Barnaby’s Boondoggle: documents reveal $80m price for ‘Watergate’ licences was nearly twice valuation

by | Aug 17, 2020 | Energy & Environment, Government

The Coalition paid the tax haven-linked Eastern Australia Agriculture nearly double what independent valuers recommended for water licences. Most of the record $80 million from the sale ended up with a Cayman Islands company established by Energy Minister Angus Taylor. Investigative journalist Kerry Brewster has this exclusive report.

The Commonwealth paid nearly double its valuer’s central estimate when it gave Eastern Australia Agriculture nearly $80 million for its water licences, the Government’s valuation document shows. Most of the profit from this record price paid for water licences ended up with a company founded by Energy Minister Angus Taylor, Eastern Australia Irrigation in the Cayman Islands.

Barnaby Joyce approved the deal as water minister in 2017.

An unredacted copy of the valuation by Colliers International, obtained by independent senator Rex Patrick, appears to contradict findings by the Australian National Audit Office (ANAO) that the Commonwealth’s strategic water purchases were less than the maximum price recommended by valuers.

Watergate license valuation

Water License Valuation

The document shows a valuation range of $1,100 to $2,300/ML, with a central estimate of $1,500/ML for licences attached to Eastern Australian Agriculture’s Clyde and Kia Ora properties in the Lower Balonne valley, Queensland. The price paid by the Commonwealth – $2,745/ML – is nearly double the valuer’s central estimate and 19% higher than the top of the valuation range, according to analysis by Slattery & Johnson for The Australia Institute.

The valuation states that “the majority of [overland flow] licences would be considered to be in the lower end of the [$1,100 to $2,300/ML] range”.

Extraordinary premium

The extraordinary premium paid to Eastern Australia Agriculture for licences described by Colliers’ valuer Shaun Hendy as “lower valued” water that could be taken by other “harvesters”, reignites the so-called Watergate scandal that enveloped the Energy Minister in 2018.

Senator Rex Patrick, who had previously obtained redacted versions of the valuation, obtained a clean copy, following a protracted Freedom of Information battle. Said Patrick:

“Australians should be disturbed that their money has been spent paying well over the market price for these water licences. It’s no wonder the government went to such great efforts to keep the valuations secret.”

The opaque taxpayer-funded deal, which ostensibly bought water for the recovery of the Murray Darling River system, has been mired in scandal, with questions over the reliability and value of the water and the fact that Eastern Australia Agriculture was controlled in the Cayman Islands tax haven.

When asked today why the Department of Agriculture paid so much for the licences, a spokesperson for the Department of Agriculture, Water and the Environment said:

The price paid for overland flow water entitlements purchased from Eastern Australia Agriculture in 2017 was informed by an independent market valuation. While the valuation was $1,500/ML with a market value range of $1,100/ML to $2,300/ML, the valuation also stated that the department should be prepared to pay 10 to 30% above the standard market rate (i.e. up to $3,000/ML) for ‘properties of a high standard that have achieved above average levels of water use efficiency’ in this region.

‘No true market’ for overflow licences

But the term “standard market value range” does not appear in its valuation document. In fact, the Colliers valuation emphasises that “there is no true market” for Queensland’s overland flow licences, Maryanne Slattery’s analysis shows. Such a licence cannot be traded as it is attached to the land. The intermittent floodwaters it accesses can be “harvested” by other irrigators once flows leave the property. In 2016 the Queensland Government made an exception to the ban, allowing the Commonwealth to purchase overland flows for the environment.

The Commonwealth purchased overland flow licences from the nearby Balandool cotton property south of Kia Ora and Clyde for $800/ML, less than a third of the price it paid to Eastern Australia Agriculture.

Exhumed: evidence Barnaby Joyce whitewashed role in Watergate

The progressive think tank The Australia Institute, which has analysed the Colliers document, says it is clear the Eastern Australia Agriculture properties are not examples of high standard properties that could have potentially attracted a 10-30% premium. TAI, whose analysis has been instrumental in shedding light on the questionable transactions and the value of the water, noted this morning: “The valuation documents contradict claims by the Department of Agriculture and Water Resources that the valuer “stated that the department should be prepared to pay” a premium for the water rights”.

‘Worst performing’ properties

The Colliers valuer Shaun Hendy had previously assessed the Clyde and Kia Ora properties for Herron Todd White as the worst performing comparable properties with measures of efficiency just 39 – 47% compared to much higher-performing irrigation operations in the region.

Eastern Australia Agriculture was operating at a considerable loss prior to the sale, with net liabilities in 2017 of $28.5 million, up from $15.4 million in 2016.

According to the Australia Institute’s research director, Rod Campbell:

“Prior to the unredacted version being released, Department of Agriculture officials selectively quoted and misrepresented this valuation to suggest that a premium would need to be paid to the vendor due to the efficiency and quality of these properties.

“We now see that rather than the EAA properties being the best in the region, they are actually among the worst performers in various valuations and had rapidly increasing liabilities.

“The public has a right to know why so much was paid and who was responsible for paying so far above the valuation the department commissioned,” said Campbell.

The Australian National Audit Office said it does not comment publicly on its audits.

Watergate: when two rights do make a wrong

ABOUT THE AUTHOR

Kerry Brewster

Kerry Brewster

Kerry Brewster is a Walkley-award winning investigative journalist and documentary maker. As a specialist water writer, she has contributed to The Saturday Paper, Guardian Australia and The New Daily. A former ABC Lateline reporter, she investigated water corruption issues. She has also produced and directed independent documentary films, including “Demons at Drivetime”, which won the Dendy award for Best Australian documentary and the ABC TV series "Our Boys". Her Twitter handle is @KerryBrewster4

20 Comments

  1. Avatar

    The main stream media is bought and paid for. No longer holding elected officials to account.
    Desperate for a meaningful Federal *Independent Commission Against Crime and Corruption* that can make politicians and public service officials answerable to the electorate.

  2. Avatar

    The point that is mentioned ONCE then subsequently danced around .. the inflated price of approx $20M (ooppsss $80M .. ) (why is there a price attached to overland (flood?) water anyway??) went to a Cayman Island TAX haven (ie a place intended for one purpose alone .. to HIDE money) controlled by Taylor.
    Why and how can serving ministers have the most tenuous of links to such clear and blatant “conflicts of interests” (!!) such as this obvious f#$king scam? How can they continue to serve after such connections are found?

    The punishment for such blatant graft and cronyism is risible.
    This alone should be enough to put the Beetrooter and the Farmer in prison for a long time.
    Not holding my breath.
    I think The BeetRooter and the Water Rorter is a good alternative title..

    Time for an ICAC with extraordinary powers and NO statute of Limitation on any fraudulent activity.

    • Avatar

      To be fair, the minister says he resigned from the board before entering parliament.

      The company is now dissolved, and the retaining records period has expired. This means we can’t ever tell (should the Caymans change their laws radically) who the money trickled to, or whether the rowing mate of ‘Anxious’ was the director.

      As far as beetroots go: Gross incompetence & having it off with your staffer is not a criminal offense.

      • Avatar

        “Resigned from the Board” …. Still much too close to the recipient of a grotesque “overpayment”.
        The money came from the Australian Taxpayer. If I had any say, the Australian Citizen recipient close to the Tax haven company that received that largesse would simply have to show what happened, with NO statute of limitations.

        If you were in most professions where you do not have anything like the (undue, unearned) influence, gross incompetence & having it off with your staffer IS a sackable if not sanctionable offense.

      • Avatar

        > the Australian Citizen recipient close to the Tax haven company that
        received that largess would simply have to show what happened

        I share your frustration, but that’s not how the law works. Plus, even if he had the best intentions, Anxious could not necessarily give an accurate idea of who was the director at the time of the deal.

        Furthermore, he has plenty else to worry about. How an obviously drunk, half blind contractor poisoned a rare native grassland on his family’s property.

        How (he supposes) cosmic rays so distorted a Sydney City Council international travel report (on the way to his office) that it was made to look like the SCC had spent millions on international travel rather than thousands.

        How he can explain to the people of Oz that gas and coal (well not really coal) is so much better for the people (well really for the Coal-Gas-a-lition and their sponsors) that Oz should subsidize gas and coal EVEN MORE than the current $20+ billion p/a.

        Poor Tin Man, so Anxious, but so little heart.

  3. Avatar

    Just another day in Australia. How much of this type of thing is going on that we know nothing about? Just how much have these guys stolen? A billion?

  4. Avatar

    It doesn’t matter what question you ask economists, the answer is always “the market”.

    I wrote a report (2009) for the National Water Commission, warning of the risks of water “markets” and “buybacks” on top of a cowboy 19th century irrigation system with Heath Robinson metering and puny “regulators”.

    At the time, it would say been impolite, to say the bleeding obvious. Water “markets” were always going to make the governments, and not just the irrigators, more corrupt. The Oxford “Mates of Angus” prove that.

  5. Avatar

    A matter worth investigating, if it has not been done already, is the money trail after Eastern Australia Agriculture received the funds. Who did EAA owe the net $28.5M in 2017 and were any of EAA’s creditors connected to the Government (eg: entities controlled by members of the Government or donors to the Coalition)? It would seem that the amount paid for the water rights would have been sufficient for EAA to pay its creditors and,without it, EAA seemed insolvent. In whose hands did the funds ultimately end up? Given EAA is a Cayman Islands linked company, this might be a difficult if not impossible task. It does seem extraordinary from at least a policy perspective, that an Australian Government would transact with a company linked to a well-known tax haven, the Cayman Islands, when Australia is party to international initiatives to address tax evasion. Keep going with this investigation. Our integrity as a country with a Westminster system of government demands it.

  6. Avatar

    Wasnt it part of the scam with Cubbie Station that Overland Flow water was free of charge? And, as Climate Crisis bites harder, is Overland Flow close to being extinct, so $80M for figment if imagination?

  7. Avatar

    How can this be ignored and or justified, Joyce & Taylor Are crooks that’s obvious. So what are we going to do about it ! How does this see the light of day now ? Joyce stole the water & our money !

  8. Avatar

    good job – I’ve been waiting for this expose of politicians connection to that BS Cayman Islands ‘Trust’ fund

    which goes to show we should not ‘Trust’ those politicians ! Can we call that a crime – corruption – profiting from insider trading ?

  9. Avatar

    Long past time for a federal ICAC!!

  10. Avatar

    Barnaby “The Stud” Joyce has had his sticky finger in numerous controversial pies over the last 10 years. Insider trading is something an accountant like Joyce would have a solid understanding of as he would for tax havens like the Cayman Islands. Joyce & Taylor make quite a team. Taylor set up EAA in the Cayman Islands. No doubt he would have set up other secretive companies & accounts in his & other family member’s names because he would have confidence knowing that no one would ever be able to trace them to him.
    Fully funded Federal ICAC with teeth now.

  11. Avatar

    Joyce and Taylor’s corruption is disgraceful, but the cover-up by the entire Coal ition government makes every one of them co-conspirators. If there is no prosecution, no enforcement, no consequences, how can we have ANY confidence in ANY of our institutions – governments, the judiciary, the AFP? We NEED a hard reset and a restoration of democracy – a magna-carta moment for Australia.

    • Avatar

      the lab-greens lost the election through their incompetence in drawing out this scandal and nailing the guilty

  12. Avatar

    There seems to be no end to this type or inexcusable behaviour by our politicians.I am getting to a point where I just don’t want to know,so depressing.

  13. Avatar

    Australia has reached well over the limit this country can afford to host a Liberal/National coalition political party to further exist as an alternative political party to govern our nation of Australia.
    Furthermore,the quantity of, and the subject matter of, all that necessitates full public disclosure has been stealthily throttled down by this very same L/NP party…who are fully responsible for the change by this L/NP coalition party of despicables… into a rapidly diminishing regulatory authority oversight system… of failing in the leadership role and of their role of governance in our nation of Australia.

    The L/NP anti-the-people-of-Australia method of governance defies the tenets held uppermost in the Australian Constitution Act 1900.
    Treachery and treason are words that spring immeidiately to my mind.
    The day must soon arise for the people in every State of Australia to assemble around every capital city hosted State Parliament House demanding the revocation then the prohibition of reforming as a Liberal/National Coalition political party, for the corruption they have engaged in that gives support to the now treacherous and treasonable method of the L/NP national governance that today, denies the tenets held in our Commonwealth Constitution.
    The government of Australia must govern in the best interests of the australian people. To govern otherwise is therefore an act of treason against the people of australia.

  14. Avatar

    This is a real question casting doubt on the Australian National Audit Office . This is a far more important issue to most but your report is merely misleading as to the real issue

  15. Avatar

    I am beginning to despair that anything will be done to punish these politicians for obvious misdemeanors and personal pocket filling at the expense of the public. There appears to be no attempt to make them accountable and they are continually voted in by their constituents, making them more emboldened and selfish with every election. They are barely even trying to hide it now.

  16. Avatar

    The whole argument that overland flow has value is itself fraudulent.
    We are talking floodwater here; for it to be of any value at all it would need to be stored for future use.
    This would require large dams coupled to significant earthworks and would require significant cost inputs aimed toward mitigation of evaporation if stored water is to be held for any length of time.
    In most cases, farmers have found that capture and storage of overland (flood) flows is impractical on a cost benefit basis.
    This is also the main reason the Bradfield Irrigation Scheme has languished since the 30’s; nobody has been able to demonstrate a method of reducing water loss to economically viable levels.
    To cut a long story short, overland flows are worthless and one must ask what the motivation is behind valuing it at all!

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