$7.4b Dam Announcement Doesn’t Hold Economic Water: Research

New research has found that the Federal Government’s announcement that it will spend $7.4b on dams does not deliver value for money and provides less employment and GDP growth than if the same amount were invested in other parts of the economy.

The research reveals that if the $5.4b announced for the Hells Gate Dam in Queensland was invested in aged care, 20,000 more jobs would be created, and GDP would be $360 million greater than the current proposal. The research underscores questions about the integrity of the funding announcement on the eve of an election.

Key Findings:

  • Federal Government has committed $7.4 billion of public money to building new dams
  • Vast majority is earmarked for the $5.4 billion Hells Gate Dam in north QLD
  • Spending $5.4 billion on aged care instead of dams would create 48,000 jobs, 20,000 more than spending on dams
  • Spending $5.4b on aged care would boost GDP by $360m more than investment in dams
  • $5.4 billion for Hells Gate was made without scrutiny from the Commonwealth’s own National Water Grid Advisory Board, an environmental impact assessment, or a detailed business case
  • The vast majority of new water infrastructure spending is being allocated to where the National Party vote is highest, not where the agricultural potential is highest
  • Most spending is in North Queensland where less than 1.1% of Australians reside

“The lack of business case or rationale for this gigantic level of spending is shocking, even by modern standards,” said Dr. Richard Denniss, Chief Economist at the Australia Institute.

“The Hells Gate Dam has previously been rejected by Labor & Coalition Treasurers for 80 years but it seems Josh Frydenberg is the first Treasurer to capitulate, based on a business case sketched on the back of a beer coaster, with taxpayers picking up the $5.4 billion tab.

“This level of spending is nationally significant, but the main beneficiaries appear to be the National Party in very specific locations. Despite the water and economic policy challenges nationally, there is no investment in this announcement for South Australia, Victoria, or Tasmania.

“ While there is nothing illegal about building dams, car parks, or other projects in regions based seemingly on political calculations rather than economic ones, there’s also no reason to expect they will deliver any lasting economic benefits beyond those paid to pour the concrete.

“Compared to the Murray Darling Basin plan that took 15 years since Howard’s announcement at a cost of $13b, with bi-partisan support, extensive scientific, environmental, and economic research across a range of stakeholders, experts, and all levels of government, affecting millions across the country – the Hells Gate announcement appears to be a blank cheque.”

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