The top water bureaucrat in NSW, Gavin Hanlon, has been secretly recorded offering to confidentially share internal government information with irrigation lobbyists — documents he proposed to strip of government logos and share via a special Dropbox account — to assist their lobbying against the contentious Murray-Darling Basin Plan.

Key points: Secret recording reveals NSW Government has been considering plans to abandon the Basin Plan

Secret recording reveals NSW Government has been considering plans to abandon the Basin Plan The NSW Office of Water has long faced criticisms of its processes

The NSW Office of Water has long faced criticisms of its processes Gavin Hanlon also defended the DPI's decision to shift compliance out of the department

The recording of the 2016 teleconference also reveals the NSW Government has been actively considering plans, in discussion with irrigators, to abandon the Basin Plan altogether, and has sought legal advice about doing so.

A Four Corners investigation has confirmed that Mr Hanlon, Deputy Director General of the NSW Department of Primary Industries, did not approve a major operation targeting non-compliant irrigators in the north of NSW — an operation urged upon him by his own investigators after they collected evidence that billions of litres of water had been improperly pumped.

"I think that it was clear that there was no appetite for compliance anymore," said Jamie Morgan, who until midway through 2016 managed the department's Strategic Investigations Unit.

"It was odd timing in my view. It was only when we went to the north-west of the state, where we found significant problems, that our team was very quickly disbanded after that.

"Our briefings weren't being answered. And to this day, no-one has actually addressed those issues in that area."

Investigations into at least four large-scale cotton-growing operations were underway when responsibility for compliance was transferred to Water NSW. ( Four Corners )

The revelations raise grave doubts about the integrity of the $13 billion Murray-Darling Basin Plan.

Murray-Darling Basin Authority chief executive Phillip Glyde said all responsibility for compliance fell to the states.

"The measurement, the recording, the compliance activities, the enforcement activities are all vital, absolutely vital to having faith in the Basin Plan," he said.

"As water becomes more valuable, people will want to know that it is being used fairly."

But Four Corners has confirmed that investigations into at least four large-scale cotton-growing operations in northern NSW were underway when responsibility for compliance was transferred to Water NSW, a state-owned company which licences and sells water.

The transfer was part of a major restructure of water governance in 2016.

But a critical review by Third Horizon Consulting in December 2015, which underpinned the reforms, did not recommend that serious compliance investigations be moved out of the department.

The effect of the reform was that the Strategic Investigations Unit was closed. Even prior to the reform, the number of serious non-compliance investigators responsible for targeting illegal water extractions fell by half.

The unit had originally been established in the wake of two scathing reports from the NSW Ombudsman which found the conduct of the department in enforcing the state's water laws was "unreasonable and otherwise wrong".

"NOW [The NSW Office of Water] failed to implement policies, practices and procedures which ensure breaches to the Water Management Act and Water Act were adequately and effectively enforced," the Ombudsman found in its previously confidential 2013 report.

The department has long faced criticism of its processes.

The Ombudsman's inquiries detected failures to prosecute illegal water works stretching as far back as 2003.

In a 2014 report, the Independent Commission Against Corruption found "systemic problems" in the department, including "weaknesses in poor policy formulation, management, resourcing and business systems".

Hanlon canvassed 'Plan B'

In 2015, after several investigations identified evidence of serious breaches by some of the largest water-users in NSW, the Strategic Investigations Unit sought approval for a coordinated investigation targeting the whole of the Barwon-Darling "between the locations of Mungindi and Lake Menindee".

"A compliance operation to address this non-compliance is proposed … to identify and bring into compliance all users of the unregulated river system," one briefing said.

Mr Morgan said this operation was never approved.

When asked about this, Mr Hanlon said that compliance cases were prioritised according to "established protocols".

Sorry, this video has expired Who is benefitting from the billions spent on the Murray-Darling?

Mr Hanlon also defended DPI's decision to shift compliance out of the department, claiming it had no adverse impact on water investigations and was in keeping with "best practice".

He said it "ensured the organisation responsible for regulation has the detailed understanding of what a regulated entity should and should not be doing and therefore is in a much stronger position to determine if compliance is being met".

In the secret audio recording of a teleconference with irrigator lobbyists, Mr Hanlon is also heard canvassing "Plan B" — a plan for NSW to abandon the Murray-Darling Basin Plan altogether.

"We have had detailed legal advice on what walking away means," he tells the group, offering them a one-page summary setting out the advice in a way that would not breach legal privilege.

He told the group the advice said that "Plan B" was "doable", though "bloody messy".

"Before we walk away we would dare them to step in over the top of what we're doing if we're acting in good faith, delivering on what we should, and they start carrying on, we would say we dare you to bloody step in over the top of us," Mr Hanlon said.

'Obviously we would have to de-badge it'

Sorry, this video has expired Drone footage of the Barlow water reserve

Mr Hanlon is also heard offering to share government documents.

"What we might do," he said to the group of irrigator lobbyists, "is set up some sort of, something like Dropbox or something like that, where we can stick documents that we're sharing as just a safe way to get information around between us."

He describes some of the information at hand as "ammunition" that can be confidentially used to the group's advantage, and says he will provide internal information stripped of his department's logo.

"There's a good discussion to be had with a group like this confidentially about at what point do you roll, and start firing those things off?" Mr Hanlon said.

"We can put together a few paragraphs for you to assist … obviously we would have to de-badge it."

NSW Environmental Defenders Office chief executive Sue Higginson said her lawyers had been fighting to obtain government data via freedom of information laws.

"De-badging documents is something that is entirely inappropriate," she said.

"We are really struggling to get access to documents lawfully at the moment, and documents that we think we're really entitled to, members of the community ought to be having access to … so providing anybody a sort of material advantage in a high-level position, I would suggest, is very inappropriate."

One of the cases under investigation by the former Strategic Investigations Unit involved a prominent cotton grower Anthony Barlow. ( Four Corners )

Mr Hanlon told the group he had a strategy in hand if he was criticised for his relations with the lobbyists.

"It's part of my job unfortunately, I have to be able to talk to everyone," he said.

"Now, how much notice I take and how often I meet with them is another thing, so I think I can manage that sort of a conversation by being seen to and occasionally meeting with everyone and anyone, but in terms of having structure and detail and discussions in confidence, I only do it here."

Mr Hanlon told Four Corners it was "prudent" to consider plans to leave the Basin Plan and that confidentiality was sometimes requested of stakeholders to allow for "frank conversations".

"These discussions are carefully managed under our protocols so that market sensitive information is not released," he said.

One of the cases under investigation by the former Strategic Investigations Unit involved a prominent cotton grower from the NSW and Queensland border at Mungindi, Anthony Barlow.

Documents seen by Four Corners show he was pumping water during an embargo in 2015 which had been established to ensure sufficient water flowed down the Barwon-Darling system to replenish Broken Hill's dwindling drinking supply.

The embargo, which ran during the first six months of 2015, was gazetted under NSW law and publicly advertised.

But when questioned by NSW officials, Mr Barlow claimed he had received permission to take the water from the then NSW minister for water, Kevin Humphries.

"We sat in a Barwon-Darling water users meeting at Bourke where the then-minister, Kevin Humphries, stated on three separate occasions, after being questioned directly by the members of the room, is it an event-by-event basis? To which he said, 'Yes, it has to be announced that flow in the river is embargoed,'" Mr Barlow said.

"I thought that would be enough, he was the Minister."

Mr Humphries did not respond to a request for a comment.

In a formal briefing for senior departmental officials, investigators wrote that as many as 1.191 gigalitres — or 1.1 billion litres — may have been pumped on Mr Barlow's property Burren Downs in contravention of NSW law.

Mr Barlow declined to comment.

'At the end of the day we want to do the right thing'

Another major case investigated the water-taking on Miralwyn, a major cotton farm near Brewarrina owned by Peter Harris, a prominent NSW irrigator.

Investigators toured the property in August 2015 discovering water meters which appeared to have been tampered with and large-scale pumping that appeared to be "outside of required river heights".

When they interviewed the farm's manager he said he did not know what had happened to the meters.

He also initially told them that he kept a logbook of how much water the property takes from the river — as is required under NSW law when meters are not properly functioning.

Warned that he was required under the law to give truthful answers, the manager promised he could retrieve it for the investigators after the interview.

But as soon as they switched off the recording, he admitted there never was any such logbook.

Six minutes later they turned back on the recording, and the manager said: "We've left the room and I don't have a record of the logbook of the pump."

The Miralwyn farm manager did not respond to Four Corners' request for comments.

Prominent NSW irrigator Peter Harris (left) was interviewed by investigators. ( Four Corners )

The following day, Peter Harris's son Jack Harris was also interviewed under caution about whether the farm kept logbooks.

In his interview, he said: "I understand we probably should be running a diary, and we probably will start from today."

"At the end of the day we want to do the right thing," he told the investigators.

"We've been here for long enough, we've been irrigating for 30-odd years, we're not out to do the wrong thing.

"And it just looks like we're in a tight situation here now with a couple of things all lined up at the same time, but what else can we do about it?

"I'm happy to work with you guys for the rest of the time you want to look into it and we can get it sorted out."

Separately, records of two of the Harris properties' water licences released under the Government Information (Public Access) Act to the Environmental Defenders Office (EDO) indicate significant volumes of water have been pumped on Harris farms beyond any legal entitlement.

The NSW Government has told the EDO that the operations on the Harris properties remain under investigation.

Peter and Jack Harris declined to answer questions put to them by Four Corners.

Their solicitor wrote to the ABC denying any wrongdoing on their behalf.