Murray-Darling Basin: Icac finds NSW's water management favoured irrigators over environment

A long-running investigation into New South Wales’ management of water in the Murray-Darling basin has not found any corrupt conduct but has concluded the state’s water policies were undermined for a decade by departmental favouring of the irrigation industry.

In two related investigations known as Operation Avon and Operation Mezzo, the Independent Commission Against Corruption (Icac) examined multiple allegations, over almost a decade, concerning complaints of corruption involving the management of water, particularly in the Barwon-Darling area of the Murray-Darling Basin.

“Ultimately the Commission was not satisfied in relation to any of the matters it investigated that the evidence established that any person had engaged in corrupt conduct for the purposes of the Independent Commission Against Corruption Act 1988,” it concluded.

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However, ICAC said “it did form an opinion that in many of the matters it investigated the evidence established that certain decisions and approaches taken by the NSW government department with responsibility for water management over the last decade were inconsistent with the object, principles and duties of the Water Management Act 2000 (WMA) and failed to give effect to legislated priorities for water sharing.”

The investigation found that the development and implementation of the 2012 Barwon-Darling Water Sharing Plan represented a failure to adhere to the priorities set out in the WMA.

The Guardian revealed in 2018 that there had been-last minute lobbying on the 2012 Barwon Darling water sharing plan by irrigator interests, which were accepted by the then minister, Katrina Hodgkinson.

Icac rejected as corrupt conduct allegations that she had acted to benefit the interests of Ian Cole, owner of a major cotton enterprise.

It also said other allegations, including that irrigators had been allowed to pump water in breach of the Act, and that extra pumps had been added to the licences of cotton growers, did not amount to corrupt conduct.

It found that another former minister, Kevin Humphries, was wrong to assert that there was no embargo in place (which led to irrigators pumping during the embargo) but Humphries did not intend by his assertion to give permission to those irrigators.

Icac also found that the department’s failure to prosecute several irrigators did not constitute corrupt conduct.

But it did find that the department’s approach to implementing water policy amounted to repeated favouring of commercial interests over the environment and other stakeholders.

“A significant number of the matters investigated by the Commission illustrated the department’s ‘triple bottom line’ approach.

“The Commission found that this approach to balancing competing interests in the highly contested space of water management involved giving at least equal weighting to social, economic and environmental considerations and, in some cases, clear precedence to economic interests,” it said.

“The Commission is satisfied that the practical effects of this approach, particularly in the Barwon-Darling, have often been prejudicial to the environment,” it said.

But the commission said the evidence did not enable it to find that “manifestly partial” decisions were for corrupt or otherwise improper reasons.

“The commission formed the opinion that this approach was motivated by a misguided effort to redress a perceived imbalance caused by the Basin Plan’s prioritisation of the environment’s needs, which has had adverse effects on irrigators and their communities,” it said.

NSW’s stewardship of the Barwon Darling was brought to the public’s attention by the ABC Four Corners program in 2017 . The government immediately ordered a review by water expert Ken Matthews, who in turn referred a number of matters to Icac.

Icac conducted an investigation but did not hold public hearings.

Four Corners revealed that then head of the office of water, Gavin Hanlon had given a select irrigator group he had established sensitive government information.

Icac said this was “a serious breach of his public official obligations” and his partial treatment meant he did not act in the public interest. But Icac said while serious, Hanlon genuinely believed he was acting in the interests of NSW and so his conduct was not improper.

It also found that Hanlon’s role in recommending that the commonwealth purchase water entitlements for $80m from the Tandou property, owned by Webster Ltd, was not improper either.

Icac has made 15 recommendations to the NSW Government to improve the management of the state’s water resources.

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Specifically, the recommendations concern the undue focus on irrigators’ interests within water agencies and deal with the identified failures of the department.

These include a lack of transparency, balance and fairness in consultation processes undertaken by water agencies in relation to external stakeholders, and a practice of sidelining public officials undertaking environmental roles within the NSW government.

Responsibility for water management has now been restructured in the NSW government to create a separate enforcement agency and to create a natural resources commission with responsibility for managing the state’s natural resources.

But there remain questions about whether irrigators still call the shots on policy matters such as water sharing plans. The NSW draft water resources plans are currently being assessed by the Murray Darling Basin Authority.

The Icac findings are likely to prompt even greater scrutiny of how these technical plans will work in practice.