Scott Morrison has defended Barnaby Joyce's role in a controversial water purchase which splashed almost $80 million of taxpayers' money when he was the minister in charge.
The prime minister also dismissed suggestions there was anything wrong with the company that sold the water - Eastern Australia Agriculture - donating $55,000 to the Liberal Party four years before the sale.
Labor is not ruling out supporting a Greens push for a royal commission into the Murray-Darling Basin Plan over the water buyback from two properties in 2017.
But Mr Morrison is confident Mr Joyce acted appropriately despite questions over the high price and the company's links.
"The minister relied on the advice provide by his department," Mr Morrison told ABC News Breakfast on Tuesday.
"That department conducted those negotiations at arm's length and inquired into the relevant matters required under the Act. The minister has acted in accordance with the legislation."
In August 2017, the coalition government bought 28.7 gigalitres of water from two Eastern Australia Agriculture-owned Queensland properties, Clyde and Kia Ora, for $78.9 million.
In an extraordinary interview, Mr Joyce said he didn't care if a royal commission investigated the issue because he was "absolutely confident" in his position.
"So go right ahead, knock yourself out, have the inquiry," the former deputy prime minister told ABC Radio National on Monday.
Mr Morrison said suggestions a $55,000 political donation in 2013 had any part in the water sale were misinformed.
"There is no evidence to suggest that played any role in this arrangement," he said.
Labor has demanded more information on the purchase from the Agriculture and Water Resources Department, which water spokesman Tony Burke believes paid over the odds.
"You don't pay Versace prices for water that you get from The Reject Shop and that looks like what Barnaby Joyce has done," he told reporters in Cairns.
Mr Morrison said the water buyback program had been run strictly within the rules and subject to regular reviews by the auditor-general.
He noted the previous Labor government had dealt with Eastern Australia Agriculture, citing a $300 million water purchase.
Labor argues the difference is that its buybacks were conducted through a competitive tender process.
Mr Morrison has also defended Energy Minister Angus Taylor, who was once a director of Eastern Australia Agriculture.
Mr Taylor co-founded the company that sold the water but said he'd had nothing to do with it since entering parliament and received no benefit from the sale.
Mr Joyce said the federal government had acted on a recommendation from the Queensland government, which confirmed it backed the buyback.
"The Queensland government was supportive of the purchase because it helped achieve the basin plan water recovery targets," state Natural Resources Minister Anthony Lynham said in a statement.
Dr Lynham said the price and any connection Mr Taylor had to Eastern Australia Agriculture were matters for the federal government.
Australian Associated Press