Newly released documents show the Commonwealth faces “unique fraud risks” in relation to the management of environmental water in the Murray Darling Basin.

An audit written by Ernst and Young (EY) found the Commonwealth Environmental Water Holder, and the near $3.2 billion worth of water it controls, was at risk of being defrauded by state agencies, individual officers within those agencies and private landholders.

The Australia Institute has today published analysis of the released documents.

“Taxpayers have spent billions buying water for the environment, but it is totally reliant on the State agencies to get the water where it needs to go,” said Maryanne Slattery, Senior Water Researcher at The Australia Institute.

“Worse still, the Commonwealth has no legal clout to force states to deliver the water in the way the Commonwealth wants.

“That is why EY’s audit was commissioned and why they discovered this major asset ‘relies on relationships developed at the officer level rather than agreed processes’ and is dependent on ‘verbal or other non-legally binding agreements’.

“In other words, a $3.2 billion asset and internationally significant wetlands are being managed by handshakes, winks and nods.

“An example of this is South Australia’s mismanagement of its Lower Lakes and important wetlands at the Coorong.

“Released documents discuss a long-running problem with South Australia “substituting” water meant for the Coorong to ensure boating and tourism can run through summer in the Lower Lakes.

“In 2015-16, SA water managers substituted environmental water for normal barrage operations that was worth $175 million if it was purchased on the temporary water market.

“These documents have been buried for a long time and the timing of their release is interesting – just after sensitive intergovernmental negotiations on the Basin Plan and just before Christmas.

“Last week’s Ministerial Council meeting saw $70 million allocated to the Coorong. The imminent publication of these documents is likely to have played a role in this deal.

“The $13 billion Basin Plan needs better governance if it is to deliver for taxpayers and the environment. It is time for a full governance review and a process to align the Commonwealth agency’s powers with its statutory responsibilities.”