The Labor opposition has committed to a major inquiry into the water buyback scandal that has engulfed the government just weeks before the federal election, and has provocatively accused Prime Minister Scott Morrison of leading a "cover up".
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Opposition Leader Bill Shorten will on Wednesday propose either a royal commission or a parliamentary commission of inquiry into the affair, both of which would have coercive powers and the capacity to put cabinet ministers on the stand - in scenes reminiscent of the Coalition's royal commissions into trade unions and Labor's home insulation program after Tony Abbott won the 2013 election.
As Agriculture and Water Minister David Littleproud announced a government audit into water buybacks dating back to 2008, his Labor counterpart Tony Burke declared Labor was not satisfied with redacted documents provided so far and would demand an inquiry.
"The government's chaos has meant the documents the Labor Party sought by close of business have not been received," Mr Burke said on Tuesday evening.
"Scott Morrison is trying to cover up his government's incompetence, chaos and potential misconduct.
"This is not acceptable. It is now clear that there needs to be an independent inquiry into the Eastern Australia Agriculture scandal, with coercive powers so that Australians can get the truth."
The Coalition government and its bureaucrats are under the microscope over the 2017 purchase of water, under the Murray Darling Basin Plan, from two Queensland properties owned by Eastern Australia Agriculture.
It has since emerged that its parent company, Eastern Australia Irrigation, was domiciled in known tax haven, the Cayman Islands. Energy Minister Angus Taylor co-founded the parent company and directed it until he was elected to Parliament in 2013, but denies benefiting from the transaction.
The purchase was made while former deputy prime minister Barnaby Joyce was the minister. National Party colleagues defended Mr Joyce following an extraordinary and belligerent interview in which he maintained he had done nothing wrong and claimed it was "not his job" as minister to "second guess" a proposal that had been recommended to him by his department and the Queensland government.
In November 2015, the Queensland Labor government's Minister for State Development, Natural Resources and Mines, Anthony Lynham, proposed the federal government buy water entitlements from Eastern Australia Agriculture. However, Dr Lynham on Tuesday said the deal he proposed was "very, very different" to the one signed off by Mr Joyce two years later.
Dr Lynham had suggested the Commonwealth buy the two cotton properties in their entirety, including almost 56,000 megalitres of water entitlements, infrastructure and the farm enterprises, with an expected cost of around $123 million.
Under the deal signed by Mr Joyce, the Commonwealth received about 29,000 gigalitres of overland water flows - available only after rare flood events - for $79 million. This deal did not involve buying the farms or associated infrastructure.
Dr Lynham told ABC Radio that Mr Joyce, as the federal minister, was also responsible for conducting due diligence on the deal and ensuring the price was fair, while the Queensland government's role was "administrative".
He said while the 2015 proposal was "a good deal for Queensland", the federal government abandoned discussions around the time Mr Joyce took the water portfolio.
"It was a wasted opportunity ... It was Barnaby Joyce's decision to subsequently buy the unreliable overland flow of 28,000 megalitres in 2017 and it was his decision to pay $80 million," Dr Lynham said.
"There are some serious questions to be answered by Barnaby Joyce here."
Mr Littleproud announced the Auditor-General would examine all water buybacks since 2008 to ensure Australians could have confidence in the Murray Darling Basin Plan. But he said he did not "see any evidence to support a royal commission".
Other National Party figures came to Mr Joyce's defence. Nationals MP Damian Drum, who holds the Murray River seat of Nicholls, slammed the ABC for its interview with Mr Joyce, and labelled the entire scandal a "greenie conspiracy".
"I cannot believe the ABC wanted to question Barnaby Joyce for his processes when he was simply following a process that had been used on at least two major water buybacks previously," Mr Drum said. "There's nothing untoward about that."
Mr Drum said people in Sydney and Melbourne "don't want to hear the truth" that too much water had been diverted from agriculture to the environment.
Retiring NSW Nationals senator John "Wacka" Williams said he understood Mr Joyce's frustration.
"He's darn annoyed. He was very angry about people insinuating he'd done a shonky deal," Senator Williams said.
"If someone infers that you're a crook I wouldn't blame them for coming down on the front foot and punching hard."
NSW Nationals director Ross Cadell said Mr Joyce said "a lot of valid things" in his response to the allegations but may have over-reacted and said them "in a slightly hostile way".
