Federal dam funding for NSW drought revealed as loan

Despite being announced as a 50-50 funding split between the NSW and federal governments, The Daily Telegraph can reveal the state will be forking out 75 per cent of three water infrastructure projects.

Half of the funding handed to NSW by the federal government to build critical new dams will have to paid back because it is being delivered in the form of concessional loans.

Despite being announced as a “50-50” funding split, The Daily Telegraph can reveal half of the Commonwealth’s $577 million spend on three water infrastructure projects in NSW will be given as loans.

This would mean the NSW government would ultimately pay about 75 per cent of the $480 million Dungowan dam, $650 million for the Wyangala dam raising and $24 million for investigation of a dam at Mole River.

Wyangala Dam, near Cowra.

The $288 million in direct funding announced by Prime Minister Scott Morrison on Sunday also included $75 million already put on the table by the Commonwealth for Dungowan Dam three years ago.

The revelation comes as state cabinet signed off on laws that will fast track dams and emergency water pipelines, allowing the government to bypass regular planning processes. The changes could cut between 18 months and two years off the time taken to build dams.

The reliance on loans for NSW is in stark contrast to funding awarded in Queensland for similar water infrastructure projects in 2018, when Mr Morrison committed $430 million in direct grants.

This included $200 million to build a pipeline for town drinking water in Townsville.

Labor’s water spokeswoman Terri Butler said if the funding was “not 50-50” the government should apologise for “misleading” NSW communities.

A proposed dam to be built on the Mole River near Tenterfield that would also supply water to Stanthorpe and Warwick in Queensland.

“This government has been quick to make announcements and offer false hope for regional communities who are desperate for action on water security, but they have failed to deliver, time and time again,” Ms Butler said.

Talking points accidentally released by Mr Morrison’s office yesterday did not mention the loan arrangement.

“We are putting $575 million on the table in a 50-50 funding partnership with the NSW government to get these projects underway as soon as possible, bolstering water supply and security across NSW,” the memo to MPs said.

Deputy Prime Minister Michael McCormack, who looks after the infrastructure portfolio, said funding arrangements were negotiated with states on a “case-by-case” basis with a maximum of 50 per cent in federal contributions.

Early works on the Dungowan dam are expected to start next year as Premier Gladys Berejiklian vowed to “accelerate” the project after years of inaction.