Despite this valuation, the federal government by 16 March, 2017 would pay Tandou's owner Webster Ltd more than $78 million. At its announcement on 21 June last year, Webster said in a statement it "expects to record a net profit on disposal in the order of $36-37 million". The transfer of the water rights are apparently the subject of inquiries by the NSW Independent Commission Against Corruption, with several people saying they have discussed their knowledge of the deal with the agency. An ICAC spokeswoman declined to comment. Tandou property as of October 2017. Credit:Richard Kingsford Niall Blair, NSW Water Minister, on Tuesday defended the support given to the buyback proposal by Mr Hanlon, saying the purchase "made material sense on its own".

"NSW has supported the purchase of water entitlements and decommissioning of irrigation infrastructure as a water saving project that allow significant volumes of water to be saved and returned to the environment," Mr Blair told Fairfax Media. "In providing that support the NSW Department of Industry has corresponded with the commonwealth on these matters." Loading A spokesman for the federal agricultural department, now headed by David Littleproud, said it "stands by this water purchase as value for money and an important investment in the future of the Murray-Darling Basin". The price was based on water entitlements valued at $38 million and $40 million "for the loss of land value for permanently forfeiting all future rights to irrigate on the property and decommissioning certain infrastructure". The spokesman did not explain how Webster came to book the transaction as a one-off profit of about $37 million.

Maurice Felizzi, Webster's chief executive, told Fairfax Media the company was "unaware and not privy to correspondence between Gavin Hanlon and the Commonwealth regarding support of the buyback of water and/or the compensation for the sale of the decommissioning of the Tandou operations". "Webster communicated with Mr Hanlon initially, regarding possible solutions for the Menindee Lakes," Mr Felizzi said. "Mr Hanlon had then passed this matter onto the Commonwealth to work through possible solutions and commercial terms which remained until the matter closed." He said the company "has had no contact with ICAC". Water deals in the Murray-Darling Basin are also coming under scrutiny following the failure last week to amend the $13 billion plan that would have cut environmental flows to be recovered from the northern basin by 70 billion litres a year to 320 billion litres. While Webster closed its deal last year, the company - 12.49 per cent owned by prominent businessman Chris Corrigan - it has proceeded with another cotton crop even as flows on the Darling River south of Menindee Lakes and Tandou have withered.

"It's just bizarre that Tandou's been growing cotton when there are blue-green algae outbreaks left, right and centre," Katharine McBride, a lower Darling River pastoralist, adding the price paid to Webster "was huge...because it's not a consistent source of water". The Darling River is barely flowing south of Menindee Lakes, according to Katharine McBride, who supplied this photograph taken on February 18, 2018. Chris Minns, NSW Labor's water spokesman, said Mr Blair "must reveal whether he instructed Gavin Hanlon to write to [then agriculture minister] Joyce recommending a buyout of Tandou’s water rights". "If he did we need to know why $78 million was paid out of tax payer funds to a private interest and whether lower estimates were rejected," he said. Jeremy Buckingham, NSW Greens water spokesman said he referred the Tandou buyback to ICAC on 28 November last year.

“If a federal anti-corruption body existed, I would refer it to them as well, as the Commonwealth’s role in this deal looks very fishy," Mr Buckingham said. Questions include what prompted the NSW Department of Primary Industries to commission a private valuation of Tandou Station’s water, he said. Maryanne Slattery, formerly director of environmental water policy at the Murray-Darling Basin Authority, said the purchase of Tandou's water was part of a bigger scheme. "The reconfiguration of Menindee Lakes, decommissioning of the Tandou business and the [$500 million] Broken Hill pipeline lead to the concern that the NSW government is no longer interested in achieving flows in the Barwon Darling River below Bourke," Ms Slattery, now with The Australia Institute, said. "This is particularly concerning for the remaining Lower Darling irrigators, riparian users, dry-land farmers, indigenous groups, and local communities," she said.