GROUNDWATER PURCHASE TENDER IN THE QUEENSLAND
CENTRAL CONDAMINE ALLUVIUM
FREQUENTLY ASKED QUESTIONS
What is the aim of the tender?
The Murray-Darling Basin Plan requires the maximum allowable take in the Queensland
Upper Condamine Alluvium groundwater resource to be reduced by 40.4 gigalitres (GL) to
bring use within the sustainable diversion limits. Reducing extractions to sustainable levels
will provide long term protection of the productive base of this groundwater resource.
As a result the Australian Government is commencing water recovery to reduce extractive
use through its first groundwater purchase initiative in this region. The aim of this
groundwater tender is to purchase groundwater licences from any of the four sub-areas of
the Central Condamine Alluvium.
The tender will open on Monday 10 February 2014 and will close on Friday 7 March 2014.
How much funding has been allocated for purchasing groundwater in this tender?
A budget of up to $5 million has been allocated to this groundwater tender.
What licences will the Commonwealth buy?
This tender will be conducted only within the Central Condamine Alluvium Groundwater
Management Area. The Upper Condamine Alluvium tributaries will be excluded from this
tender.
Groundwater water licences located in all four sub-areas can be offered for sale through this
tender.
Who can make sell offers?
Legal owners of eligible licences are able to make sell offers through the tender. If a licence
is owned by more than one person all of the listed owners must sign the application form. In
the case of company owners, at least two of the listed directors must sign the application
form.
How can sell offers be made?
An application form must be completed and submitted to the Department of the Environment
(the Department). An application form can be obtained from the Department’s website at
www.environment.gov.au/water or by calling 1800 218 478.
Applicants are able to nominate the price they are seeking for their water licences. A sale will
only proceed if the price is acceptable to both the seller and the Commonwealth. A separate
application is required for each water licence and only one application will be accepted per
water licence.
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How will the Department determine which licences to buy?
The Department has obtained an independent valuation of groundwater licences in the
Central Condamine Alluvium to assist with our understanding of the market value of licences
in each sub-area. Based on this information, the Department has set an upper limit on what
it is prepared to pay for licences in each sub-area. This information will not be publicly
disclosed.
Will there be different prices for licences across the aquifer?
The maximum price which will be paid for groundwater licences may be different for each
sub-area.
Am I able to offer part of my licence for sale to the Australian Government?
Yes. Part licences will be eligible for participation under this tender.
Can I sell a ‘Group S’ licence?
Yes. It should be noted that ‘Group S’ class licences will be eligible for sale as part of this
tender but they will not retain their higher Announced Entitlement when permanently traded.
Further information on this is available in the Central Condamine Alluvium Groundwater
Management Area Water Sharing Rules, available at the Queensland Department of Natural
Resources and Mines website at http://www.dnrm.qld.gov.au/.
Can I sell my licence if I have already used my water for this year?
Yes. The Australian Government is purchasing permanent water licences and the associated
nominal entitlement. Any water on the licence (annual entitlement) is available for use by the
owner until the purchase of the licence is settled. After settlement both the nominal
entitlement and annual entitlement will belong to the Commonwealth.
Is the Australian Government buying annual entitlements though this tender?
No. The Australian Government is only buying permanent water licences and the associated
nominal entitlement at this time.
How will Announced Entitlements for groundwater licences be affected as a result of
Commonwealth purchases?
The Queensland Government currently limits water use in the Central Condamine Alluvium
through a system of Announced Entitlements. This represents the percentage of the nominal
entitlement that a licence holder may take in a year.
The Australian and Queensland governments have agreed that as groundwater licences are
purchased by the Australian Government there may be increases made to the Announced
Entitlements in the Central Condamine Alluvium. Annual Entitlements may be gradually
increased as a series of ‘trigger points’ are reached. These trigger points relate to the
volume of groundwater licences which have been acquired by the Australian Government.
They are set at 10 gigalitres, 18 gigalitres, 25 gigalitres, 32 gigalitres and 37 gigalitres. While
the Announced Entitlements may be increased once each trigger point is reached, the effect
will be a gradual reduction in allowable extractions towards the sustainable diversion limit in
the Basin Plan. The gradual reduction is achieved because the volume of water recovered is
greater than the volume associated with the increase in Announced Entitlement.
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Once the Australian Government has purchased enough groundwater from across the
Central Condamine Alluvium to reach the first trigger point, the Queensland Department of
Natural Resources and Mines will assess (in consultation with the Australian Government
and other relevant stakeholders representatives) whether it is appropriate to increase
Announced Entitlements. This assessment will occur again as each trigger point is reached.
Once the Australian Government has ‘bridged the gap’ to the Sustainable Diversion Limits
for the Upper Condamine Alluvium set out in the Basin Plan, all Announced Entitlements for
this region can be set at the maximum level. For the Central Condamine Alluvium
Groundwater Management Area this maximum is set by the Queensland Government at
87 per cent. The Queensland Government has declared a water management plan under
section 986J of the Queensland Water Act 2000. The water management plan ensures that
the total extraction of water from the Upper Condamine Alluvium SDL area is limited to the
Baseline Diversion Limit as identified under the Murray–Darling Basin Plan. Each megalitre
of groundwater licence purchased by the Australian Government will ultimately contribute
0.87 megalitres towards bridging the gap to the Sustainable Diversion Limits. Further
information on Announced Entitlements is available from the Queensland Department of
Natural Resources and Mines website at
http://www.nrm.qld.gov.au/about/policy/documents/4068/wap-2010-4068.pdf and the Water
Management Plan is similarly available from the website at
http://www.dnrm.qld.gov.au/water/catchments-planning/qmdb/water-resource-planning.
Can I sell a licence without installed works?
Yes. A groundwater licence without installed works can be offered for sale through this
tender.
Will there be a limit on the volume of licences purchased in each sub-area?
Yes. There will be a limit on the volume of licences purchased from each sub-area through
this tender. As specified in the Request for Tender, the limit for each sub-area is as follows:
(i)
2.3 gigalitres for sub-area 1.
(ii)
10 gigalitres for sub-area 2.
(iii)
3.6 gigalitres for sub-area 3.
(iv)
3.2 gigalitres for sub-area 4.
This will ensure that initial water recovery is not overly focused on one sub-area. The limit on
purchases from each sub-area will be reviewed prior to any future tenders.
When will applications be evaluated?
Applications will be evaluated after the close of the tender on 7 March 2014.
How will applications be evaluated?
The Department of the Environment will evaluate each eligible application on the basis of
value for money. This will be done by comparing the offer price with the predetermined
upper limit for a groundwater licence in that sub-area.
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What happens if my application passes the evaluation?
The Department of the Environment will endeavour to notify applicants about the outcome of
this evaluation by a letter dispatched within five business days of the completion of the
evaluation.
If the application passes the evaluation it will be pursued by the Australian Government.
Subject to due diligence checks, a water sale contract will then be issued to the seller. When
the contract is signed and exchanged, the sale will proceed to settlement.
What happens if my application does not pass the evaluation?
If the application is not pursued the applicant will receive a notification letter stating their
offer was unsuccessful. No further action will be undertaken. If there is a future groundwater
purchase tender the applicant may submit a new sell offer in that tender.
Will there be any future rounds of this tender?
The Australian Government may decide to conduct further rounds of groundwater
purchasing following a review of the first tender. None have been announced at this time.
Can I withdraw an application?
Yes. An application can be withdrawn at any stage of the process prior to signing a water
sale contract.
Will the Australian Government pay for all costs associated with the trade?
The Australian Government will only pay for any charges associated with the transfer of the
title from the irrigator. Irrigators selling entitlements will have to pay for the services of their
solicitor or any other professional advice, as well as any outstanding fees or charges relating
to the licence.
Is capital gains tax payable on the proceeds of sale of water licences to the Australian
Government?
Irrigators considering selling water licences to the Australian Government are encouraged to
seek independent financial advice on the likely tax ramifications before submitting a sell
offer.
What will happen to licences sold to the Australian Government?
Formal transfer of ownership to the Commonwealth takes place on registration of the licence
transfer by the Queensland Department of Natural Resources and Mines. The licence
becomes part of the Commonwealth environmental water holdings at that time.
Commonwealth environmental water is held and managed to protect or restore the
environmental assets of the Murray-Darling Basin. In the case of groundwater the primary
use of licences will be to protect the productive base. Water will be managed in accordance
with the environmental watering plan that will be part of the Murray-Darling Basin Plan.
The Commonwealth Environmental Water Holder will be bound by the same water sharing
rules, seasonal water assignment rules and water licence transfer rules and other provisions
that apply to all licence holders.
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