More than $2 billion of that trade took place in NSW, making this state’s water market equal to the entire value of the country’s wool exports.
The federal Labor government helped inflate the price by buying more than $1 billion worth of water as drought bit last year, accelerating its $3.1 billion buyback of water in the Murray-Darling Basin.
After good rains and a change to the government’s tender system, prices have dropped by as much as 40 per cent this year, hurting irrigators who need to sell their water rights, but making buying into the market more attractive to investors.
”We know that water is a scarce resource in a resource-starved world,” said Guy Kingwill, the chief executive of the agricultural company Tandou, which has substantial US and British investors.
”We are long-term investors in secure water entitlements and Australia is one of the few countries in the world where you can own those,” he said.
Yet there is virtually no oversight from the Foreign Investment Review Board.
The federal Treasury says it never looks specifically at foreign acquisition of water licences, and takes an interest only if a foreign player is buying an agribusiness worth more than $231 million.
Mr Lourey rejects fears about ”water barons”, claiming his investment fund will allow ”water to be used in the most productive way possible. We would argue that’s in Australia’s strategic best interests”.
But farmers’ groups are worried that big players could corner areas of the market by buying up permanent rights in whole valleys, or being able to dictate what food is grown where by controlling water.
”We don’t have a problem with investment, or indeed, speculation in the water market,” said Mr Gregson of the Irrigators Council. ”We are concerned about market dominance. It’s a recently developed, relatively fragile market.”
FOREIGN OWNERSHIP
ONLY a tiny handful of water bureaucrats in each state has full knowledge of who owns the country’s permanent water rights, as water registries cannot be openly searched. Some foreign acquisitions of water that have emerged include:
Summit Global Management, founded by John Dickerson, of San Diego, owns $20 million worth of water through its Australian subsidiary Summit Water Holdings. The company wants to buy more.
The Singapore company Olam International acquired nearly 90,000 megalitres of permanent water along the Murray when it picked up the almond operations of the failed managed investment scheme Timbercorp last year. The land and water were valued at $288 million.
The British investment fund Ecofin owns 20 per cent of Eastern Australia Irrigation, a company with extensive land and water holdings in south-eastern Queensland.
Tandou Limited owns Tandou Farm, near Menindee Lakes, in far western NSW. A fierce takeover battle this year has left the company dominated by the New Zealand corporate raider Sir Ron Brierley’s Guinness Peat Group (28 per cent), battling it out with Ecofin (19.9 per cent) and the US company Water Asset Management ( 13 per cent). Tandou’s most valuable asset is $30 million worth of water rights.
A Japanese consortium led by Mitsubishi Corporation acquired the Australian water businesses of the British company United Utilities in May.
Causeway Asset Management, of Melbourne, wants to attract $100 million from foreign investors to a ”diversified portfolio of permanent water entitlements” in Australia.