the operation of water markets across the southern Basin, including carryover, to ensure it is being used appropriately.

"Here in Victoria we're doing what we can to support irrigators in the GMID and provide confidence in the water market, including looking at more transparency so people know who is buying and selling water."