Australia’s federal government spent $190m on water without holding an open tender or developing a framework to maximise value for money, an audit has found.
Acting auditor general Rona Mellor said the then Department of Agriculture (DoA) did not negotiate on price except in one purchase, where it made just one counter offer.
Under the controversial scheme the government purchased water rights from private irrigators from 2016 to 2019 to return water to the environment and boost the health of river systems.
A strategy was put in place to ensure the government only recovered the required volumes and did not pay above market price.
Before the scheme the government had made buybacks under open tenders but voluntary offers started to dry up in 2016, forcing the federal government to approach potential sellers with proposals.
The audit found the DoA had failed to adequately plan for evaluation of the strategic water purchasing programme.
It said arrangements to ensure probity were different to those applied to open tenders and conflict-of-interest declarations were not clearly documented.
Mellor said briefings to the then minister, Barnaby Joyce, did not clearly indicate how the procurement process would obtain a triple-bottom-line outcome as had been promised.
The audit queried how the DoA assessed individual procurement processes to determine their strategic priority or considered how to encourage competition within the limited tender process.
“The department did not appropriately manage procurement risks. While the department identified risks associated with the broader water recovery strategy, there is limited evidence of risks being raised or managed for individual procurements,” said the audit.
The controversial plan raised questions about whether the purchases of water entitlements represented value for money and genuinely benefited the environment.
But Mellor said the purchases of water through limited tender had contributed to the government objective of “bridging the gap” in the amount of water to be returned to the environment under the Murray-Darling Basin plan.
And the government did not pay more than the maximum in independent valuations it had been given.
“While the department identified risks associated with the broader water recovery strategy, there is limited evidence of risks being raised or managed for individual procurements,” the audit said.
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