Vic Water Minister Tim Holding said Goulburn-Murray Water would begin processing more than 400 water trades from today that were put on hold until the Water Amendment (Non Water User Limit) Bill 2009 came into effect.

“Removing the 10 per cent non-water user limit will provide more choice for irrigators who want to buy more water or those who want to sell their water entitlements," Mr Holding said.

“It also frees up water to be purchased from sellers as part of the Australian Government’s buyback program to return water to the Murray River for the benefit of the environment.”

The Victorian Government originally set the 10 per cent limit when water entitlements were unbundled in 2007 to allay concerns that ‘water barons’ might enter the market to buy up large quantities of water and manipulate the price.

A review found ‘water barons’ were not buying up significant quantities of water and following consultation with irrigators in northern Victoria, legislation was introduced into the Victorian Parliament to remove the limit.

Parliament passed the bill on September 3 and it received royal assent yesterday.

The 10 per cent limit was reached for the first time this year in the Murray, Campaspe and Goulburn systems.

The Victorian Government will retain the four per cent annual cap on permanent trade-out of irrigation districts to help communities adjust to the social and economic impacts of irrigation water leaving their districts.

The 4pc cent cap will be phased out from 2011, however water purchased as part of the Australian Government’s water buyback scheme will be exempted from the cap if it is coordinated with the $2 billion Food Bowl Modernisation Project.

There are no limits on the temporary trade of seasonal allocations of water.

Federal Minister for Climate Change and Water, Senator Penny Wong, welcomed the removal of the Victorian limit on the amount of water that can be owned separately from land in individual water supply areas.

“The Rudd Government has long argued for a removal of barriers to water trading so water in the Murray-Darling Basin can go to where it has most value – for irrigators, communities and for our rivers,” Senator Wong said.