Foreign interests hold almost 12% of all water entitlements in the Murray-Darling Basin and the level of foreign ownership in water is increasing, a new report shows.
Foreigners own or have a significant share in 4,503GL of Australian water entitlements, which is 11.3% of all the entitlements across the country, the Australian Taxation Office’s report says.
This is the equivalent of about nine Sydney Harbours – and it is up nearly 500GL in the last four years.
About half of this is in the food and fibre producing Murray-Darling Basin, where the proportion of foreign ownership is higher at 11.7%.
The biggest foreign owners include Canada, with 2.1% of all Australian water entitlements, the US with 1.8%, China with 0.8% and the UK with 0.8%.
A water entitlement is an ongoing legal right to a share of water from a particular water resource.
The ATO tracks foreign ownership of water entitlements as well as foreign ownership of agricultural land and its report for the year to 30 June 2022 will be tabled on Thursday.
The report says as of June 2022, the Bureau of Meteorology reported 39,800GL of water entitlements were on issue and foreign interests held 11.3% of them, up from 11% in 2021.
Some of these are jointly owned with Australian owners – the figures include entitlements for which at least 20% of the total is owned by foreign interests.
The main uses of foreign-held water entitlements are agriculture (69.3%) and mining (19.0%).
Canada’s large ownership is mainly due to the holdings of Canadian pension fund PSP, which has poured $6.5bn into Australian agriculture in the past eight years to become a major presence in the production of cotton and grain, organic meat, fruit and vegetables, wine, dairy, walnuts, macadamias, pecans and avocados.
The fund owns more than 3m hectares of farmland and is the biggest owner of irrigation water entitlements in the Murray-Darling, after investing in several major cotton operations including Webster Ltd.
But Chinese firms have also invested in cotton and there has been significant investment in almonds by US firms.
after newsletter promotion
As part of Australia’s water reforms a decade ago, water entitlements can be traded separately to land, incentivising the use of water for the highest value crops. But it has also led to concerns that some companies are stockpiling entitlements and manipulating the market.
The government will next week introduce the water amendment, which aims to make the market more transparent. It will also introduce big fines for insider trading and market manipulation.
Tanya Plibersek, the environment minister, used the release of the report to upbraid the opposition for opposing further water buybacks in the Murray-Darling.
The Albanese government has recently extended the life of the Murray-Darling Basin plan in an effort to recover further water for the environment and improve the river system’s health.
“It makes no sense that the previous government was content to allow water purchase by companies associated with the governments of other nations but doesn’t want to allow the Australian government to buy water to protect the Australian environment,” Plibersek said.
The government has flagged that it will be necessary to call for more voluntary buybacks of water in order to meet the shortfall in the planned reclaiming of water for the environment.
This is likely to be strenuously resisted by farming groups and rural communities because it will almost certainly lead to some farms withdrawing from irrigated crops.