Exclusive: Business case, which NSW government fought to keep secret, shows water security was not primary motivation for pipeline

A business case for the controversial $500m Broken Hill pipeline, released after a three-year battle, reveals the New South Wales government made almost no effort to evaluate the impacts of the pipeline on the lower Darling and instead put weight on how the pipeline would help the cotton industry upstream and mining ventures along the pipeline route.

The 2016 report, which had been kept secret until this week, will add to pressure on the government to respond to the findings of the Natural Resources Commission that water-sharing rules for the Barwon-Darling system in northern NSW are responsible for the environmental catastrophe at Menindee and a drought three years early in the lower Darling.

The NRC has called for an immediate overhaul of the water-sharing rules to make them fairer. It says the rules have allowed irrigators to take huge volumes from the river including during low flows, at the expense of other users of the river, including the Indigenous people.

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The unfair rules have led to prolonged periods of no flows in the lower reaches of the Darling and towns now facing extreme water shortages, it says. These have led to unprecedented fish kills at Menindee last summer and more are expected as the weather warms.

The $500m Broken Hill pipeline to bring water from the Murray 270km away instead of drawing from Menindee Lakes 100km away has now been built, but independent MP Justin Field, who secured the release of the business case, said it showed the crisis had been “manufactured.”

“The reality is that Broken Hill didn’t have a water security problem until upstream irrigators were allowed by the NSW government to suck the river system,” he said. “This pipeline allows that unsustainable water use to continue and risks the long-term health of the river and the Menindee Lakes.”

The final business case reveals that a far more complex set of considerations other than water security for Broken Hill drove the decision.

Front of mind for for the Department of Primary Industries, the author of the report, was facilitating what is known as the Menindee Lakes water saving project. It is designed to deliver 50GL of water savings through shrinking the lakes and cutting evaporation.

If NSW can meet its contribution to water savings this way, it takes the pressure off irrigators, mainly cotton growers, upstream to surrender water entitlements to the government.

The report, which was written before ABC’s Four Corners blew the whistle on allegations of water theft by irrigators, shows unequivocally that the pipeline project business case did not consider what the environmental impact of the entire scheme- the pipeline and running the lakes dry – would be on the lower Darling.

It said the environmental issues would be canvassed later, while also being very critical of the environmental impact of the cheaper alternative: taking water out of the nearby Talyawalka aquifer to supplement the lake supply.

Since the business case was written, the Murray-Darling Basin Authority has examined the impact of shrinking the lakes and has flagged environmental concerns.

The business case instead concentrated on the economic benefits of both the pipeline and the associated water-saving scheme for Menindee.

“The economic benefit of the additional 50GL of SDL offset savings under option 1a and 1b [the pipeline options] would add an estimated economic surplus to the state of $4.6m,” the report says. “The value of this water to production is significantly more with the Cotton Growers Association estimating that the economic contribution of 50 GL of water could be more that $120m to agricultural output.”

At another point it notes that mining near Broken Hill uses 50% of the potable water supplied to the region.

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“For mining companies, scarce water availability may eventual require the mines to become wholly self-sufficient which will require additional investment and approvals placing additional pressure on the viability of the region’s primary industry,” it says.

There was virtually no analysis of the negative economic on tourism of shrinking the Menindee lakes, or of the impact on downstream farms.

“The business case shows what many in the Broken Hill community who were opposed to the pipeline long suspected, that decoupling Broken Hill’s water supply from the Menindee Lakes would reduce the need for flows down the Darling and open up more water for northern irrigators,” Field said.

“The government couldn’t be clearer, under Summary of Benefits of the Business Case, the first benefit listed is: ‘avoided costs of water embargoes on Northern Rivers irrigators (ie. loss cotton production)’.”

Elsewhere in the business case it says: “Ultimately, the State’s ability to manage environmental, agricultural and industry water requirements within the Basin is limited by Broken Hill’s reliance on the Menindee Lakes system.”