Plans to build Queensland’s first new dam in more than a decade – the Emu Swamp dam in the Granite Belt – have been thrown into limbo by a construction cost blowout, Guardian Australia has learned.
The 12,000 megalitre dam on the Severn River was initially slated to cost $84m, with most of the funding provided by the federal government ($47m) and Queensland government ($13.6m). The deputy prime minister, Barnaby Joyce, has been a longstanding supporter.
But a Guardian Australia investigation has discovered that estimates for construction of the dam have more than doubled – to more than $200m – leaving the proponent with a significant funding shortfall.
That proponent is Granite Belt Water Ltd, a company made up mainly of local irrigators, which had planned to spend about $23.4m on the project. Overall, about 50 farmers agreed to effectively buy into the scheme in exchange for rights to an annual water allocation.
But the Guardian understands some of those irrigators have since ceased their involvement with the project, claiming it is now unviable.
Opponents of the project – including some local residents and operators of small farms – say taxpayer funds should be spent on alternative water security measures, not a dam privately owned and run by large-scale irrigators.
A project launched in desperate times
In early 2020, the nearby town of Stanthorpe came within weeks of running out of water. The local council, Southern Downs regional council, had plans to raise the wall of Storm King dam, which supplies town water, and had a 450 megalitre water allocation set aside for the project.
“This water is reserved for the future urban growth of Stanthorpe and cannot be compromised,” the council said in 2018.
But in late 2020, a newly elected council reversed that position and voted to transfer the reserve allocation to the proposed Emu Swamp Dam.
At the same time, the council effectively bought into Emu Swamp, agreeing to buy back 585 megalitres a year once the dam was constructed.
Documents seen by Guardian Australia show that irrigators secured annual water allocations by agreeing to contribute to the capital cost of the dam at a rate of $6,000 a megalitre.
Irrigators also agreed to pay $405 a megalitre for water on an ongoing basis – four times the cost of using recycled water from a local scheme.
Maryanne Slattery, a former Murray-Darling Basin Authority member and water researcher, said few crops would be viable at that price.
“It’s hard to imagine you’re making enough profit at that amount,” Slattery said.
While the project would be owned and run by local irrigators, the vast majority of the funding to build the dam was originally to come from government handouts, with the federal government committing $47m through the National Water Infrastructure Development Fund, alongside irrigator contributions of $23.4m and the Queensland government’s promise of $13.6m.
Earlier this month, the Queensland premier, Annastacia Palaszczuk, told state parliament the project was at a “planned pause phase”, but that “we have … invested money in the project because we know how it could transform the region”.
Leading Nationals, including Joyce and the federal agriculture minister, David Littleproud, who is also the local MP, have been longstanding supporters of Emu Swamp.
There are already signs that delays to progress at Emu Swamp will be a source of political jostling at the upcoming federal election.
This government is all about giving the appearance of action but not taking any.
— Terri Butler MP (@terrimbutler) March 5, 2022
On Budget night 2020, the Treasurer included Emu Swamp Dam in his speech.
But after the Palaszczuk govt had agreed to fund it, the Feds took another year to send through the paperwork.
It is unclear whether the federal, state and local governments backing the project know about the cost blowout. Multiple members of Granite Belt Water Ltd have told Guardian Australia that tenders for the construction of the dam came back last year, and showed it could cost more than $200m – more than double the initial estimate.
Irrigators backing the project said they no longer believed Emu Swamp would be built. They said others had already pulled out and written off their preliminary investment – in some cases up to $100,000 paid upfront.
“The reality is that we won’t build the dam unless governments agree to kick in three times what they’ve already committed,” one irrigator said.
“Even then, it would still be close to the most expensive water ever sold to irrigators in Australia.”
Melissa Hamilton, from local group Protect Our Water, said the taxpayer funding for the dam should be “used to benefit the whole community, rather than just 50 irrigators”.
“There are more than 400 farmers in the district who won’t have any access to this water,” she said.
“Government modelling shows that this dam would have been empty in the last drought, and we would still have had to truck water in. Stanthorpe needs real water security, not false promises.”
Hamilton said other options to drought-proof the region were less expensive, but the council had only pursued Emu Swamp.
“The project hasn’t acquired the land it needs, it doesn’t have its approvals, and it doesn’t stack up financially. By now we could have completed other projects that would actually secure the long-term interests of the people of the Granite Belt.”
Guardian Australia sought comment from Granite Belt Water and the Southern Downs Council. Neither organisation responded to questions.
