The Federal Government will introduce new reforms to water trading, seeking to better regulate the growing market.
Released ahead of the Murray Darling Basin Ministerial Council, the Government’s Water Market Reform: Final Roadmap Report lists 23 recommendations for addressing poor regulations and a lack of transparency in the water trading market.
The report was provided to the Minister for the Environment and Water by independent Principal Adviser, Mr Daryl Quinlivan AO.
“The ACCC’s report provided the basis for developing a modern regulatory system that is now required for this market that is so important for producers, communities and the environment in the Basin,” Mr Quinlivan said.
“This is now widely understood and we have drawn from the lessons of other trading markets (finance, housing and land, etc) to propose critical improvements to support the integrity and transparency of water markets.
“Implementing them will improve the functioning and governance of water markets, improving confidence and the information available for improved decision making.”
Federal Minister for the Environment and Water, Tanya Plibersek, said the Government would support all 23 recommendations.
“Water is one of our country’s most precious resources. Many Australians aren’t aware that a large amount of it is bought and traded on the water market every day,” Ms Plibersek said.
“Currently, our water markets are poorly regulated, lack data and accountability and are difficult to navigate for everyday farmers and irrigators. This has to change.
“Unlike in financial markets, for example, brokers do not have to abide by mandatory codes of conduct or integrity standards. These reforms will fix this – introducing trust to the system.”
Unlike Australia’s financial markets, water markets are poorly regulated and lack the features that make comparable trading markets work effectively and transparently. For example, unlike in financial markets, there is no regulation around broker behaviour, no prohibitions against market misconduct, and few reporting obligations.
In accepting the recommendations, the Federal Government will introduce legislation and a mandatory code of conduct to deliver integrity safeguards, and lift conduct standards, comparable with other markets. There will be penalties for brokers who do not comply with the mandatory code of conduct.
