A HUGELY unreliable water supply and a mega price tag could be pushing the purchase of the controversial Queensland cotton growing giant, Cubbie Station, out of reach for the Federal Government.
While environmentalists and The Greens are urging the Government to cough up the $450m asking price to help solve some of the Murray-Darling woes often blamed on Cubbie Station, major hurdles don't make a high-profile purchase like this one an easy task.
There are calls for a Senate Inquiry to investigate the merits of a sale and determine whether a Government purchase would deliver water to the environment and offer value for money in the process.
While Cubbie is believed to have been unofficially for sale for the past four years, its owners – the Cubbie Group – ramped up its marketing on the weekend declaring three properties for sale to anyone with a spare $450m.
Cubbie is Australia's largest cotton producer with a licence to extract approximately 70,000 megalitres of water but a storage capacity of 537,000 megalitres.
When those storages are filled it is largely thanks to the diversion of overland flow and floodwater from the plains off the Culgoa and Balonne Rivers into the huge storages – the trigger for major water wars between irrigators in Queensland and graziers in far north west NSW.
A legal battle is underway challenging a plan to licence such overland flow which would significantly boost the entitlements of irrigators in the area and legitimise the practice of taking water from the plains.
Much of the $430m price-tag for Cubbie is based on the capacity to store and use this overland flow water.
Sources close to the sale say Cubbie Station has been under the watch of NAB credit management for some time, and the bank is pushing the sale to the Government to help recoup massive debt owed to it by the group.
The same sources have been critical of the $450m price tag, arguing that on an earnings model basis the value would be more in the order of $260m – a value more sustainable with the debt attached to it and 10 times the estimated earnings.
It's believed the Cubbie Group board rejected a $200m offer just four weeks ago made by local interests.
Despite the pressure on the Government to buy Cubbie, its board is still hopeful a commercial interest will be the purchaser so the properties remain in agricultural production.
Media reports suggest the Government has already been given at least three opportunities to buy the water alone as part of its water buyback program, but the offers were rejected.
The Government has flagged its intention to buy the water only, not the property, yet land and water titles in this area are still attached to each other.
Critics, like Liberal Senator Bill Heffernan, say the Government would be better off completely overhauling irrigation in the entire Lower Balonne region, starting with an abolition of the Resource Operating Plan which will turn the overland flow into an entitlement for irrigators.
Senator Heffernan, who has regularly labelled the irrigation practices in the Lower Balonne a national disgrace, says the huge variability and unreliability of water supply in that river system was alone enough reason for the Government to steer clear of buying the group because it did not offer the tax payer value for money in terms of returning water to the system.
Senator Heffernan says the Condamine-Balonne system has a 730 per cent variability, and since 1920 the aggregated flow of the Condamine-Balonne at St George has been 103,000 gigalitres - 25 per cent of that flow occurred in four of those years, he added.
"That just demonstrates the extreme variability of the system," Senator Heffernan said.
"The weakness in the argument as to why the Government should purchase Cubbie is that a lot of the value of the property is based on the scenario of those 469,000 megalitres of overland flow and the 537,000 megalitres of storage.
"But the licences to fill those storages don't exist."
Minister for Water, Penny Wong, would not be interviewed by Rural Press but told ABC this week that buying Cubbie's water was not as easy as buying water in other parts of the basin.
"What I have said about this and any other purchase is that the Government is open to talking with willing sellers of water entitlements," Senator Wong said.
"We will consider any offer based on value for money and environmental need. I don’t comment on specific potential purchases for obvious reasons.
"I want to say in relation to Cubbie, there are some challenges because at the moment we don’t have a separation between water and land title like we do elsewhere in the Basin. And the Government obviously is focused on purchasing water entitlements."
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