Damning Infrastructure Australia assessment recommends against Dungowan Dam project

Federal agency Infrastructure Australia has released an independent assessment of the state government's business case for the scheme.

"There is insufficient evidence that the new Dungowan Dam and pipeline is the most appropriate response to Tamworth's water security," the report said.

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Instead, the state should complete a "revised business case" for a more cost-effective solution, after considering other options "including buying back water licenses from impacted irrigation water users".

It should also consider increasing the amount of water from Chaffey Dam available for urban use, policy changes such as demand management and water use efficiency measures, or "more conservative infrastructure solutions", the organisation said.

"The project has a capital cost of more than $1 billion and a benefit cost-ratio of just 0.09 [9 cents to every dollar spent]," the agency declared.

"Although it offers sustainability and resilience benefits, our assessment found that similar community benefits could be achieved through a combination of lower cost build and non-build options.

"We would welcome a revised business case for an investment solution that better aligns to the identified problems and opportunities for providing increased water security to the Tamworth region."

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The project's long-secret summary business case was released to NSW parliament last week.

It revealed that just 27 cents worth of benefits would be attained for every dollar spent on the scheme.

The government also considered five alternatives to the new dam and pipeline, including an "increased urban reserve" in Chaffey Dam, a pipeline to the city from the gigantic Keepit Dam and water recycling.

Infrastructure Australia, which is independent of the government of the day, finalised its report in July.

The document is an assessment of the state government's business case, which was handed over to the agency in early 2022.

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The report also reveals that the dam is scheduled to be completed in 2029, to be operational by 2030.

"It appears that options were progressed primarily on their ability to increase the storage capacity of the region, whereas the service need is primarily to reduce water security risk," the report said.

"This is an important distinction as non-infrastructure solutions may reduce water security risk without increasing storage capacity."

Infrastructure Australia assumed a 7 per cent real discount rate, leading to a very low cost-benefit ratio. The state business case includes both a .27 cost benefit ratio and a .09 ratio estimate.

Former Tamworth Mayor, now chair of Infrastructure Australia Col Murray, declared a conflict of interest in relation to the project and was not present during any discussion or decision-making relating to the business case assessment.

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