Agriculture department had no plan to maximise value for money of Murray-Darling water purchases, audit finds

By Shannon Jenkins

Friday July 17, 2020

The return of Barnaby Joyce as leader of the Nationals has sparked a ministerial reshuffle
The return of Barnaby Joyce as leader of the Nationals has sparked a ministerial reshuffle. (AAP Image/Lukas Coch)

The former Department of Agriculture and Water Resources’ handling of Murray-Darling strategic water buybacks was not “fully effective”, the national auditor-general has found.

The latest report from the Australian National Audit Office, tabled on Thursday, found that departmental briefings to the then-water minister Barnaby Joyce were unclear about how the procurements would obtain a triple-bottom-line outcome “as in the original commitment”, the report said.

“The department did not consistently provide complete information to enable departmental decision-makers to make informed decisions,” it noted.

The government has spent $190 million on 78.5 gigalitres of water since 2016, purchased through a limited or closed tender process.

The department’s strategic purchases of water through limited tender did contribute to the policy objective of bridging the gap to obtain water for the environment, the audit found, but the arrangements to support the procurements “were not fully effective”.

While the department’s guidance aligned with the high-level policy objective to assist in the assessment of limited tenders, “it is not clear how the department assessed individual procurements to determine their strategic priority or considered how to encourage competition within the limited tender process”, ANAO said.

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The ANAO report pointed out several other concerning findings, including that departmental staff failed to consistently apply approved policy, planning and guidance to the assessment of all limited tender procurements.

“The department advised the minister [Joyce] that it would assess limited tender offers against specific criteria, however, briefings to the minister did not consistently address these criteria or provide appropriate advice,” the report said.

“It is not clear whether two of the seven instructions given to the department by the minister were fully executed. Information provided to departmental delegates to seek approval to enter into contractual arrangements did not clearly outline the delegations required.”

The department also didn’t create a framework to “maximise the value for money” of strategic water entitlements bought through limited tender arrangements, and instead relied on a methodology of valuations where gap-bridging water was required.

“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,” the report said, referring to a controversial $80m purchase of water entitlements from Eastern Australia Agriculture, of which energy minister Angus Taylor was a founding director.

Taylor has repeatedly stated that he has had no financial interest in the EAA since he entered parliament in 2013, after cutting ties to the company in 2012.

The report also found that “probity management arrangements were different to those applied to open tenders and conflict of interest declarations were not clearly documented”.

The department hadn’t reviewed the water recovery strategy or its approach to procurement of strategic water entitlements, and “has not adequately planned for evaluation of the strategic water purchasing program”.

ANAO made four recommendations, to which the department agreed.

The auditor-general called on the department to:

  • review and update internal procurement guidance to ensure delegations are accurately identified in approval briefs,
  • develop assurance mechanisms for procurement processes to ensure all necessary documentation is completed and
  • documented in a timely manner prior to execution of contracts,
  • review and update arrangements for managing real or perceived conflicts of interest including assurance mechanisms to ensure these are consistently implemented and communicated,
  • implement a framework which requires the development of evaluation strategies early in the program design process and regular monitoring and review throughout the lifecycle.

Read more: Joyce sacked Ag secretary ‘to remind him where the authority starts from’


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