Water price spike has farmers fearing for future of irrigation

WaterNSW's price hike worry farmers as costs increase 40 per cent for some Fri 26 Jun 2026 at 3:33pm In short: IPART approves annual water price hike up to 10 per cent until 2030 across NSW. WaterNSW confirms insolvency risks and warns increases are not enough long-term. What's next? IPART and WaterNSW say the funding model for water infrastructure needs to be reviewed. The agency that manages water infrastructure in NSW could be in a "death spiral" as farmers confront price hikes that could make irrigating crops and paddocks unaffordable. WaterNSW levies charges to help cover the cost of regulating water use and maintaining the state's dams and pipelines The Independent Pricing and Regulatory Tribunal (IPART) has warned it could be in a "death spiral" as those costs rise, even though hefty hikes have been approved. From July 1, prices across all valleys will rise by an average of 6.5 per cent a year over the next four years, with a cap of 10 per cent. When combined with inflation, this could see the cost of water for some farmers increase by more than 40 per cent. On the South Coast, annual charges will increase from $35,860 today to $52,503 in 2030. Dairy farmer and chair of the Bega Valley Water Users Association, Will Russell, said the situation was deeply concerning. "I can see some farmers on the Brogo River that might say, 'Is irrigating actually worth it?'" he said. 'Should I stop irrigating altogether and focus on buying in feed from out west?" "We currently pay the second-highest rate for our water in the state, but it's still worth it to irrigate to grow rye-grass and corn." Mr Russell said the shift in strategy to pursue full cost recovery from irrigators was not practical and could backfire on WaterNSW. "If we're not using it to create feed for our dairy cows, then no-one is going to use the water,"he said. "That makes the revenue gap even larger." It was this scenario IPART referred to in its 2025-26 review of WaterNSW's prices. "Over time, this can create … [a] "death spiral," where the declining demand or customer numbers progressively undermines WaterNSW's financial sustainability," the report stated. Striking a 'balance' Prices for general security water over four years will rise 41 per cent in the Gwydir and 46.4 per cent North Coast, the Lachlan, Peel, South Coast and Border region. "The Tribunal has struck a balance between what is reasonable for customers to pay and what taxpayers should pay to cover the efficient cost of running WaterNSW," an IPART spokesperson said in a statement. The approved price hikes are 20 per cent less than what WaterNSW requested, with IPART reducing the state-owned corporation's proposed revenue requirement by about $53 million a year. The organisation is facing rising construction, interest rate and insurance costs and the introduction of a land tax. In a statement a spokesperson said WaterNSW had already deferred $860 million of capital works and would cut $133 million in operational costs over the next five years. Andrew George, chief executive and managing director of WaterNSW, said the authority had no option but to increase charges. "With IPART's interim decision on prices last year, WaterNSW was on the brink of insolvency," he said. "We have a very small customer base, it isn't growing, so we're having to spread increased costs over a very small population … and that's why the regulatory models need to change." Regulator calls for review The regulator's report flags the risk of a WaterNSW "death spiral" and recommends a broader government review to scrutinise the scope of regional and rural bulk water services. It also suggests the review investigate the need for long-term government funding and the possibility of subsidies in some sectors or regions. NSW Irrigators Council chief executive Madeleine Hartley backed the call for a review, and said the determination was devastating for water users. "IPART itself acknowledged some significant deficiencies in WaterNSW's proposal, such as the failure to properly explain its escalating costs and not taking sufficient ownership of how to help solve the affordability crisis facing customers,"Dr Hartley said. "But instead of fixing those problems, IPART has simply approved them and passed the bill onto customers." Dr Hartley said the regulator's own modelling showed these prices could not be absorbed by irrigators. "This analysis found at allocations of just 20 per cent, all crops across all valleys in NSW have negative net margins and are no longer profitable at current prices," she said.