The water industry watchdog has accused state governments - particularly Victoria - of distorting the $2.8 billion water market and impeding the transformation of rural communities by restricting interstate water sales.
The National Water Commission will release its second annual assessment of the water market which will reveal that there was no interstate trade at all in licences in 2008-09, despite a 75 per cent surge in the market's value, the Australian Financial Review reports.
The findings are reinforced by a Productivity Commission report yesterday which said the Victorian government was "seriously distorting" water markets and hampering the federal government's buybacks through its 4 per cent cap on trades.
The report confirms that the bulk of federal water purchases came from NSW, where the state government has argued that its irrigation districts are being unfairly targeted because of the trade restriction in Victoria, which Victoria insists is necessary to protect its vulnerable farming communities.
Trades from NSW dominated the water market, accounting for more than $2 billion, compared with $495 million from Victoria, $152 million from South Australia and just $62 million from Queensland.
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