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The Murray-Darling Basin (the Basin) is a major water catchment area that includes parts of Queensland, New South Wales, Victoria, South Australia and the Australian Capital Territory. These are known as the Basin states.

The Basin Plan 2012 (the Basin Plan) sets limits on the amount of water available for urban, industrial and agricultural use, to ensure the ongoing health and resilience of the ‘environment’. The Basin Plan sets out local water recovery targets for each Sustainable Diversion Limit (SDL) area and shared water recovery targets within the Basin states for SDL resource units in a zone. The recovery target must be met by recovering water from within that SDL resource unit area and must be fully recovered in order to successfully ‘bridge the gap’.

Water regulation is a topic of parliamentary and public interest. The audit examines $190 million of strategic water procurements through limited tender arrangements, to provide assurance to the Parliament and the public that these procurements were planned for and executed appropriately and achieved value for money.

The objective of the audit was to examine whether strategic water procurements by the department were conducted consistent with government policy, were supported by appropriate program design, were planned and executed appropriately, and achieved value for money.

This audit focused on completed strategic water procurements undertaken through limited tender arrangements between January 2016 and December 2019. A total of 27 transactions were considered.

Main findings:

  • The department did not consistently apply approved policy, planning and guidance to the assessment of all limited tender procurements. The department advised the Minister 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 department did not develop a framework designed to maximise the value for money of strategic water entitlements purchased through limited tender arrangements. Rather, the department 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 department has not reviewed the water recovery strategy or its approach to procurement of strategic water entitlements. The department has not adequately planned for evaluation of the strategic water purchasing program.
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Auditor-General Report No.2 2020–21