The Newman government slashed oversight of the controversial coal seam gas (CSG) industry in Queensland despite warnings it would lead to serious non-compliance and to CSG companies "gambling" with safety.

Key points: The budget for CSG oversight was cut from $1.9 million to just over $1 million

The budget for CSG oversight was cut from $1.9 million to just over $1 million The cuts were made despite warnings oversight of the industry was "critical"

The cuts were made despite warnings oversight of the industry was "critical" Activists describe the cuts as a "get out of jail free" card for the CSG industry

Cabinet documents, obtained by the ABC, reveal the government was told in 2012 that slashing jobs and funding from CSG compliance would increase "the risk of a significant incident occurring".

One submission to cabinet, marked "urgent and unavoidable", actually argued for an increase in compliance funding.

It said funding cuts would be "poorly received by the community".

Despite the warnings, the budget for overseeing the CSG industry was repeatedly cut from $1.9 million in 2011-12, to just over $1 million three years later.

The number of fulltime staff involved in compliance was cut by half.

The documents seen by the ABC were prepared for the 2012 budget amid a climate of widespread budget cost-cutting.

Oversight of CSG industry deemed 'critical'

One cabinet-in-confidence document warned that "a high level of attention and oversight was critical given the potential groundwater impacts, the impacts of contaminant release to underground waters, soil contamination, air quality (noise, dust, nuisance, and air emissions), vegetation disturbance as well as impacts to wildlife".

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"Industry growth ... has created enhanced regulatory responsibilities which will require additional ongoing funding," it stated.

The cabinet documents also warned that cutting funding for compliance would mean "only the most significant breaches would be considered for prosecution".

"This may potentially signal to industry that non-compliance is worth the gamble as they are unlikely to be held to account," the document stated.

"Reductions will also restrict the department's ability to deliver a robust regulatory framework committed to by government."

Carmel Flint from the conservation group Lock the Gate said the 2012 decision by the Newman government to cut the compliance budget showed "a complete disregard for Queensland farmers".

"They were determined to hand the CSG industry a massive get out of jail free card and paid no heed to written warnings that it could lead to water and soil contamination, instead leaving farmers and communities to bear all the risks," she said.

The Queensland Opposition has told the ABC that when it was in government, it actually increased funding for CSG compliance activities by $38 million across three budgets.

A spokesman said the extra money was provided to the departments of Energy, Environment and Natural Resources.

It accuses Labor of leaving CSG compliance unfunded.

Last year the Queensland Labor Government injected $7 million to fund the operations of the Coal Seam Gas Compliance Unit, including inspections and investigating complaints about CSG impacts on water bores.