Huge water bill probed
An internal probe is looking at why the federal government paid millions more than it needed to buy water from a company linked to federal MP Angus Taylor.
Questions have been asked about the $190 million spent by the federal government on water entitlements in 2017.
The largest of that year’s purchases was an $80 million purchase of water entitlements from Eastern Australia Agriculture (EAA). Energy minister Angus Taylor was a founding director of EAA in 2007, before he joined parliament. The company’s parent is domiciled in the tax haven of Cayman Islands, so it is difficult to find out who was a beneficiary of the sale.
International investors in EAA are expected to have benefited, including Hong Kong-based fund Pacific Alliance Group, which is headed by one of Mr Taylor’ s former Oxford rowing teammates, Chris Gradel.
Independent senator Rex Patrick has spent three years investigating the mammoth $80 million water purchase.
He has now been able to get the auditor general to review his findings.
Auditor-General Grant Hehir has contacted the valuer used by the Department of Agriculture for the sale, Colliers International.
Colliers says the department used its valuation in a way that was “not reasonable.”
The department, run by Nationals MP Barnaby Joyce as agriculture minister at the time, took Colliers’ highest recommended valuation and added a 20 per cent premium on top of that.
That meant the $80 million figure was about $13 million more than even the most generous evaluation deemed it was worth.
The department paid a record price of $2,745 per megalitre for the unreliable floodplain entitlements, despite Colliers providing a range of values between $1,050 and $2,300 per megalitre.
A sympathetic view would suggest the department misinterpreted the valuation advice, which did include some reference to additional premiums, though this discussion related to premiums on a base price of $1,500 per megalitre.
“No reasonable person, reading the valuation could come to the conclusion that the maximum price to be paid wasn’t $2,300 per megalitre,” Senator Rex Patrick said this week.
“For the cost of a phone call the department could have saved the taxpayer $13 million.
“It’s inexcusable that the person managing the sale didn’t discuss the valuation with the valuer. In the interests of accountability someone must lose their job over this.”
The auditor-general has written a response to Senator Patrick, saying; “The valuer has advised the ANAO [Australian National Audit Office] that he does not consider the application of the premium referred to in their valuation report, to the range provided, as reasonable”.
“The ANAO has discussed the subsequent view of the valuer with the department and they have undertaken to review the material available to them at the time which supported their price range methodology and the basis for relying on the two components of the valuer’s report,” he said.
A spokesperson for the Department of Agriculture has told reporters that the EAA deal "achieved value for money".
“The department's position has not changed based on the statement made by the valuer,” the department said.
“The material relied on at that time supported the decision.
“We understand the ANAO has recently written to Senator Patrick and we have not been provided with a copy of the letter, the department continues to cooperate fully with the ANAO as the ANAO responds to Senator Patrick's request for a review of its report findings.”