Dungowan Dam Infrastructure Australia report flawed: Nationals

There are fears the $7.4-billion in water infrastructure committed to by the former government will also be on the chopping block due to flawed metrics creating unfavourable assessments.

Infrastructure Australia, which reviews the business case of all projects seeking $250 million in federal funding, found the dam - located near Tamworth NSW - only had a cost-benefit ratio of 0.09.

The dam was not added to the organisation's Infrastructure Priority list and gives the new Labor government ammunition to walk away from the Coalition's $433-million commitment, which was made during the 2019 drought, when Tamworth was less than 12 months away from running out of water.

However, the Nationals are up in arms over the report's self-confessed inability to assess the economic benefits of the dam.

"The proposal will improve the region's water security outlook, potentially alleviating constraints on future business investment and economic activity in the region, although this was not able to be quantified in the economic appraisal," the report states.

"It is therefore not possible to assess whether the impact of the proposal on the productivity of the region will be material."

Nationals New England MP Barnaby Joyce, who secured the funding as Infrastructure Minister, "fervently disagreed" with the report, and said city-based bureaucrats didn't want to spend money on infrastructure in the bush.

"[The report] was a very convenient excuse, they knew what answer they wanted and they wrote the report to get it," Mr Joyce said.

The report notes that the economic benefits it could quantify from reduced incidence of water restrictions and risk of a water supply shortfall were "relatively small".

Mr Joyce said if the report's authors couldn't quantify the benefits of water security, he was happy to take them to Tamworth's industrial park and abattoirs, where "thousands of jobs" already relied on a secure water supply.

Nationals leader David Littleproud said the report was "pretty disappointing" and should "sit in someone's draw and never be seen again".

"While Infrastructure Australia said the dam had a poor business case, they've provided a poor report which hasn't really gone to the essence of what it would do," Mr Littleproud said.

"They need a little bit of reflection of what they've produced here. These pieces of infrastructure are important not just for securing critical water supply, but for growing agriculture and industry, and that's been glaring overlooked."

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Infrastructure Australia recommended a package of "non-infrastructure solutions" to improve the region's water security, such as water pricing reform, water use efficiency and demand management measures, which could be "achieved through lower cost solutions".

It also suggested increasing the urban reserve within the nearby Chaffey Dam, by buying back the water licences of farmers.

Opposition water spokesperson and Nationals Senator Perin Davey said Infrastructure Australia had to develop tools to assess both the economic and social benefits of projects.

"If you purely look at the cost-benefit ratio of infrastructure, I don't think we'll ever build another dam," Senator Perin said.

"They haven't quantified the social benefits of increased water reliability. That brings confidence to business decisions and investment to the whole region."

Federal Water Minister Tanya Plibersek was asked if Labor would uphold the funding commitment of the previous government in light of the report.

"I want to make sure we examine all the options and choose one that delivers water security for the region and is also cost-effective and environmentally appropriate," Ms Plibersek said.

"The Infrastructure Australia assessment makes clear that Dungowan Dam and pipeline is not the only potential solution... and said they would welcome a revised business case for a solution that better addresses the region's water security."

A spokesperson for Infrastructure Australia said only the evidenced provided in the NSW government business case was considered.

"The business case contained descriptive information on the extent to which water security risk will impact future investment and economic activity," the spokesperson said.

"However, the business case did not quantify the benefits of increased water security on potential future activity, meaning that future economic benefits were not modelled to demonstrate a return on investment.

"As such, the Benefit-Cost Ratio of 0.09 is the most accurate figure available."

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