Money will go to Eastern Australia Agriculture – founded by energy minister Angus Taylor – for additional water to save rare wetlands

This article is more than 6 months old

This article is more than 6 months old

The federal government is spending up to $2m buying water from Queensland agribusiness Eastern Australia Agriculture in a bid to keep an internationally significant wetlands from dying, despite paying $80m to the same company three years ago for water rights for the same purpose.

The $80m purchase of overland flows from Eastern Australia Agriculture has been controversial and is now under scrutiny by Australian National Audit Office.

The extremely large purchase was done without tender by the former agriculture minister Barnaby Joyce, who concluded that the opportunity was exceptional and that it warranted direct negotiations. Part of the reason given was the benefit to the Ramsar-listed Narran Lakes.

Government rejected several offers on water rights before reaching $80m deal Read more

The EAA purchase also came under scrutiny in the Senate because the energy minister, Angus Taylor was a founder of the company.

Its parent company is based in the tax haven of the Cayman Islands so very limited information is available on shareholders and investors but Taylor has told parliament he severed his connections with the company before becoming an MP in 2013. He has told parliament he played no role in the water purchase and was not aware of it until it was announced. There is nothing to suggest this is incorrect.

However questions remain about whether the federal government received value for money for its $80m.

Until this week the commonwealth had not been able to access any water from the licences it paid for under that deal which was finalised in 2017.

But the commonwealth environmental water holder, Jody Swirepik, whose job is to manage environmental water for the nation, has said recent rains mean it could access overland flows for the first time in years.

CEWH said it expected to harvest those overland flows for several days.

But it has also decided that it needs to buy additional water this season to save the Narran Lakes wetlands.

Last week it announced plans to offer grants to irrigators to forego pumping water under their licences.

Swirepik said the purchase of the flows would give the Narran Lakes a “helping hand” and allow mid sized flows into the lake after seven years of no flows.

“In these dry times, it’s important to get the water where the environment most needs it. We are trialling an innovative approach to getting water into Narran Lakes to give important wetland habitat a chance to survive the drought” she said.

“The water will be used to get vegetation in this core area of the internationally important Narran Lakes ready for the birds to nest in the future,” said Prof Richard Kingsford, director of the centre for ecosystem science at the University of NSW.

Endangered native waterbirds rely on the lakes to breed and survive.

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An independent report by Marsden Jacobs, released by the CEWH put the mid price of water to be purchased under the scheme at $225 a megalitre.

Irrigators may be prepared to sell their water as cotton would not be planted until November, the report said.

The exact amount of money to be spent by the commonwealth to reimburse EAA under the pilot grant program will be calculated at the end of the financial year once the CEWH sees how much water is available and needed.

But Guardian Australia understands from sources that the bill could be as high as $2m.