While the Victorian government supported the Commonwealth's plans to establish the office of the Inspector General, Victorian Minister for Water Lisa Neville said the state government would not support the Inspector General having powers to change water sharing rules.

The Murray River Group of Councils - which comprises of six councils in northern Victoria - supports the state government's decision.

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"Each state has its own rules in place in terms of how it manages its water," chair Lorraine Learmonth said.

"Victoria has very strong allocation, which is suited to the smaller scale, capital intensive dairy industry.

"It's fairly conservative with its approach with High Security Water Shares rather than the NSW approach, which was developed to suit mixed farming and annual crops.

"If the Commonwealth takes over, Victoria wouldn't be in a strong position. We can't afford to lose any more water out of our irrigation systems."

Cr Learmonth said the Commonwealth had already mismanaged the Murray Darling Basin Plan.

"We just can't afford to have any other water out of Victoria," she said. "We're the food bowl of Victoria and things are fairly drastic in our area.

"I don't know what needs to happen next but we do need to have water traded for agricultural and environment purposes rather than for financial gains.

"Water needs to be used to produce, rather than as a commodity of profit making for some people who are in other countries."

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