The Australian government paid almost $13 million more than was advised by an independent valuer, in an $80 million deal to secure water from two Queensland farms in 2017.

Key points:

  • Auditor-General says department review into 2017 water buyback is underway
  • Independent valuation suggests government paid almost $13 million more than it was independently advised
  • Department says Eastern Australia Agriculture water deal achieved value for money

The Auditor-General has suggested the Agriculture Department might have paid a lesser amount for the water if it had “been aware of the valuer’s view at the time”.

Auditor-General Grant Hehir has written to South Australian senator Rex Patrick, explaining that he has called on the department to review the material it used to determine the purchase, following an earlier investigation into government water buybacks.

In a speech to the Senate on Tuesday night, Senator Patrick called for the bureaucrat that oversaw the deal to resign or be fired.

Valuation at odds with water buyback

Independent advice to the Department of Agriculture and Water Resources, for the water entitlement purchased from Queensland’s Condamine-Balonne, has been kept secret, until recently.

The information was released as part of a Senate order, requested by Senator Patrick, and related to decisions made by then water minister Barnaby Joyce.

The advice showed the independent valuer, Colliers International, recommended a range of $1,100 to $2,300 a megalitre for water from the region.

But the Commonwealth paid $2,745 a megalitre of entitlement for almost 29 gigalitres of overland flow water, that is water only available in a flood, to Eastern Australia Agriculture.

That business is part of a structure of companies owned by Eastern Australian Irrigation, which has its headquarters in the Cayman Islands.

The water entitlement from two properties, Kia Ora and Clyde, was bought by the government for environmental purposes, through a closed tender process.

In a statement to the ABC, the Agriculture Department has defended the sale, adding “the valuation stated that the department should be prepared to pay 10–30 per cent above the standard market value”, which it interpreted as up to $3,000 a megalitre.

The valuation, seen by the ABC, stated a recommended value of $1,500 per megalitre, with a range of $1,100–$2,300 a megalitre, for water entitlement from the Lower Balonne.

“We have provided a value and a value range,” it stated.

“The majority of Overland Flow Licences (OFL) would be considered to be in the lower end of this range.”

Auditor-General seeks explanation

Last year the Auditor-General found the Commonwealth had paid significantly more than recommended valuation for land to build an airport near Sydney.

It also released a report that found a long list of flaws in the federal government’s approach to water purchases, concluding that while the water buybacks were under the market price at the time, there was a lack of focus on competition and “value for money”.

After receiving the independent valuation for water in the Condamine-Balonne, Senator Patrick asked the Auditor-General to reconsider that report’s findings.

Senator Patrick has now received a response, from Auditor-General Grant Hehir, that said the valuer did not believe the price offered by the department was reasonable.

The letter suggests the department did not understand the valuer’s advice at the time of negotiating the sale.

“At the time of the audit, the ANAO considered the department’s utilisation of the [valuer’s] report reasonable,” Mr Hehir wrote.

The Auditor-General suggested the department might have paid a lesser amount if it had understood the valuer’s point of view.

“The Australian National Audit Office (ANAO) has discussed the subsequent view of the valuer with the Department, and they have undertaken to review the material available to them at the time which supported their price range … the Department’s valuation methodology allowed for an adjustment to the valuation advice and early advice from the Department is that an alternative option may have been taken prior to the purchase if they had been aware of the valuer’s view at that time,” Mr Hehir wrote.

The letter said the auditor would not amend the report at this time, as the department was continuing to resolve the matter.

Kia Ora, Clyde buyback were value for money, says Department

A spokesman for the Department of Agriculture has told the ABC the Eastern Australian Agriculture deal “achieved value for money”.

“The department’s position has not changed based on the statement made by the valuer,” the spokesman said.

“The material relied on at that time supported the decision.

“We understand the ANAO has recently written to Senator Patrick and we have not been provided with a copy of the letter, the department continues to cooperate fully with the ANAO as the ANAO responds to Senator Patrick’s request for a review of its report findings.”

Senator Patrick formally requested the independent valuation for the water in the Senate in November 2017.

Government paid $13 million over recommended value for water buyback
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