The state government would be guilty of "maladministration" if it doesn't match Commonwealth funding to subsidise farmers' water infrastructure.
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That's according to the Federal Minister for Resources and Water, Keith Pitt.
New England MP, Barnaby Joyce, said local farmers would miss out unless NSW Agriculture Minister Adam Marshall signed up to the On-farm Emergency Water Infrastructure Rebate Scheme.
"I am very concerned to hear the NSW Minister suggest our state won't match the federal funding, which would mean his farmers miss out on this important scheme," he said.
"Minister Pitt and I fought hard to secure the new federal funding and it's time the NSW minister came to the table, so that our local farmers can access this important scheme."
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The scheme offers rebates for spending by farmers on new water infrastructure. It is jointly funded by the Commonwealth government - which has spend $100 million on the scheme - and states.
In a media release issued on the day of a visit by Premier Gladys Berejiklian and Deputy Premier John Barilaro to Tamworth and Armidale, the former Deputy Prime Minister slammed a potential state decision not to joint fund the scheme
The Premier and Deputy Premier were not available for a comment during a brief press conference on Friday.
Mr Pitt said the scheme was managed by state governments and in NSW had been "significantly oversubscribed" leaving many farmers out of pocket.
He said other states contributed to the first round of the rebate scheme, but NSW hadn't delivered a cent.
"The extra funding we are now providing would see those farmers get their money and allow more on-farm water infrastructure projects to go ahead," he said.
"We are determined to stop the maladministration of this scheme by some states and get the money out the door where it will have a real and positive impact for farmers."