Australian taxpayers have given a huge corporation more than $40 million, enabling it to expand irrigation in the Murray-Darling Basin under an environmental scheme that has been labelled a national disgrace.

Key points: Billions of dollars in Commonwealth funds have been handed out to irrigators under a scheme designed to help the environment

Billions of dollars in Commonwealth funds have been handed out to irrigators under a scheme designed to help the environment Partly foreign-owned corporation Webster Limited received more than $40 million and has expanded its irrigation operations

Partly foreign-owned corporation Webster Limited received more than $40 million and has expanded its irrigation operations Farmers say no-one is checking whether grants given under the scheme are delivering their promised water savings

Four Corners can reveal that more than $4 billion in Commonwealth funds has been handed over to irrigators, which has allowed them to expand their operations and use more water under the $5.6 billion water infrastructure scheme — the centrepiece of Australia's $13 billion Murray-Darling Basin Plan.

The scheme is intended to recover water for the rivers by giving farmers money to build water-saving infrastructure, in return for some of their water rights.

Some of the beneficiaries of the scheme are partly foreign-owned corporations that have used the money to transform vast tracts of land along the threatened river system, planting thirsty cotton and nut fields.

One of the biggest operators is Webster Limited, a publicly traded company that produces 90 per cent of Australia's walnuts and is 19.5 per cent owned by Canadian pension fund PSP.

Webster has received $41 million from the water infrastructure scheme to grow its empire in the Murrumbidgee Valley, in south-west New South Wales, where it has bought hundreds of square kilometres of land.

The funding covers more than half of an ambitious $78 million capital works program by Webster Limited to build dams to store more than 30 billion extra litres of water and irrigate an extra 81 square kilometres of land, developing much of it into prime, irrigated cotton country.

Maryanne Slattery, a former director at the Murray-Darling Basin Authority, says it is horrifying that a scheme designed to help the environment is allowing irrigators to use more water.

"That program was supposed to reduce the amount of water that was going to irrigation, when it's actually increased the opportunities for irrigation … all subsidised by taxpayers," she said.

"I think Australian taxpayers will be really shocked to find out that that money is actually going to foreign investors as well."

Maryanne Slattery was a director at the Murray-Darling Basin Authority before she quit in disgust, concluding the basin plan was a fraud on the taxpayer. ( ABC News: Neil Maude )

Dams paid for by the Commonwealth

On the Hay Plains, one of the flattest places on earth, Webster is one of several agribusinesses building dams to store huge volumes of water to irrigate new cotton fields on the outer reaches of the Murrumbidgee River.

UNSW river ecologist Professor Richard Kingsford, who has been studying the area for more than 30 years, says the new dams are trapping water that would have otherwise flowed downstream into habitats and farming communities in the Murray-Darling Basin.

"I find that astounding. I mean, why are we building these large dams for private gain at public cost?" he said.

"Essentially it increases the take from the river system and ultimately decreases the amount of water in the river. That to me is where, in fact, we may be seeing more water taken out of the rivers than water savings."

Ms Slattery says the region, where temperatures regularly soar into the 40s, is unsuitable for dams because of the high rate of evaporation.

"You just see dam after dam after dam, these massive on-farm dams, in a place that is as flat as a table, that just should not have dams," said Ms Slattery, who is now a senior water researcher at the Australia Institute.

"And then when you realise they're being paid for by the Commonwealth, under a supposedly environmental program, that's just horrifying."

No checks or oversight on water scheme

The water infrastructure scheme was designed to recover water for rivers in the basin. ( ABC News )

Former government officials have revealed to Four Corners that no-one in government monitors whether the work paid for by the water infrastructure scheme delivers on its promised water savings.

Farmers say that to get a grant, they give the Federal Government an estimate of how much water their proposed new infrastructure will save, but that figure is never checked or monitored, even after millions of dollars in Commonwealth funds are handed over.

Ms Slattery says the scheme is a fraud on the taxpayer.

"There's no government checking in that process at all. There is no confidence that that process has been done independently and is able to be verified," she said.

"Governments are very motivated to get the savings on paper, and they've got deep pockets … you'd have to expect that some of the savings aren't real, and that money has gone to projects that haven't yielded what they were supposed to."

UNESCO chair in water economics Professor Quentin Grafton has been calling for measurements on the impacts of the scheme since it was introduced, but he says the Federal Government has ignored him and tried to discredit his work.

"It's been incredible to say this, that we can spend [$4 billion] to date yet we haven't done those basic measurements to allow us to know what in fact we've got, net, in terms of the impact for the environment," he said.

"In the best case scenario it's less than half of what the Government claims, and in the worst case scenario we've gone backwards, not forwards; that in fact the amount of water in the environment has actually declined as a result of these efficiency subsidies.

"We don't know because we need a water audit, a hydrological audit of what's going on in the basin."

Farmers say Government overpaid them for water

Glen Andreazza says as a taxpayer, he doesn't agree with the water infrastructure scheme. ( ABC: Neil Maude )

Farmers have also told Four Corners that they believe the Government has overpaid them for water under the scheme, and in many cases they have been paid to build infrastructure they would have built anyway.

Julie Andreazza and her husband, Glen, received more than $100,000 for earthworks to reduce water runoff from their farm.

"Those works were things that we were going to always do anyway," Ms Andreazza told Four Corners.

"Obviously, cost was a problem, so we were going to do it down the track. But when this opportunity turned up for available funds to be used, well of course we jumped at it."

Glen Andreazza estimates the Government paid double what it should have on the water buy-back on his farm.

"I'm a taxpayer, I don't agree with the scheme. I think it's too expensive," he said.

The Andreazzas were later able to buy back the same amount of water they had surrendered for the grant, and they got it on the market for a lower price.

Professor Grafton says the scheme could have delivered huge benefit for the environment and communities along the Murray-Darling, but instead it has been squandered.

"We chose to put it into pipes, we chose to put it into concrete and we chose to deliver private benefits with public money, and that is a national scandal," he said.

The Hay Plains in western New South Wales is flat, hot, and, experts say, unsuitable for dams.

Webster Limited has also been expanding its nut business, planting vast new walnut and almond orchards, as part of a boom in the nut industry, which is placing the river system under increased strain.

Nut trees are extremely thirsty, requiring water throughout every year — unlike crops such as cotton, which can be planted only when there is enough water to sustain them.

Webster Limited's deals with the Australian Government are confidential, however the company has confirmed to Four Corners it received $41 million in water infrastructure subsidies in return for surrendering water licences it valued at $22 million.

Those licences were part of an enormous water portfolio the company most recently estimated to be worth $350 million.

Under the scheme, details of who receives the subsidies and how they are spent are not publicly available. The Government has not measured what effect Webster's huge irrigation expansion will have on the river system.

Webster declined to give Four Corners figures on how its taxpayer-backed expansion had changed its water usage, but said the funding had led to a decrease in water use per hectare and was intended to make the farms more productive and efficient.

According to its environmental impact statements, the works allowed Webster to pump and store huge volumes of what they call "opportunity water" — water from heavy rain events that would have otherwise flowed downstream.

The upgrade enabled Webster to activate a stockpile of unused licences for the cheaper water, known officially as "supplementary water".



Webster says its projects have been independently audited and reported in accordance with the Government's guidelines.

The $41 million was provided to Webster via companies that are contracted by the Federal Department of Agriculture and Water Resources to distribute water infrastructure funding and administer the program.

The department relies on the companies, known as "delivery partners", to submit independently validated evidence of changes to Webster's farming practices.

Watch the Four Corners investigation, Cash Splash, tonight at 8.30pm on ABC TV and iview.