In late December, the Parliamentary Upper House handed down a report criticising the current system of water trading in NSW and calling for the system to become more transparent.

Key findings were that in the forty years since water trading in the state was first formalised, it has not only expanded exponentially to become a billion dollar industry, but:

(1) "the introduction of private and institutional investors in water trading markets has led to market destabilisation and manipulation at the expense of irrigation farmers, regional communities and the natural environment" and

(2) "The existing governance and regulatory framework for water trading in New South Wales is inadequate and facilitates unfair market practices."

Ian Cole, a grower from Bourke and ex-Chair and spokesperson for the Barwon-Darling Water Group questioned the finding that there were transparency issues in the local industry.

"Whenever I want to find out something about water trading, I am able to find the information without a problem," Mr Cole said.

"There is no problem with transparency in my experience. It's not that hard to find out what you need to know."

Mr Cole suggested an increase in community education surrounding water allocations would be a good move.

"There is a low understanding among the general community around how licensing and the river system works," he said. "A report early last year pointed this out. There is a real need to educate the public on water literacy."

The Upper House report made ten recommendations for reform, covering a range of actions including digitising trade platforms, tightening market conduct rules, publishing water market information, and improving water access for First Nations people.

Chair of the 8-person investigating committee, the Hon Robert Borsak MLC said $1.8 billion worth of water rights were traded each year and the governance has not kept pace with growth.

"The committee heard of serious deficiencies with the way markets are regulated, which is allowing practices like market manipulation, unfair dealing and insider trading to flourish.

"It is clear that much tighter regulation is needed and the committee makes recommendations to this effect," he said.

"Hand-in-hand with these issues is the lack of openness in water trading markets."

"The community is left in the dark about who owns water and when it is traded, as limited information is publicly accessible.

"The committee therefore recommends the Government establish a public water market register to provide some urgently needed transparency."

Mr Borsak said another key issue during the inquiry was the involvement of private traders in water markets.

"While the committee recognises the value of having an open market, we are concerned that millions of dollars of profits are being made in Sydney and Melbourne, rather than going back to Murray Darling Basin communities," he said.

"The decline of towns in this region is a serious concern and this report examines the role that water trading has played in this."

Mr Cole said the current situation with excess rain has meant plenty of allocated water during the last year.

"In most years, it's not uncommon for irrigators to sell or trade their water allocations," he said. "But trading is not operating effectively due to government restrictions.

"As far as money going to big cities, I don’t think that is true in our region with over 90 per cent of water allocated to local farmers. I don’t know of any private traders in this region at all."

The NSW Government's response to the Committee's report is due on 20 March 2023, just five days ahead of the state election.