By Adam Carey
South East Water took up to two months to identify and seal a burst water main in the weeks before a disastrous McCrae landslide, despite making multiple checks in response to residents’ complaints of water seeping out of the ground and damaging local roads.
Estimates ranging from 36 million to 80 million litres of water leaked from the burst water main in a six-to-eight week period in November and December last year, before the source of the leak was identified and sealed.
The cliff in McCrae experienced four landslides between November 2022 and January 2025.Credit: Joe Armao
Two weeks later, on January 14, a serious landslide occurred downhill from the burst main, crushing a three-storey house at the bottom of an escarpment and forcing the evacuation of about 20 homes.
South East Water managing director Lara Olsen told an inquiry the corporation’s leak detection methods failed and that the state-owned corporation still does not know how exactly much water escaped from the burst main before it was fixed.
The authority estimated 36 million litres of water was lost, but testing conducted by affected residents put the figure as high as 80 million litres.
South East Water is reviewing its detection methods in response to the failure, Olsen said.
The state-commissioned inquiry is probing the cause of four landslides in the same residential part of McCrae, 70 kilometres south of central Melbourne, between November 2022 and January this year, and how to prevent repeat landslides.
The inquiry heard that South East Water received several residents’ reports of road damage due to seeping water in McCrae in November last year, but that repeated visits and testing did not identify the source of the leak, leading the company to initially conclude it was groundwater and not from its network.
A staff maintenance worker, identified only as Gary, eventually located the burst water main in an area of dense vegetation near the Mornington Peninsula Freeway on December 30.
Olsen admitted that the corporation’s methods for leak detection – including site visits, acoustic testing, electrical conductivity tests and internal alarms – had all failed to detect the significant and long-running leak.
“We are doing a full review in terms of all of that,” Olsen said.
South East Water moved quickly to distance itself from perceived responsibility in the days following the landslide. It issued a public statement on January 17, three days after the collapse, saying “preliminary data from tests indicates the water is not from South East Water’s network”.
South East Water managing director Lara Olsen, pictured last year, said the company is reviewing its leak detection methods following the landslide.Credit: Christopher Pearce
But Olsen told the inquiry the company could no longer be sure of its contribution and had commissioned an external, expert report about the impact of South East Water’s infrastructure on groundwater in McCrae.
“We wanted to understand if we contributed to the landslide,” she said. “We’ve had that discussion internally as well, that if we have contributed in any way, that we will own it and acknowledge it.”
The report, tabled in the inquiry, states it is “reasonable to conclude” the upwelling of water and damage to the streets was caused by the burst main, but said it was “not feasible” that the burst main alone generated enough water flow to have caused the landslide “without additional defects (i.e. pavement and structural defects) being observed.”
A burst water main leaked undetected for six to eight weeks, potentially causing upwelling and cracking in the roads.Credit: Adam Carey
Counsel assisting the inquiry Mark Costello, KC, said no conclusions had been reached about the cause of the landslide, but reprimanded Olsen for her inability to answer many of his questions, arguing neither she nor South East Water were taking the inquiry seriously enough.
“From the evidence that you’ve given today and the evidence that you’ve provided to this commission in writing, there is not the slightest evidence to suggest that South East Water take any of this as being an urgent matter,” Costello said.
Olsen rejected the assertion and said: “Absolutely it is a serious matter, and we have been focused on it too.”
The inquiry has also heard from affected residents and from the Mornington Peninsula Shire Council.
A municipal surveyor employed by the council was seriously injured in the landslide, forced to jump from the balcony of a house that was destroyed when tonnes of waterlogged earth collapsed from the hill above.
The co-owner of the house, Nick Moran, told the inquiry that the disaster had broken his family, and it was just luck that saved his daughter from being killed in a smaller landslip on January 5, which damaged the house nine days before it was destroyed.
The council estimated the landslide would cost $8 million, adding an average $75 to each household’s rates bill.
Eight properties remain under evacuation orders, with no known return date.
The board of inquiry is due to hand its report to the Allan government on June 18.
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