Water buybacks didn't hunt value for money

The audit examined water transactions made through limited tender arrangements between January 2016 and December last year.

Former water minister David Littleproud asked for the audit which looked at $190 million of strategic water buybacks.

Under the Murray-Darling Basin Plan, the government buys water entitlements to improve the health of rivers, wetlands and floodplains.

The Auditor-General found the department did not appropriately consider opportunities to generate competition between sellers through its limited tender process.

“It is not clear how the department assessed individual procurements to determine their strategic priority or considered how to discourage competition within the limited tender process,” the report said.

“The department did not develop a framework designed to get value for money ... The price the department paid for water entitlements was equal to or less than the maximum price determined by valuations. The department only negotiated price for one procurement.”

Four offers were assessed and provided to then Water Minister Barnaby Joyce for approval prior to the guidelines being fully developed and approved, according to the report.

Briefings also did not provide a clear indication of how the buybacks would obtain a triple-bottom-line outcome.

In an assessment of the application of the guidelines to the buybacks in 2016 and 2017 across NSW, South Australia and Queensland, none of the buybacks were believed to have been ``exceptionally advantageous''.

In a response to the report, the Department of Agriculture and Water Resources said it acknowledged the findings of the report.

“The government is committed to ensuring the water purchased continues to provide long-term benefits for the environment while maximising positive outcomes for farmers and communities in the basin,” it said.

“Therefore, the government is continuing to prioritise investment in water-saving infrastructure over water purchases, but where necessary considers strategic purchases in circumstances where they provide significant benefit, while minimising negative social and economic impacts.”

The Auditor-General made four recommendations including improving procurement guidance, developing assurance mechanisms for procurement processes, updating conflict-of-interest management arrangements and developing a clear evaluation framework.

The Department of Agriculture and Water Resources has agreed to adopt all four recommendations.