States failed on free water market: ACCC

The competition regulator has accused the state governments of failing to deliver on a promise made nearly 15 years ago to facilitate a free market for water.

The Australian Competition and Consumer Commission (ACCC) has complained that long delays and exit fees continue to undermine trading.

"Clearly, the current process is - I think, on any analysis - not satisfactory," ACCC chairman Graeme Samuel told Fairfax newspapers.

Mr Samuel said the ACCC was also monitoring whether irrigation companies, which impose large fees on farmers who sell their water rights, were erecting barriers to trade.

He said there were still big problems with water trading that needed to be resolved.

The state governments had agreed, as far back as 1993, to set up a free market underpinned by a national register of water entitlements.

But Mr Samuel said it had been stymied by seasonal and political factors, including the over-allocation of water in some regions.

"It hasn't happened as efficiently and effectively as I think governments and the ACCC and the National Competition Council would have hoped," he said.