“The seller of the water was the New York Police Department superannuation fund,” Mr Polkinghorne told a NSW parliamentary inquiry into water trading, sitting in Griffith on Tuesday, August 16.
“The floodgates are open and we have international interests who are trading in our water.”
The first day of the NSW inquiry heard from several farmers, who said the water market benefited overseas investors and corporations over family farmers and the environment.
The select committee is looking into the status of water trading, which traditionally allows growers to increase their water supplies, expand production and earn money by selling their rights when someone else needs more water.
It comes after the Australian Competition and Consumer Commission's inquiry into Murray-Darling Basin trading found the markets are largely unregulated and vulnerable to insider trading.
The ACCC report found the system is complex and geared towards professional traders and businesses that have the time and knowledge to navigate it.
Mr Polkinghorne said farmers competed with corporate investors, who might hold water in the system and release it during a dry time to make more money.
“(Farmers) are carrying stock, they’re trying to make their bank repayments, they're trying to put their kids through school,” he said.
“Then we've got people who have no connection to the land, or a company being able to buy the water and hold the water.
“You've got to battle the weather, but now we're battling people with limitless resources and time who are devoting their lives to making money out of something we rely on.”
Several of the region’s farmers called for an independent regulator to improve confidence in the market.
ACCC deputy chair Mick Keogh said the watchdog found no strong evidence of market manipulation or abusive practices. However, he said the system needed considerable reform.
Mr Keogh said the trading market had been “tacked on” to long-standing water management practices.
“It’s grown to the stage where it needs a dedicated market, just the same as the Australian Stock Exchange manages the stock market,” he said.
NSW Irrigators Council chief executive Claire Miller said there was an accessible database to monitor water trades, but irrigators did not support greater transparency on individual water trading balances.
“It is akin to making a person’s bank account open to any and all,” Ms Miller said.
The council agrees with the ACCC’s view that water trading rules do not always reflect storage and river capacity, leading to negative consumer and environmental impacts.
Those issues were being worked on, Ms Miller said.
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