The perils of caretaker period: alleged breach by DAWR used to justify judicial inquest

By Stephen Easton

April 26, 2019

The Department of Agriculture and Water Resources is now in line for extra scrutiny along with the Murray-Darling Basin Authority, if there is a change of government, after intervening in the politically charged controversy over a certain $79 million water buy-back during caretaker period.

The department argues it simply acted as a source of pure facts about the matter, in response to supposed “factual inaccuracies” in a report by The Project on Channel 10, but this was always going to be a hard position to maintain.

The opposition certainly doesn’t see it that way and neither do other critics of the buy-back, like The Australia Institute’s ex-public service water researcher Maryanne Slattery, who questioned the value of the deal a year ago.

This week Slattery argued the DAWR response to The Project contained misleading claims itself and failed to answer the key questions in her analysis of the government’s responses, and wrote an explainer for The Guardian.

Last year the department hit back at her March 2018 report and said it made false claims, too — a back-and-forth that demonstrates DAWR is not above the political fray and was taking a risk piping up during caretaker period.

The April 19 DAWR statement was ostensibly the trigger for shadow environment and water minister Tony Burke (pictured) promising a powerful commission of inquiry into the 2017 purchase of privately owned rights to capture and store floodwater, from a company whose ownership is somewhat obscured via an entity registered in the Cayman Islands.

He first argued the departmental missive breached caretaker conventions by assisting the government’s campaign for re-election. He demanded confidential government information related to the buy-back be released for all to see, to make up for the alleged breach.

Upon hearing the vault would stay closed on Tuesday evening, Burke decided a Labor government would need to get the dynamite. He told ABC journalist Patricia Karvelas the department’s decision to keep the information confidential meant “an inquiry with coercive powers” was necessary.

“The Commission of Inquiry will investigate all of the circumstances relating to the purchase of water entitlements from Eastern Australia Agriculture Pty Ltd in 2017 under then Minister for Water Resources Barnaby Joyce from the ‘Kia Ora’ and ‘Clyde’ properties,” explained a statement the following day.

“This Inquiry would be established under the Royal Commissions Act 1902 and have the same powers as a Royal Commission.

“If elected, Labor will consult on the full terms of reference and an appropriate commissioner.”

In addition, Burke confirmed a Labor government would run “a formal review of claims public servants acted unlawfully” that emerged from the South Australian Royal Commission into the Murray-Darling Basin Plan, and move the MDBA’s compliance functions to the Environmental Protection Agency.

Burke’s statement maintained the inquest was needed because the government did not provide “a satisfactory response” to questions about the controversial buy-back.

Key questions involve the lack of an open tender process, the surprisingly high cost of the water rights versus their questionable value, and whether anyone checked if the company kept up its end of the bargain by permanently removing infrastructure to capture and store floodwater, as the department said it did.

There is also contention over what happens to floodwater that would previously have been captured on the two farms. The department counts this as returning to the environment but Slattery argues the Commonwealth doesn’t own the water once it leaves the properties and has no means to store it, so it can be pumped out again downstream.

Other questions are around the identities of the beneficiaries and the past involvement of Energy Minister Angus Taylor in setting up and running the firm listed in the Caymans, Eastern Australia Irrigation, and its Australian subsidiary that sold the water rights, Eastern Australia Agriculture.

“Only a Commission of Inquiry, with coercive powers, can properly investigate this matter,” said Burke.

The details are complex, especially because there are opposing claims and counter-claims about much of the story, which has been covered by several news outlets since 2017. It was propelled back into the spotlight this year by the work of several independent journalists, including business and finance investigator Michael West, who worked with The Project.

West points out there are no allegations of corruption or criminality in this story, just a lot of curious issues.

Caretaker conflict

When acting secretary Lyn O’Connell declined to provide the opposition any new information, she said the only aim was to “correct the record” after The Project’s story aired, and contradicted the shadow minister’s view of this as “an unusual step” during caretaker period.

Lyn O’Connell

Burke had ratcheted up the pressure in his initial letter to secretary Daryl Quinlivan. He argued DAWR had helped the government’s re-election campaign by making a statement in its defence and only full disclosure could redeem it.

“The political debate and allegations which had been discussed in the public realm had focused on the role of the then Minister [Barnaby Joyce] not the Department which made it particularly unusual for the Department to intervene in this way,” he wrote to the secretary.

O’Connell, acting in Quinlivan’s role, told Burke the release was a “factual statement” based entirely on publicly available material. “It is not unusual for departments to make statements to correct the record on matters that go directly to their activities and does not contravene caretaker provisions,” she added.

By Burke’s analysis, however, the offending statement made reference to nine aspects of the department’s work on the deal and everyone should now get to see the complete records to back up the claims.

“The Prime Minister said that documents relating to these issues had been sought and had been made publicly available,” he argued.

“Given that the only form of those documents that has been made publicly available were documents provided to the Senate and heavily redacted, and given that the Department has chosen to insert itself in to the public debate in this way, it is not consistent the operation of the public service to provide reference to these documents to make a case in order to defend the Minister without then also making those documents public.”

It’s a serious charge. It’s also hard to believe the shadow minister really thought there was a “fair chance” the public servants would agree to his demand, as he told Karvelas, as this would have been a tacit admission of breaching the convention and thrown a lot more fuel on the political flames as well.

Part of O’Connell’s reasoning for declining was that documents about the matter had already been requested via a Senate order, just as the PM argued, and considered for release by the department more than once.

The information was blacked out to protect personal privacy, legal advice, Commonwealth-state relations and the federal government’s bargaining position in future water buy-backs. Some of the blacked-out information was later revealed in late October after “a further request to reconsider the redacted material” and O’Connell told Burke this would not happen again.

It’s dramatic stuff, and leads one to ponder what the relationship between senior DAWR officials and the Labor minister would be like if there were a change of government next month.

Questions remain

Agriculture and Water Minister David Littleproud told journalists an audit of all water buy-backs since 2008, under governments of both persuasions, would be sufficient to go back over the transaction and maintain the dwindling public confidence in the Murray-Darling Basin Plan.

O’Connell signed off her letter to Burke mentioning the audit office already had the purchase of water rights as a “potential” subject for this financial year and said such an audit would allow “detailed scrutiny” of the $79 million EAA deal.

Auditor-general Grant Hehir would compel the production of documents from public servants and ask for evidence of boxes ticked and rules followed, but obviously lacks the powers conferred by the Royal Commissions Act. Specifically, Burke pointed out, he can’t haul in Barnaby Joyce, Angus Taylor or anyone else and make them answer questions under threat of prosecution — which suggests DAWR’s documents don’t contain all the answers he wants.

The shadow minister left open the proposed inquiry’s terms of reference to allow for consultation should he get a chance to follow through, after initially resisting calls to extend its remit to all buy-backs or even the whole basin plan.

This may well be due to the ever-present fear of a political breakdown in the fractious multi-government agreement. It’s likely that Labor wants a controlled demolition of Barnaby Joyce which imparts some blast damage to the Coalition but leaves the fragile basin plan and the Labor Party unscathed when the dust settles.

The evening before on Radio National, Karvelas grilled Burke on this point, noting the same company based in the Caribbean tax haven sold water entitlements to government when he was minister, and telling him the proposed inquiry would appear “politically motivated” if it only looked at one buy-back.

She asked Burke why he did not inquire into the company’s ownership. He argued the question was not so relevant when it was selected through an open tender process, because that meant public servants had selected an offer that represented the best value for money from several options.

The farming company had also approached the department offering to sell water entitlements outside of a tender process when he was minister, and was knocked back.

“If you’re running a competitive tender then you’ve already, under the rules of government, made a decision that the priority is the water for the best return for the taxpayer, and that’s a decision that you’ve made,” the shadow minister said.

“There is a completely transparent process as to how you arrive at that.

“If, for example, a competitive tender happened and we hadn’t chosen the lowest bidder and some other company was being pushed forward, then you want to get behind why on earth has that happened. But it’s not the Caymans on its own that’s the issue. It’s the fact that they were singled out in this way.”

Karvelas put it to him there were “some questions about the entire plan” that could also be investigated – quite an understatement. “I’ve got to say I certainly haven’t seen the sorts of allegations of this gravity nor the sorts of allegations that require coercive powers,” Burke replied. He was not so quick to rule this out immediately after the SA Royal Commission concluded the basin plan’s implementation was unlawful and marred by maladministration.

Burke said Labor had nothing to hide and would not seek to stop the auditor-general looking into water buy-backs if it formed government, pointing out those conducted on his watch had been audited before.

Throughout the interview Burke maintained a slightly confusing position: that the  powerful commission of inquiry with coercive questioning powers was needed because the department had declined to give up the documents — its refusal was ostensibly the trigger — but that it was also required to uncover information beyond that which departmental records would contain.

By his logic, there would still be a good case to launch the judicial inquest even if DAWR had acceded to the shadow minister’s demand and produced the information.

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