The federal government’s announcement of funding to help build the Urannah Dam in north Queensland would direct $500m to a company run by people with links to the Liberal National party, and to a project facing serious questions about its economic benefit.
Guardian Australia reported in 2020 that an economic analysis, commissioned by local environmental groups, found the Urannah project could return as little as 26c for every dollar invested.
A subsequent Guardian investigation found that $12m in federal funding announced since 2018 ultimately flowed to Bowen River Utilities, which is run by prominent Queensland Liberal National party figures and donors.
The Australian reported the $500m grant would go to that same company.
The sole director of Bowen River Utilities is John Cotter Jr, a former member of the LNP’s governing state executive and a former regional party chair. Under a complicated corporate structure, subsidiary companies of Bowen River Utilities are run by people who include two LNP donors.
The suite of companies proposing the Urannah scheme were – until July 2019 – previously mostly owned by Initiative Capital, a venture specialising in public-private partnerships that is owned by Cotter and his wife, Regina.
Profiles of Bowen River Utilities staff on LinkedIn previously listed their employer as Initiative Capital. Guardian Australia makes no suggestion Bowen River Utilities or any associated individual has acted improperly, or that the company and its proposal should not be eligible to receive federal grant funding.
Cotter was quoted by the Australian – which did not mention his or the company’s LNP connections – as saying the $2.9bn dam would be able to provide water to coalmines in the Bowen Basin, supply water for irrigation and would include a pumped hydro-electric scheme.
The deputy prime minister, Barnaby Joyce, on Thursday said the $483 million investment in the 970 gigalitre dam project would help nearby producers develop 20,000 hectares of irrigated land, and deliver more infrastructure to regional centres such as Mackay and Gladstone.
But studies have raised serious questions as to whether the project carries the sort of economic benefit suggested.
A preliminary business case for Urannah, submitted to the Queensland government in 2019, claimed the project would return a benefit of $1.70 for every dollar invested. It is understood a final business case has been developed but that it has not been released publicly.
A review of the preliminary business case by an economist, Andrew Buckwell of Altus Impact, found the benefits were significantly overstated, based on “flawed assumptions” and did not take into account environmental costs, including additional carbon emissions created by the inundation of 6,099 hectares of forest. The economic assessment was commissioned by the Mackay Conservation Group.
In each of five scenarios modelled by Buckwell, the project was measured as having a net social cost to the community. In the worst-case scenario, the total benefit of Urannah was equivalent to about a quarter of the cost.
“From an economic perspective, the construction of the Urannah Dam should not be supported,” the report concludes. “It will come at a net social cost to the community.
“From a policy perspective, the construction of the Urannah Dam should not be supported. It will not achieve the stated goals of cost recovery from water users.”
While much of the public discussion about Urannah has focused on how the project might boost local agriculture, the bulk of any water transported to Moranbah would be used for coalmining.
Documents submitted by Bowen River Utilities to the federal government for environmental assessment show it has consulted major coalmine operators in the Bowen Basin about buying water from Urannah.
“Community and stakeholder consultation has been targeted and conducted at a regional level as part of the feasibility studies for the project,” the referral document says.
“The focus of stakeholder engagement, to date, has been on water infrastructure and potential customers of a large-scale water solution. Consultation with the following stakeholders has been undertaken … Rio Tinto, Glencore, QCoal, New Hope, BMA, Peabody, Anglo American, Stanmore, Fitzroy Resources.”
Bowen River Utilities chief executive officer James Benjamin said in a statement: “Our detailed business case has been completed by top-tier advisors in line with best practice for government infrastructure requirements.
“Our DBC has now been released by the Queensland Government and is available to the public and highlights the vast benefits to the Greater Whitsunday Region, North Queensland more broadly and taxpayers.
“Once built, Urannah Dam will be handed back to the Queensland Government as a public asset.
“We are currently completing our environmental approvals in line with the stringent process for major projects in Queensland.
“We welcome the overwhelming support we’ve had from the local community in response to the announcement from the Coalition Government this morning.
“Urannah Dam will transform the region with water security and reliable energy and is strongly supported by both major political parties and all three levels of Government.”
