Rex Patrick (SA, Independent) Share this | Link to this | Hansard source

I rise to talk about a scandal in relation to water purchases. I will reveal what the government has recently found out, but which it has not yet made public: that the government paid $13 million more for a water purchase than it was advised to by way of independent valuation. Senators, one 30c phone call could have saved the taxpayer $13 million. How? Let me explain. Back in February 2016 Eastern Australia Agriculture offered to sell water from their property at Clyde for a cost of $2,200 per megalitre. The person they wrote to was Ms Mary Colreavy, an assistant secretary in the Department of Agriculture and Water Resources. Following that offer, an independent valuation was commissioned, properly, to establish what a reasonable price might be for the water at Eastern Australia Agriculture's properties at Clyde and Kiora. If those names ring a bell, it's because they should. They are the properties at the centre of the Angus Taylor watergate scandal.

The government required a valuation which provided a single-point value and a value range. The valuation was delivered to the department in September 2016. In December 2016 a brief was presented to the then minister, Mr Barnaby Joyce, by Ms Colreavy, to propose the purchase of 15,000 megalitres. Approval was given to explore the purchase. The valuation that was received was invalid after three months, so a further valuation was sought some time in the new year, in 2017. It was received by the government in March 2017. Mr Joyce was briefed, a few days later, by Ms Colreavy initially requesting the purchase of 14,000 megalitres of water. The minister placed conditions on the approval and asked that final approval be sought once conditional approvals had been met.

In May 2017, two months later, Ms Colreavy engaged with Eastern Australia Agriculture and put a further proposal to the minister, this time for 28,700 megalitres. An offer was made to Eastern Australia Agriculture in June 2017. A more senior official, Mr Paul Morris, relying on the work of Ms Colreavy, signed off on the purchases in July 2017. A contract was signed and the water was purchased at $2,745 per megalitre. Remember that number.

We're blind to what happened behind the scenes. The reason we know what happened is that on my second day in the Senate, 16 November 2017, I sought an order for production of documents relating to strategic water purchases. A significant number of documents were provided, including valuations, but valuations were redacted. I challenged those redactions, both privately with ministers and publicly through estimates. How could water valuations for water already purchased by the department be considered commercial in confidence? How could water valuations that were invalid three months after issue be considered commercial in confidence?

In response to a question on notice, in May 2018, at estimates I was given this answer about the price paid: 'In August 2017 the price paid for 28.7 gigalitres of overland flow entitlements in the Condamine-Balonne was $2,745 per megalitre.' In this case, the price paid by the department was above the estimated standard market value range but below the maximum price the independent valuer advised we should expect to pay. The valuation advice stated that the department should be prepared to pay 10 to 30 per cent above the standard market rate for 'properties of a high standard that have achieved above-average levels of water use efficiency in this region'. The agreed price was 'within this wider range and reflects the well-developed nature of the property from which it was purchased'.

Unsatisfied with the lack of transparency of the valuation, I did what I always do: I got the valuations through freedom of information. The department refused to give me the data. That's standard practice; no surprises. I appealed it to the Information Commissioner. In the meantime, I had a discussion with Ms Colreavy at estimates in March last year. I said to Ms Colreavy:

I want to go back to a statement you made about the water gate purchases. In your own words, you said 'it's a dynamic market' and 'prices change all the time'. You said that you had disclosed a whole bunch of information by way of OPD. One of the things that you didn't disclose in that OPD was the valuation range—the nominal valuation by the valuers, Colliers, and, indeed, the valuation range by Colliers—on the basis that it was commercially sensitive. In your own words, you have just said that the pricing is dynamic and it changes from year to year. Can I ask you to provide me with the nominal valuation and, indeed, the valuation rage, noting what you've just said?

Ms Colreavy replied:

I can refer you to my answer in Hansard and questions on notice previously that those values were redacted for commercial reasons.

I went on to caution Ms Colreavy. I said:

… I think, in some sense, you are withholding information from the Senate and I foreshadow, if the Information Commissioner agrees with me—I'm pretty sure I'm on fairly solid ground—I will seek a referral to the Privileges Committee for contempt, because I think you are being overly secret on information which should be in the public domain.

On 12 July, in a parallel process, the auditor completed an audit into the water purchases. He stated, of Kia Ora and Clyde and others: 'These purchases achieved value for money with the price being paid at or below the maximum price identified by the independent market valuations.' So there we have it: even the auditors agree that everything is in order.

However, on 13 August, before the Information Commissioner made her FOI decision on my review, the department released the documents to me. They revealed the truth: a point value of $1,500 per megalitre and a valuation range of $1,100 to $2,300. That was the maximum price to be paid—$2,300—yet we paid $2,745 for the water. So on 3 November last year I wrote to the Auditor-General seeking an explanation. How did the department and audit come to the conclusion that the price paid was within the range? It was clearly $475 per megalitre above the maximum price. I got my response last week from the Auditor-General, and here it comes. The Auditor-General has advised me that: 'Subsequently the valuer has advised the ANAO that he does not consider the application of the premium referred to in the valuation report to the range provided as reasonable.' The valuer has said it was not reasonable for them to pay the price they did. The Auditor-General has now discussed this with the department and they're reviewing the material that led them to believe it was okay to pay $13 million above the independent valuer's maximum price.

I don't need them to tell them what the cause of the error was. I know what the error was—incompetence. It was incompetence on behalf of Ms Colreavy. She had carriage of this sale from start to finish. How she came to the conclusion that $2,745 per megalitre was an okay price to pay when the valuer had clearly stated the maximum was $2,300 per megalitre is beyond comprehension. If she had just made a 30c phone call to discuss the valuation report with the valuer, taxpayers would have an extra $13 million to spend on useful things. We can't have these sorts of mistakes just being brushed over, saying, 'Oh, well.' We can't have officials thinking, 'It doesn't matter; it's only taxpayers' money.' It does matter, and people serving in senior positions must be held accountable for their mistakes. Ms Colreavy must resign. If she does not, she must be fired. She has demonstrated incompetence beyond her post, to the tune of $13 million. If her departmental secretary, Mr Andrew Metcalfe, does not see that she is removed then he should go as well because the standard you walk past is the standard you accept, and this sort of incompetence is quite unacceptable.