Foreign-owned water register should continue, despite ‘small’ role, Productivity Commission finds

By Shannon Jenkins

Wednesday August 18, 2021

The Productivity Commission says the water register is a resource that promotes transparency and provides government agencies with useful data.
The Productivity Commission says the water register is a resource that promotes transparency and provides government agencies with useful data. (Naoki Kim/Adobe)

The Productivity Commission has called for the federal government’s foreign‑owned water register to be retained after finding that the information source promotes transparency and provides government agencies with useful data.

However, low levels of awareness of the register among communities, water market participants and government agencies ‘limits its effectiveness’, according to the commission’s new draft report.

The register, established in 2017, requires foreign persons to notify the Australian Taxation Office (ATO) if they purchase water assets or if there are changes to their foreign status or water entitlement holdings. The ATO then publishes annual statistical reports based on the register data.

The commission’s preliminary analysis of the register has found that it ‘plays a small, yet useful, role’, allowing for the production of statistical reports that are sufficiently transparent and ‘generally clear and easy to use’.

“Although the benefits are difficult to measure, they plausibly exceed the register’s administration and compliance costs,” the draft report said.

The register has shown that around 11% of Australian water entitlements are foreign-owned. The report noted that some parts of the community have concerns about foreign investment, despite it playing an important role in Australia’s economy.

“There is support for foreign investment within the agricultural and mining industries, but a sizeable share of the broader community has some unease with foreign investment, and it can be conflated with other water market concerns, such as water market manipulation,” it said.


Read more: Governments must modernise and bolster 17-year-old national water policy, PC finds


By providing transparency, the register ‘helps maintain community confidence in Australia’s approach to foreign investment’, and provides benefits to government, the commission has found.

“It gives ministers, government agencies and other interested parties an authoritative source of information on foreign ownership of water entitlements in Australia,” the report said.

“There is no other source for this information.”

However, the register can’t respond to broader concerns with water markets, such as price manipulation and anti-competitive conduct.

“Such problems should be dealt with through competition or water market policies,” the commission said.

The report noted that information from the register was intended to support policy development and administration. But, according to the report, the commission ‘has not been able to identify a tangible use of register information for these purposes’.

The commission has considered whether more granular information on foreign ownership, such as at the water source or catchment level, should be included in the register. Its analysis has found that this information would be unnecessary, and could even have negative impacts.

“Such information could be used to identify registrants, violating confidentiality provisions, and potentially damage Australia’s attractiveness as a destination for foreign investment,” it said.

The commission has recommended a number of small changes to improve the register’s performance, including changes to its statistical reports.

“The statistical reports should include data on the proportion of foreign owners of water entitlements that also hold agricultural land. This would be of low cost and improve the effectiveness of the register,” the report said.

“The statistical reports should clarify a number of misperceptions, by clearly stating that registration is compulsory, and that foreign ownership need not entail foreign control.”

The commission has also called for the state and territory governments to link to the register from their water information portals.

The public can provide feedback on the commission’s draft report until September 10.


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