Dominic Perrottet to bail out of NSW water projects

The NSW government is poised to back away from two of the country’s largest water infrastructure projects promised at the height of drought conditions.

NSW Premier Dominic Perrottet. Picture: Gaye Gerard

The NSW government is poised to back away from two of the country’s largest water infrastructure projects promised at the height of drought conditions, marking the Perrottet government’s first significant break from policies announced during ­Gladys Berejiklian’s leadership.

Construction of a dam along the Mole River, in the state’s north, is earmarked not to go ahead, according to officials familiar with the matter, who cited its economic viability and a lack of community support as drivers for the impending decision.

A plan to raise the Wyangala Dam wall by about 10m – to increase storage capacity for the Lachlan Valley – is likely to be ­“indefinitely postponed” because of the soaring costs of biodiversity offsets, they said.

Biodiversity offset credits are required to be purchased in cases where projects have an environmental impact resulting from ­development and clearing.

The Dungowan Dam project, a long-held third dam promised for northern NSW, appears likely to proceed despite delays and ­recent criticism of its viability in a Productivity Commission report.

The three water supply initi­atives were announced in 2016, 2019 and 2020 as part of a $1.1bn federal-state commitment to ­secure water for drought-afflicted areas of the state.

A spokeswoman for NSW Water Minister Melinda Pavey would not respond to the ­proposition that the two projects had been either scrapped or delayed, saying only that a final business case and environmental impact statements were being worked on. “Biodiversity offset costs for all projects, including contributions to the Biodiversity Conservation Fund, will be assessed and considered as part of the final business case and EIS process. Only then will a final cost be ­determined,” she said.

“We are doing everything we can to complete all necessary work as soon as possible so that, subject to approvals, construction can begin on these critical ­projects.”

Former deputy premier John Barilaro told The Australian that the Wyangala and Dungowan projects were required as a matter of necessity, saying the political will for both “must rise above the bureaucratic white noise”.

“Wyangala and Dungowan must happen … not to proceed on either would be reckless in preparing for future droughts and water security,” he said.

He conceded that if the Mole River project was found to be non-viable then it would be ­“acceptable” to sideline the project, but the other initiatives should be pursued.

The Dungowan Dam project, along the Peel River, initially ­received $150m from the state and federal governments for its construction. In 2019, this ­increased to $484m.

“Infrastructure project costs do change and in the case of these dams, I acknowledge it’s more than we first planned. But how many Sydney road and rail projects have exceeded budgets, yet they continue?” Mr Barilaro said.

A NSW parliamentary inquiry recently cast doubt on the ­viability of the Dungowan and Mole River dam projects, with committee members critical of government decision-making and saying the water security projects, and others, might not “represent good value for money”.

The investments “do not appear to have adequately considered alternative options,” the inquiry’s chairwoman, Greens MLC Cate Faehrmann, wrote.

Labor water spokeswoman Rose Jackson said: “The government water policy is a shambles. Project after project is delayed or cancelled, the minister herself admitting they stuffed it up. The Nat­ionals ... promise dams and then fail to deliver.”

A spokeswoman for Acting Prime Minister Barnaby Joyce said business cases for all three projects were in different stages of completion, and ultimately were the NSW government’s ­responsibility.