The Government has said restoring river health cannot wait until the establishment of a new Murray Darling Basin plan and that it intends to push ahead with purchases - spending $170.1 million in 2008-09 and $482.7 million in 2009-10 buying water from irrigators towards its ten year total commitment under the Water for the Future plan.

But in the face of mounting rural anger at the lack of transparency in the buyback process, the vulnerability of those selling, impact on rural communities and the plethora of Government agencies in the market, Federal Minister for Climate Change and Water Penny Wong has set up a 12-member consultative committee to “evaluate” the Government’s first $50m water tender, which closed on Friday.

Announcing the committee at the Irrigation Australia Conference in Melbourne, Senator Wong said it would have input into how future buybacks should be conducted.

But she stopped well short of saying the Government would automatically take up any recommendations, which may well differ from the Government’s views on issues such as an early dismantling of the four per cent barrier on annual trade out of any one district.

“Water purchase by the Government is a relatively new frontier, so we are aware of the need to learn from our first foray into the market,” she said.

“The group … will provide advice on how the Government can best respond to community concerns as we progress water purchases.”

The new committee is made up of eight farmer group and irrigation company representatives - five from NSW, one each from QLD and SA, and the Victorian Farmers’ Federation’s water spokesman Richard Anderson - two academics and a representative each from the Australian Conservation Foundation and Murray/Darling Association.

NSW-based Murray Irrigation Limited, widely regarded to be bearing the brunt of the buybacks by virtue of its cheaper water, has not been given a seat on the committee.

Concerns raised about the water tenders are legion and have included the lack of information on the type of water sought, price to be paid, and destination, the number of Government agencies in the market, their combined clout and practice of rejecting expressions of interest on a price basis and the scant regard shown for the impact on communities if all the water leaves one region.

Mr Anderson said the 30,000ML or so expected to be acquired under the $50m tender was a drop in the ocean compared to what could be bought with $3bn.

“We need to look at how they are going into the market with such deep pockets and long arms and how it will impact on rural towns,” he said. “We don’t just want open slather.”

NSW irrigator and National Farmers Federation Water Task Force chairman Laurie Arthur said he would be using his position on the committee to lobby for greater transparency.

“I think because the Government has entered the market in such a major way, we need to make sure the market is operating properly,” he said.

“The ACCC has said a good market is a well informed market, and this one is not. A lot of landowners are not very clear about what their water is worth. They put it into the tender and in many cases they are told it is too dear.”

Mr Arthur said the water market offered opportunities to irrigators, but given the scale of the Government purchase proposed and the vulnerability of irrigators facing potentially their third year of zero allocations, it was critical they were dealing with Government on a level playing field.

“We’ve been calling for property rights and an obligation is that they are readily tradeable,” he said. “The Government has a responsibility to taxpayers to get fair value, but they also need to make sure it is a fairly run market.”

One issue sure to arise is whether the 4pc limit on permanent trades out of a district in any one year, which presents a major obstacle to the environmental purchases and is due for review in 2009, should be dismantled this year.

A report on the issue is due to be presented to the next COAG meeting in July.

Mr Arthur said although some irrigators shared the Government’s view it was a barrier to trade, until concerns about market operation were resolved some caution was probably wise.

“The Basin Authority is just starting up and there is major water reform which we are struggling to cope with,” he said. “On balance it is probably a good idea to have some restrictions.”

Asked whether buying water for the environment addressed overallocation or was simply a transfer from one user to another, Senator Wong said it was important to return water to the rivers.