Queensland sank case for federal dam funds

Federal funding for the long-awaited Hells Gates Dam in north Queensland was scrapped after a recommendation by the state’s own water minister.

The site of the proposed Hells Gates Dam on the Burdekin River, northwest of Townsville. Picture: Trudy Brown

Federal funding for the long-awaited Hells Gates dam in north Queensland was scrapped after a recommendation by the state’s own Water Minister.

A leaked budget-night letter from federal Water Minister Tanya Plibersek to her Queensland counterpart, Glenn Butcher, debunks the state government’s claim the dam’s business case is still being assessed by the federal government.

Funding for the $5.4bn project was outlined in the Morrison government’s budget in March, but was absent from the Albanese government’s first budget last week. Ms Plibersek has enraged farmers by saying the Coalition’s dam funding had been redirected for controversial water buybacks in the Murray-Darling Basin.

Mr Butcher, who has been criticised for “failing to fight” for the dam ahead of the budget, has ­repeatedly said the business case for the dam was with the federal government, but the letter from Ms Plibersek to Mr Butcher cites his advice as the reason the funding was scrapped.

“The government has also had to make a number of tough decisions in the budget to manage spending pressures on our ­nation’s finances,” Ms Plibersek wrote in the letter. “For instance, the government will not be proceeding with the Hells Gates dam project based on your advice regarding the project’s deliverability and the outcomes of the detailed business case.”

Mr Butcher has not publicly ­revealed the Palaszczuk government had recommended the project not go ahead.

According to the business case, the 2100GL dam on the Burdekin River, 140km northwest of Townsville, would have supported a 60,000ha irrigation scheme and led to “substantial increases” in gross regional product and ­employment.

The site of the Hells Gates Dam, northwest of Townsville.

Both Ms Plibersek and Mr Butcher have been publicly coy about the reason for the dam’s axing, ­alluding to the approval being rushed and saying the projects that had received funding were “robustly investigated”. They have also described the Morrison government’s funding of Hells Gates and other regional dams and ­infrastructure projects as “pork barrelling” by the Nationals.

“These big pieces of infrastructure need to be robustly investigated and robustly built,” Mr Butcher said on Thursday. “We owe that to the communities ­located next to these proposals and the areas they support.

“We also owe that to the Queensland taxpayer. The ­detailed business case has been reviewed by DRDMW (Department of Regional Development, Manufacturing and Water) and submitted to the Australian ­government.”

The Australian understands the federal government is no longer considering the project ­because of issues with the business case and a lack of Queensland government support.

Queensland Water Minister Glenn Butcher. Picture: NewsWire / Sarah Marshall

On Wednesday Liberal ­National Party water spokes­woman Deb Frecklington said Mr Butcher had “failed to stand up for Queensland” before the budget. A taxpayer-funded $24m business case, produced by SMEC and KPMG, was given to the state and federal governments in May.

Few details have been revealed about why the project apparently does not stack up, but it is understood the federal government has raised environmental and cultural heritage issues. Concerns included the likely inundation of more than 100 cultural heritage sites, including burial grounds, rock art sites, food resources and rock shelters.

Ahead of the election, Labor promised it would undertake consultation on the project, but The Australian understands Ms Plibersek considers that consultation with the Queensland government and traditional owners is finished, and that both traditional owners and the state government said the project should not proceed.

Ms Plibersek would not answer specific questions about why the business case was rejected. “We’re spending more than $1bn on water infrastructure projects – three quarters of that is going to Queensland,” she said. “We have put aside an additional $1bn for ­future water infrastructure projects that are properly costed and will deliver results. Our ­approach is to fund sensible projects that ­deliver for communities.”

Dam proponent Townsville Enterprise said the project was scrapped “without any consultation with the project proponents or community”.