Home | Commonwealth Buy-back Tender - More Information

Commonwealth Buy-back Tender - More Information

The Commonwealth Government has late last week released their supporting documents and processes for their  buy-back of 43,300 megalitres of water in the Murray Darling Basin.  Following is my opinion piece /  overview of those documents, a description of the process as they compare with past programs and normal commercial dealings.

Firstly it is important to point out that the Commonwealth has extended this open tender round to give people an additional 3 weeks to submit an expressions of interest (original close date 26th April, new close date 19th May) so please adjust this in your calendars.  

The Commonwealth released 4 documents totalling 84 pages and 25,725 words, a high level description of these documents are outlined below;

#Document NamePagesWordsDescription
1Tender Application Form224,866This document is used to submit a tender to the Commonwealth.  It also outlines some key conditions and references to other documents and Federal Legalisation that must be acknowledged and complied with when submitting an application
2Approach to Market238,155This document explains the approach to market, purchase regions, desired volumes, tenderer responsibilities, commonwealth rights, lodgement & evaluation processes, policy & law and key definitions
3Draft Sale Agreement3310,689This is the largest document in those released and sets out the terms & conditions used if the Commonwealth decides to proceed / accept, outlines costs and responsibilities ,who pays for what, sets out general contract conditions, outlines Commonwealth inspection & audit rights, privacy provisions, payment processes, wet / dry (season water assignment / allocation) provisions, conveyancing - settlement & payment processes and transfer form responsibilities as they apply to NSW or QLD
4Frequently Asked Questions62,015While it is expected that this document may grow through the open tender timeframes, the document is currently the smallest in the suite provided.  The Commonwealth do use the document to outline amongst other points, some important links, taxation considerations (ie Capital Gains Tax), and the pricing approach used in the tender.  

On first reading there are some changes in the current structure and conditions of the tender compared to previous tender conditions and processes used by the Commonwealth.  There are also differences to normal commercial marketplace practice through this process, which are important to understand.  For instance; privacy / confidentiality of participation is not guaranteed for most participants, sellers pay stamp duties if they are applicable, there are short time frames and undertakings required by sellers to deliver / endorse transfer documentation, deed polls and tax records required to be submitted from sellers and unusual time periods for consideration / possible acceptance from the Commonwealth and restrictions on tenderers to conduct certain dealings on their water right while the Commonwealth is considering to purchase or not to purchase  (up to 12 months)

Further the Commonwealth has not released any documentation on catchment pricing or water valuations of the differing water entitlement classes, instead being reasonably silent on water values apart from outlining that tenders will be assessed on a value for money basis (in the benefit of the Commonwealth buyer not as such the tenderer / seller).

I expect to see issues that have the potential to emerge as a result of the tender structure which may be but is not limited to:;

  • Transactions that cross irrigation seasons for water entitlements that have water carried over on them from previous irrigation seasons, 
  • Transactions that are struck by the Commonwealth buyer closer to the 19th May 2024 (12 month time frame) when a sellers circumstance has changed, an encumbrance has been lodged, local prices have changed, sellers circumstances have changed and or the wet turns to a dry cycle  (all of which is quiet possible on a season by season basis)
  • Issues with timely endorsement / provision of contracts & processing / conveyancing of transactions if the Commonwealth strikes / accepts an offer
  • Tenders submitted by water rights held by joint water holders and or water submitted for sale from within an irrigation district
  • Tenders submitted by water rights owned / controlled by non-nationals or with overseas interests
  • Tenders submitted by some unregulated regions or water rights administered by other pieces of state regulations other than the major / more modern regulatory instruments
  • Tenders submitted for volumes less than 10ml in size
  • Tenders submitted by entities that are behind / not up to date with their tax processing
  • Larger / more complex tenders or tenders offered from trusts / trustees
  • Sellers wanting to potentially engage the normal / non-government market to sell their water entitlements within 12 months post the close of the tender on the 19th May 2023
  • Tenders submitted where one or more of the water right joint holders dies, divorces, goes into receivership, changes their minds to sell

As such I believe it is very important that potential sellers / participants in the buy back receive assistance to further their understanding of the tender process, local water pricing / water value considerations and assistance with the processing / provision of documentation required to be submitted either when making the ‘binding’ expression of interest and or in the event that the Commonwealth accepts an offer, with the contract / conveyance of the transaction. 

While it is possible for water right holders to conduct their own appendix operation here (tender lodgement, processing and provision of forms) ,  I highly recommend applicants use the services of a capable water professional that has had experience in previous Commonwealth water tenders, understands water values in your catchment & can provide a professional opinion on pricing your water  and, has experienced and comprehensive systems for tracking and providing assistance through a conveyance / settlement process. (There is an obvious benefit for me to say that, so take that as you will)

To support clients wishing to submit to the Commonwealth, Waterfind has created a bundled service which:

  • Provides a pricing opinion for lodgements through the Commonwealth tender
  • Provides a service to assist water right holders with lodgement and provision of supportive documents
  • Provides a service to manage obligations and communications through the Commonwealth consideration period
  • Provides a service to convey / track the transfer in the event that the Commonwealth accepts the offer
  • Provides a service to manage and maintain the financial settlement of the water trade (if enacted)

The above services are offered via an agency where Waterfind represents YOU, the water right holder and NOT the Commonwealth Government hence conflict of interests are kept at bay.   If you have previously positively responded to our expressions of interest you need not do any more and a water service professional will be in contact with you for the next , if you have not previously completed our expression of interest and wish to utilise Waterfind services to receive pricing reports and assistance through the lodgement and or approval / settlement processes,  please use the following link to express your interest link;


Thank you, 

Tom Rooney CEO Waterfind

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