Farmers on Queensland's McIntyre River say the Federal Government's $13 billion Murray-Darling Basin plan has failed as it allows cotton irrigators to replace water sold back to the Commonwealth with extra floodwaters caught off the plains.

Key points: Murray-Darling Basin plan allows irrigators to catch floodwaters off the plains

Murray-Darling Basin plan allows irrigators to catch floodwaters off the plains Farmers claim millions of taxpayer dollars have been wasted, with no water savings achieved

Farmers claim millions of taxpayer dollars have been wasted, with no water savings achieved Water being "backed up in Queensland", according to farmer Clay Maher

The farmers claim millions of taxpayer dollars invested in local water efficiency projects have been wasted, with no actual water savings achieved.

"The water is backed up in Queensland and it's not getting into NSW," according to farmer Clay Maher.

"It should end up at the end of the Murray Darling."

His neighbour Chris Lamey said extra floodwaters were allowed to be caught by irrigators, which subverts the intent of the Murray-Darling Basin Plan.

"I'm blown away they don't even count all this overland floodwater that's being pushed into dams," he said. "It's not even on the Murray-Darling Basin Authority's (MDBA) radar. They call it 'leakage'."

Former director of environmental water planning for the MDBA Bill Johnson said the national plan to return water to the ailing river system had led to perverse outcomes in Queensland.

"In my view it's extremely serious," he said. "It couldn't be more serious. The Government has invested about $13 billion aside for this and it seems as though it isn't getting good value for money.

"In some parts I think the outcomes are perverse. The outcomes are possibly the opposite of what was intended."

Earthwork structures raise concern for family

A year ago, Mr Lamey said, his family's bumper crops were wiped out by floodwaters he claims were backed up against a bank on his neighbour's property.

He said his 4,100-acre property was under water for seven weeks.

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But just a few kilometres downstream, neighbour Clay Maher's property — separated from the Lameys by a single farming operation — remained dry.

"When we found out there was no flood downstream, we got in a chopper straight away and went to the air to track down what was going wrong," Mr Lamey said.

What they discovered was a series of earthwork structures built across the floodplain. The Lameys asked river ecologist Bill Johnson to assess the effect of the earthworks on their neighbour's property.

"It's a levee — it's a raised earthwork across the floodplain, running from the McIntyre River to the north, built at right angles to the overland flow," he said. "Water is held up on the upstream side of it. It is, in effect, a dam."

"It looks like … it functions as a surge area that holds water even temporarily to allow it to be moved to other storage."

Norman Farming is a large-scale cotton business stretching 30 kilometres north across the floodplain. It owns or operates eight or more properties, including the neighbouring property to the Lameys' farm.

Mr Norman declined an interview request from Lateline.

In a statement to the program, his lawyer said the bank or levee in question was a road, constructed long before he moved onto the property and that it had drains to allow floodwaters through. The Lameys argue the drains are insufficient and too much floodwater is being blocked.

Farmers say captured floodwaters make water savings redundant

Water on the Lameys' property. ( ABC News: Kerry Brewster )

As part of the national $13 billion plan to return water to the river system, Norman Farming has received at least $7 million, all of which was required to be spent on water efficiency projects.

The estimated water savings from this investment have been transferred into water licences, held by the Commonwealth's Environmental Water Holder.

But according to the Lameys, the Commonwealth's effort to save water becomes redundant, because it allows irrigators to catch floodwaters off the plains.

Chris Lamey blames the Murray Darling Basin Authority and the Queensland Government for ignoring the lost floodwaters.

"They are obsessed with making this project a success and I believe that they think a success means that the money is out of the account and the water is in the Commonwealth's account. They are not concerned one little bit about what happens thereafter."

Council changes its tune

Late last year, Goondiwindi Regional Council wrote to the Lameys and Clay Maher, informing them it had requested the removal of "illegal" structures it had identified on properties operated by Norman Farming.

Ten months later, Mayor Graeme Scheu told Lateline: "It was acknowledged there were non-approved structures there and the correct process to do that is to give the applicant the chance to go through and get them approved and that's what's happening ... it's very, very ambiguous on what's a levee bank and what's a road and all the heights and that type of thing."

The council said it was waiting for expert modelling of the impact of earthworks on flood flows, commissioned and paid for by Norman Farming. If the modelling justifies any unapproved roads, levees or banks, the council said the works would be approved retrospectively.

"You've got to have a process and that's the state process," Mr Scheu said. "It's not up to me to say whether it's right or wrong."