AUSTRALIA'S competition watchdog is keeping a close eye on foreign investment in the country's irrigation schemes, according to one of its commissioners.
The Australian Competition and Consumer Commission's (ACCC) Cristina Cifuentes told an Agribusiness Association of Australia breakfast, overseas investors were showing "incredible interest" in infrastructure assets, such as irrigation.
"These infrastructure assets generally are considered very low risk, particularly when they are in a regulated area, they are really very attractive," Ms Cifuentes said.
"Overseas funds, particularly, are very, very keen to get into the market, and they are willing to pay a premium because the return they can generate from Australian assets is much higher than similar assets overseas.
But she said the problem arose when regulated charges applied, such as in irrigation.
"These investors expect a certain level of return - now who is going to pay for that return ? It is the users," Ms Cifuentes said.
Participants at a series of seminars on an ACCC review of the national water act had raised concerns about speculators trading water as a commodity
The ACCC had no power to determine who should own infrastructure services, unless there were merger concerns.
"Where we do have an influence is in setting regulated charges," she said.
She said, as in the energy market, investors often felt the rate of return on the investment was too low.
"You can see this tension, in what we say are essential services, we need to set rates of return which are realistic - the investors, on the other hand, are saying they are way too low," Ms Cifuentes said.
Investors had the right to appeal the Commission's decision in the Competition Tribunal, which may well have the final say on rates.
"I would like to give some assurance that all will be well in the end, but a lot of it will depend on the tribunal, but it is something we are cogniscent of," she said.
Ms Cifuentes said an ACCC review of the regulatory framework, around the national water act, should be completed by the end of the year.
The review aimed to promoting efficiency in the use of water resources, infrastructure and efficiency of markets and sustainable management of water resources
She said a key area was pricing transparency and information disclosure, by operators.
"There has been a major improvement in transparency of charges, but there are instances of non compliance among operators, particularly the way they calculate termination fees," Ms Cifuentes said.
"Generally speaking we understand instances reflect back on the fact the operators don't understand the rules.
"They have difficulty reading and interpreting and putting them into practice.
"It's not surprising.
"They often have two or three staff, working on a voluntary basis, so when you put that together with the wording of the rules, their complexity and the fact they are open to interpretation, it is no surprise that there are quite a few instances of non compliance."
She said the ACCC chose to educate and mediate, rather than issue fines, to resolve non-compliance issues.
"The response is very positive, operators generally work with us, to take the steps they need to rectify the problem," she said.
Ms Cifuentes said both operators and users said the water charge rules were complex and needed to be improved.
"Some aspects of the rules don't help, they don't contribute to water market objectives and the compliance costs are high."
The ACCC hoped to complete its report by the end of the year, she said.