A scathing independent study of the Northern Territory's largest-ever groundwater licence has found the project "makes no sense" for Territory taxpayers and represents up to $300 million worth of public subsidies for the proponent.
In April last year, Fortune Agribusiness was granted the right to extract 40,000 megalitres of groundwater from an arid station 400 kilometres north of Alice Springs, free of charge.
The NT does not charge irrigators for licences, but an academic study of Fortune's business case, funded by the Central Land Council and peer-reviewed, has found this water licence would be worth between $70 and $300 million in other markets.
The study's lead academic Jeff Connor from UniSA also analysed the business case put forward by Fortune and found the company's claims on wealth and jobs creation did not stand up to scrutiny.
Professor Connor studies water economics and said his paper pointed to a "lack of due process" by the Territory government and compared Fortune's projections to other existing projects.
He said there was "very little substantial basis" to back up Fortune's claims that the project would benefit taxpayers.
Professor Connor said the water "is a public good" and that in his opinion this deal was not a good one for taxpayers given the risks the project posed to the environment.
"There is no evidence of a clear social benefit-cost analysis to justify a transfer of such value from the public to a private enterprise," the report found.
High cost, low yield to public
Fortune Agribusiness plans to develop a food bowl on Singleton Station and in its original licence application, the company said the project would create 110 permanent jobs for the region and 1,350 seasonal jobs.
Comparing this project to others like it, Professor Connor estimated the true number of jobs would be between 26 and 36 full-time equivalent jobs in the local area, with a maximum of eight of those going to residents from Indigenous communities.
"If you look carefully at what actually happens in these kinds of projects ... 90 per cent of the labour, typically, in the Northern Territory, comes in from elsewhere and overseas."
Professor Connor's team also analysed the company's claim that the business would generate $110 million a year for the Territory.
What they found instead was that a maximum of $28 million would flow back to the Territory's taxpayers.
The report notes that no social or environmental costs had been accounted for in any publicly available documents on the project.
'This water is for our kids'
Derek Walker runs a community development program in his community of Ali Curung, which relies on the same groundwater as Fortune's planned development.
He said he was "angry" to learn the project would not benefit local people, who are some of the poorest in Australia.
Mr Walker's program Uncles Farm creates employment pathways for young people, produces fresh vegetables that are returned to the community and creates a much-needed income stream for local projects.
"We do business in the community for local people, and we look after the water properly. We employ people in the community properly," he said.
He said he felt this project was a direct threat to the community's future development and drinking water.
'Makes no sense'
Quentin Grafton from the Australian National University peer-reviewed the study free of charge and agreed with all of the report's original conclusions.
"It just doesn't make any sense."
Professor Grafton, a leading academic on water economics, said it was natural for the company applying for the licence to have been overly optimistic but it was up to the Territory government to do its own due diligence on their numbers.
"You can't just accept the business case from a proponent because the proponent is obviously a beneficiary."
Business case based on detailed studies
Fortune Agribusiness has refuted the claims laid out in the study.
In a statement, it said its figures were based on "detailed studies by leading Australian professionals," which "demonstrate the economic feasibility of the farm".
"Our current projections around employment numbers, revenue, and opportunities for NT businesses are well founded and based on the above studies, and we stand by these," a spokesperson for the company said.
The company also said its planned irrigated horticultural production would deliver more revenue and employment opportunities per litre of water than what would be produced by broadacre farming that used the same volume of water.
Fortune also strongly refuted claims the local Indigenous community would not benefit from the project.
"There will be opportunities for local Indigenous people in the farm itself, in support services, as well as environmental ranger monitoring roles," it said.
"There is significant unemployment and lack of opportunities in the Ali Curung and Tennant Creek region and this farm will provide major new employment and business opportunities."
The Northern Territory government declined to comment as the matter is before the courts.
