Queensland Upper Condamine Alluvium Groundwater Purchase Tender - Frequently asked questions

​​Tender Details

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What is the aim of the tender?

The aim of this tender is to purchase groundwater licences from the Central Condamine Alluvium and two eligible tributaries in the Upper Condamine Alluvium—the Dalrymple Creek Alluvium and Oakey Creek Alluvium.

The Australian Government is helping to protect the agricultural productive base of this area by purchasing groundwater licences and retaining the water in the aquifer.

When does the tender open and close?

The tender opens at 9am Australian Eastern Standard Time AEST on Friday 6 May 2016 and closes at 5pm AEST on Thursday 19 May 2016.

What licences will the Australian Government buy?

The following licences can be offered for sale through this tender:

  • Groundwater licences located in all four sub-areas of the Central Condamine Alluvium Groundwater Management Area.
  • Groundwater licences in the Dalrymple Creek Alluvium Groundwater Management Area.
  • Groundwater licences in the Oakey Creek Groundwater Management Area.

Why is the Australian Government conducting a groundwater tender?

In accordance with the Murray-Darling Basin Plan, the maximum allowable take in the Queensland Upper Condamine Alluvium groundwater resource should be reduced by 40.4 gigalitres (GL) to bring use within sustainable diversion limits. Reducing extractions to sustainable levels will provide long-term protection of this groundwater resource. 

Making sell offers

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Who can make sell offers?

Legal owners of eligible licences can make sell offers through the tender. If a licence is owned by more than one person all of the 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 Water Purchasing and Conveyance Section in the Department of Agriculture and Water Resources. Applicants must 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 Australian Government. Only one application will be accepted per water licence.

Can I sell a licence without installed works?

Yes. A groundwater licence without installed works can be offered for sale through this tender.

Can I withdraw an application?

Yes. An application can be withdrawn at any stage prior to signing a water sale contract.

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 Australian Government.

Pricing

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What is the volume and price of water traded in the Upper Condamine Alluvium?

Information on the average prices paid under the government’s water purchasing program.

The Queensland Government also publishes water market information, including the volumes of water traded and average prices on its Business and Industry portal​.

Do previous trades between irrigators within the Upper Condamine Alluvium influence how much the government is willing to pay for groundwater licences?

Yes, along with other information including valuation advice that the department has received from independent experts.

When the department assesses sell offers is historical use taken into account?

No, the department is buying a portion of the entire stock of licences within the Central Condamine Alluvium and eligible Tributaries and historical use is not taken into account.

Will there be different prices for licences across the aquifer?

The department obtains independent valuation advice on market prices which helps inform its evaluation of offers. Market prices may vary across the region, and also within any zone over time, depending on market variability. The price which will be paid for groundwater licences may be different for each sub-area in the Central Condamine Alluvium and for the sub-zones within Dalrymple Creek Alluvium and Oakey Creek Alluvium.

Will the Australian Government pay for all costs associated with the trade?

The Australian Government will only pay for 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 tax implications before submitting a sell offer.

Licence location

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Will there be a limit on the volume of licences purchased in each area?

Yes. This tender limits the volume of licences that will be purchased from each sub-area of the Central Condamine Alluvium and from the Dalrymple Creek Alluvium and Oakey Creek Groundwater Management Areas.

The Request for Tender specifies the limit for each sub-area of the Central Condamine Alluvium is as follows:

  1. 2.3 GL for sub-area 1.
  2. 10.0 GL for sub-area 2.
  3. 2.1 GL for sub-area 3.
  4. 0.85 GL for sub-area 4.

The combined limit for the Dalrymple Creek Alluvium Groundwater Management Area and Oakey Creek Alluvium Groundwater Management Area is 2.0 GL.

This will ensure that initial water recovery is not overly focused on one area. The limit on purchases from each area will be reviewed prior to any future tenders.

Which groundwater management area is my water licence located in?

If you do not know which groundwater management area your water licence is held in then please contact the Queensland Department of Natural Resources and Mines Toowoomba office on (07) 4529 1394 for assistance.

Why are there only two eligible tributaries in the Upper Condamine Alluvium?

The Dalrymple Creek Alluvium Groundwater Management Area and Oakey Creek Groundwater Management Area have water sharing rules that allow groundwater licences to be traded.

The other tributaries in the Upper Condamine Alluvium do not have tradable groundwater licences and therefore licences in these tributaries are not eligible to be offered for sale in this tender. 

General licencing

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How will the department determine which licences to buy?

The Request for Tender sets out the evaluation process of the tender.

Am I able to offer multiple bids for the same licence?

No. Only one offer per eligible licence is permitted under this tender.

Am I able to offer part of my licence for sale?

Yes. Part licences will be eligible for participation under this tender.

If a portion of a licence is sold, will the remaining portion still be subject to the Announced Entitlements?

Yes. When a portion of a licence is sold to the Australian Government the licence is sub-divided into two licences and each portion of the licence retains the same characteristics as the original licence. This means that each portion of the licence (i.e. the portion being purchased by the Australian Government and the portion that is being retained by the original licence holder) remains subject to the Announced Entitlements.

Can I sell a Central Condamine Alluvium ‘Group S’ licence?

Yes, although ‘Group S’ class licences will be eligible for sale as part of this tender, 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.

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.

What will happen to licences sold to the Australian Government?

Formal transfer of ownership to the Australian Government takes place on registration of the licence transfer by the Queensland Department of Natural Resources and Mines. The licence becomes part of the Australian Government environmental water holdings at that time.

Australian Government 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.

Why are groundwater licences that are purchased being held by the Commonwealth Environmental Water Holder (CEWH) and not retired?

All Australian Government environmental water is held and managed by the Commonwealth Environmental Water Holder (CEWH) to protect and restore environmental assets. By holding groundwater licences in the Upper Condamine Alluvium groundwater management areas the government becomes a stakeholder in the area just like irrigators, and will have the opportunity to engage with the Queensland Government on how the resource is managed into the future.

Evaluation

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When will applications be evaluated?

Applications will be evaluated after the tender closes on 19 May 2016, and all applicants will be notified in writing of the outcome. 

How will applications be evaluated?

Eligible offers received will be ranked from lowest to highest cost in each sub-area of the Central Condamine Alluvium and eligible Tributaries, and then a value for money assessment of each offer will be made taking account of:

  • market prices
  • the bid prices and volume
  • the conveyance costs associated with the purchase of eligible licences 
  • the maximum volumetric limit for each sub-area of the Central Condamine Alluvium and the eligible Tributaries.

What happens if my application passes the evaluation?

The department will 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 taken. If there is a future groundwater purchase tender the applicant may submit a new sell offer then.

Previous and future tenders

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Will there be any future rounds of groundwater tenders?

The Australian Government has made no decision to conduct further rounds of groundwater purchasing at this time.

Can the Commonwealth Environmental Water Holder sell groundwater back to irrigators in the future?

Sections 105 and 106 of the Water Act 2007 (Cth) governs the trading actions of the Commonwealth Environmental Water Holder (CEWH). It stipulates that the CEWH can only trade water when it is not required for environmental purposes during the current year and the allocation cannot be carried over to the following water year; or in circumstances where it can be demonstrated that a better environmental outcome can be achieved by purchasing water elsewhere or at another time using the proceeds of trade (such as was the case with the sale of temporary water in the Victorian Goulburn catchment that occurred in October 2015). Such trade is unlikely in the Upper Condamine Alluvium. The disposal of groundwater entitlements may also be precluded under s105 (3) if the trade might result in an adverse effect on an environmental asset.

What was the outcome from the groundwater purchase tender held in the Central Condamine Alluvium from 30 November 2015 to 10 February 2016?

The government’s last groundwater tender resulted in a modest number of successful offers. The average price of licences pursued under this tender by the government across the Upper Condamine Alluvium is $1736.13 per megalitre.