The Claim
“Bought water rights for 50 times more than many valuations, and double the price of the seller's valuation.”
Original Sources Provided
✅ FACTUAL VERIFICATION
The claim relates to the 2017 "Watergate" scandal, where the Coalition government purchased water rights from Eastern Australia Agriculture (EAA) for $80 million [1]. The core facts are substantiated but require precise clarification.
Valuation vs. Purchase Price:
The Commonwealth paid $2,745 per megalitre (ML) for the water rights [1]. However, the valuation commissioned by the Department of Agriculture and Water Resources (DAWR) recommended a maximum price of $1,500/ML, which was the top of the valuation range of $1,100–$2,300/ML [1]. This means the government paid approximately 1.83 times the recommended valuation – not 50 times more [1].
The "57 times" figure referenced in the original source title appears to derive from a different calculation specific to the source document. Michael West Media's headline uses "57 times over" but this ratio requires clarification of what baseline is being used [2].
Seller's Valuation:
Eastern Australia Agriculture booked a $52 million profit on the sale, indicating the selling price was substantially higher than their valuation [3]. The claim that the government paid "double the price of the seller's valuation" appears to be reasonably accurate based on the profit recorded, though the exact seller's internal valuation is not publicly detailed [3].
Key Evidence from Unredacted Documents:
When valuation documents were finally released unredacted in August 2020, after a two-year battle by Senator Rex Patrick, they revealed [1]:
- The Commonwealth paid $2,745/ML
- The valuer's recommended price was $1,500/ML
- The valuation range was $1,100–$2,300/ML
- The government paid nearly 83% above the valuer's recommendation [1]
Missing Context
The claim omits several important contextual factors:
Purpose of Strategic Purchases: The government was attempting to address environmental concerns in the Murray-Darling Basin, where excessive water extraction has caused ecological damage [4]. The $80m purchase was framed as a "strategic water buyback" to restore river health [4].
Market Conditions: Water rights in the Murray-Darling Basin are complex assets with limited comparable sales. The DAWR argued that premium prices might be justified for efficiency and quality of the specific properties [1]. However, subsequent analysis contradicted this, finding EAA's properties were "among the worst performers in various valuations" [1].
Overland Flow Rights Complexity: The water rights purchased were "overland flow licences" – a specialized water right that only legally exists on the property and cannot physically be removed [4]. This significantly limits their practical value compared to standard water entitlements [4].
Inability to Deliver Water: A critical issue omitted from the simple framing: despite the $80 million expenditure, the water has provided no actual environmental benefit because [4]:
- The water cannot physically leave the property due to levee bank configurations
- When overland flows do occur (only during floods), other downstream users can legally extract the water before the Commonwealth can access it
- The deal included no infrastructure to store flood water for later use
Previous Labor Precedent: In 2008, then-Labor government had purchased water in the Warrego River region. In 2017, Barnaby Joyce criticized this Labor purchase because the water "doesn't reliably meet the Darling" – then proceeded to make an identical purchase in the same region at twice the price per megalitre [4].
Source Credibility Assessment
Michael West Media [2]:
- Founded by journalist Michael West, known for investigative journalism focused on corporate accountability
- Has Labor-aligned political perspective and explicitly campaigns for federal ICAC establishment
- Published materials show advocacy journalism rather than neutral reporting
- The "57 times" headline is partisan framing; the actual ratio (1.83x the recommended valuation) is more modest
- However, the underlying facts about the purchase price being significantly above valuations are corroborated by credible sources
The Australia Institute [1]:
- Independent, non-partisan research organization (though progressive-leaning)
- Released analysis based on officially unredacted government valuation documents
- Partnered with consulting firm Slattery & Johnson for analysis
- Findings have not been contradicted by government or independent audits
- Credible source for fact-based analysis
The Guardian [4]:
- Mainstream international news organization with editorial standards
- Published explanatory piece by Maryanne Slattery (water policy expert)
- Provides nuanced analysis of the deal's technical and policy problems
- Credible reporting on the scandal
SBS News [1]:
- Australian public broadcaster with editorial standards
- Reporting on ANAO investigation and political responses
Labor Comparison
Did Labor do something similar?
Search conducted: "Labor government water purchases controversial spending Murray-Darling"
Direct Labor Precedent:
Yes – Labor purchased water rights in the Warrego River region in 2008, which was subsequently criticized by Barnaby Joyce at the time [4]. In 2017, when Joyce was Water Minister, the Coalition made an almost identical purchase in the same region – paying twice the price per megalitre compared to the Labor purchase [4].
This is particularly significant because it demonstrates [4]:
- The policy of strategic water buybacks existed under Labor
- The Coalition's version was more expensive than Labor's equivalent deal
- Joyce himself had previously criticized similar Labor decisions
Broader Water Management Issues:
The Coalition engaged in multiple "strategic water buybacks" during Joyce's tenure as Water Minister [4]:
- Webster Limited deal: Nearly $80m payment, with the company booking a $36m profit. The deal included $40m compensation for "loss of future business" [4]
- Menindee region purchases: Tied to controversial pipeline projects [4]
- Murrumbidgee purchases: Also subject to similar scrutiny [4]
Labor's track record on water purchases appears more restrained – the primary comparison point is the 2008 Warrego purchase, which received less criticism for price and complexity [4].
Balanced Perspective
The Government's Rationale:
The Coalition government's water buyback program was presented as a environmental necessity [4]. The Murray-Darling Basin had suffered ecological collapse, including mass fish kills and towns running dry [4]. Strategic water purchases were intended to redirect water from irrigators back to the river system to restore environmental health [4].
The DAWR's justification for paying above the standard valuation range was that [1]:
- The EAA properties offered efficiency and quality advantages
- Premium prices might be necessary to attract willing sellers
- The purchase was part of broader water management reform
However, subsequent analysis contradicted these justifications [1]:
- EAA's properties were among the worst-performing in valuations
- The company had "rapidly increasing liabilities"
- The environmental benefits did not materialize
Critical Problems with the Deal:
Independent experts identified serious flaws [4]:
- Practical ineffectiveness: The water rights purchased cannot physically deliver water due to property-specific legal constraints
- Conflict of interest: The seller company was co-founded by Energy Minister Angus Taylor (though Taylor claimed no financial benefit)
- Lack of competitive process: The deal did not go to open tender, despite the large public expenditure
- Overvaluation: Paid 83% above the valuer's recommendation with no justification
- Precedent of criticism: Joyce had previously criticized Labor for similar water purchases
Expert Assessment:
Rod Campbell, Research Director at The Australia Institute, concluded [1]:
"The taxpayer paid a well-connected company far too much for water that will achieve far too little. The public has a right to know why so much was paid and who was responsible for paying so far above the valuation the Department commissioned."
Maryanne Slattery, water policy expert writing in The Guardian, characterized the broader program [4]:
"The key point is that the Murray-Darling system is being hopelessly mismanaged and is deeply politicised... It's about the powerful and the well-connected against everyone else."
Key Context: This is not unique to the Coalition – Labor also made water purchases in the Murray-Darling Basin. However, the Coalition's purchases appear larger in scale, higher in price, and more problematic in their design and outcomes [4]. The government's failure to achieve stated environmental objectives despite massive expenditure is the central concern [4].
PARTIALLY TRUE
7.0
out of 10
The purchase price was significantly above valuations (83% above the valuer's recommendation, not 50-57x), and the Commonwealth did pay substantially more than the seller's internal valuation (as evidenced by EAA's $52m profit). However, the specific ratios claimed (50x or 57x) appear to be imprecise or refer to non-standard calculations. The core assertion – that the government overpaid significantly relative to independent valuations – is well-substantiated.
Final Score
7.0
OUT OF 10
PARTIALLY TRUE
The purchase price was significantly above valuations (83% above the valuer's recommendation, not 50-57x), and the Commonwealth did pay substantially more than the seller's internal valuation (as evidenced by EAA's $52m profit). However, the specific ratios claimed (50x or 57x) appear to be imprecise or refer to non-standard calculations. The core assertion – that the government overpaid significantly relative to independent valuations – is well-substantiated.
📚 SOURCES & CITATIONS (4)
-
1
australiainstitute.org.au
The Australia Institute and consultancy firm, Slattery & Johnson, have released research today based on newly unredacted valuation documents about the $80
The Australia Institute -
2
michaelwest.com.au
The deal, signed off by by then-agriculture minister Barnaby Joyce, had been rejected twice and involved a company that Angus Taylor was once a director of.
Michael West -
3
theguardian.com
Here we explain everything from overland flows to water buybacks and why they’re gripping the nation’s politics
the Guardian -
4
sbs.com.au
Former deputy prime minister Barnaby Joyce says he has "absolutely nothing to hide" over a water purchase completed when he was water minister, as the auditor-general plans to investigate.
SBS News
Rating Scale Methodology
1-3: FALSE
Factually incorrect or malicious fabrication.
4-6: PARTIAL
Some truth but context is missing or skewed.
7-9: MOSTLY TRUE
Minor technicalities or phrasing issues.
10: ACCURATE
Perfectly verified and contextually fair.
Methodology: Ratings are determined through cross-referencing official government records, independent fact-checking organizations, and primary source documents.