SARAH FERGUSON, PRESENTER: A group of Queensland farmers has been fighting for years to stop what they claim is illegal quarrying in the Upper Brisbane River which is eroding their properties, causing millions of dollars in damage.

The quarrying company involved is one of Queensland's biggest and is run by a wealthy businessman who's also a donor to the state's Liberal National Party government.

Now 7.30 has learned that an investigation into the farmers' complaints came to a sudden halt because of a last-minute, unannounced change to the law by the Newman Government.

The change came after the company raised the issue with the Deputy Premier Jeff Seeney, who subsequently ordered his department to draw up and back-date legislation which made prosecution of the company impossible.

Mark Willacy reports from Harlin in South-East Queensland.

MARK WILLACY, REPORTER: Barrie Dunning should be spending his time tending his cattle or planting sorghum and barley. Instead, the farmer is again out repairing his river bank.

So far, he's shelled out $60,000 to build this retaining wall along his stretch of the Upper Brisbane River. In recent years, the bank has been repeatedly washed away, taking with it 12 hectares of Barrie Dunning's most fertile land as well as large tracts belonging to his neighbours.

BARRIE DUNNING, HARLIN FARMER: Between the three properties, there's probably been spent more than $180,000 to put in these banks to try and stop the erosion of high banks.

NEIL O'CONNOR, HARLIN FARMER: We believe that it's been the 20 years of overextraction of sand and gravel. The river's have their ways of doing things. If you abuse that, which I believe's happened, then it will do what rivers do. It can only literally swallow us up.

JON OLLEY, AUSTRALIAN RIVERS INSTITUTE: So by disturbing the bed of the channel and the banks of the channel, you actually trigger erosion upstream, delivering material downstream and in effect mining farmers' properties upstream. They've lost many hundreds of thousands, if not millions of dollars worth of land that they can't get back. It's basically gone, it's a resource that they've lost.

MARK WILLACY: The company doing the sand and gravel extraction is Karreman Quarries, one of the biggest operators in Queensland. Its owner, Dick Karreman, is one of Queensland's richest men. A prominent racehorse owner, he's also a big donor to Queensland's Liberal National Party, in recent years contributing $75,000.

BARRIE DUNNING: We know he's got some powerful friends, but we've got to be careful what we say, 'cause he's threatened to sue us at times if we complain too much about his not complying with council or department rules.

MARK WILLACY: Karreman Quarries has been taking sand and gravel from the Upper Brisbane River for 20 years. With every cubic metre of material worth about $150, it's a lucrative industry.

JON OLLEY: What they've been taking out of the river is about 100,000 to 150,000 cubic metres of material a year.

MARK WILLACY: That means this river is worth up to $22 million a year to the company. But the mining has been having a significant impact on the environment, with a 2007 Australian Rivers Institute investigation finding that sand and gravel extraction from the Upper Brisbane River was "unsustainable".

JON OLLEY: In 2007, the institute recommended that all sand and gravel extraction cease in the Upper Brisbane. That didn't happen.

MARK WILLACY: Responding to complaints about Karreman Quarries, the Premier Campbell Newman wrote to farmer Neil O'Connor last year confirming the company needed a state permit to mine the river, a permit the company didn't have. The Premier asked the Minister of Natural Resources to investigate. The investigation confirmed that Karreman Quarries was breaking the rules, because the company didn't have any authorisations from the department. The department told landholders it was considering legal action against the company.

NEIL O'CONNOR: And we're waiting on where that might lead, if it leads anywhere of any, any - of any good. So, yeah, I guess you could say we're still in that limbo land.

MARK WILLACY: But it wouldn't be in limbo land for long. Not after the Deputy Premier and State Development Minister Jeff Seeney got involved. In December, Dick Karreman met with Mr Seeney, a meeting recorded in the official ministerial diary. The entry says only that they discussed the Mining Act.

The quarrying was still going and the department still believed it was illegal. So in February, the department ordered Karreman Quarries to stop extracting sand and gravel because it didn't have the required permit.

The company challenged this compliance notice and was allowed to continue operations until the department's internal investigation was finished. But that investigation would never be completed, because a few weeks later, another crucial meeting took place.

That meeting was called at short notice by Deputy Premier Jeff Seeney and was held in his office. It was noted in the official diary of the Natural Resources Minister, who also attended.

According to an account of the meeting given to 7.30, the Deputy Premier was given a briefing about the department's investigation and its conclusion that Karreman Quarries' extractions were illegal.

It was after this meeting that bureaucrats were asked to draw up special legislation that would resolve the matter once and for all, and this amendment to the state's Water Act would slip through Parliament without anyone noticing, including the Labor Opposition.

The amendment extended the area allowed to be quarried to the lower bank of a river, meaning Karreman Quarries' activities were now legal. And it also back-dated the legislation by four years, meaning illegal quarrying like that carried out by the Karreman company for years was now lawful.

NEIL O'CONNOR: I just can't believe it. What can we do now? We're affected by this amendment. We have nowhere to go.

MARK WILLACY: As well as back-dating the law, the amendment allows all quarry operators to continue to mine for another five years, even without a current permit.

NEIL O'CONNOR: The Deputy Premier has stepped in and berated the people within the department and now has sidelined them. And they've brought this amendment into the act. End of story. We're finished. Our farms will just continue to be eroded away.

MARK WILLACY: With the law now against them, these farmers know it's not just their land slipping away, but also the futures they'd planned for.

BARRIE DUNNING: I don't have suitable inheritance to pass on to my family. Only see it as a problem they hand on. If they want to sell it, well it's not going to be worth much.

SARAH FERGUSON: Late this afternoon, lawyers for Karreman Quarries said the company rejected suggestions it has operated outside the law, saying Karreman Quarries has always disputed the need for the state permit issued by the department.

Deputy Premier Jeff Seeney said in a statement that his dealings with Clive Palmer - as his dealings with Clive Palmer had shown, everyone was treated equally by the LNP government.

Mark Willacy with that report, produced by Mark Solomons.

And you can read the response to 7.30 from the Queensland government.