The national auditor has queried the conduct of former prime minister John Howard for announcing an $80.3 million water scheme in a marginal electorate before any actual proposal was lodged.
In a report tabled in parliament on Thursday, the Australian National Audit Office (ANAO) said the Wyong-Mardi Link Project in the Liberal electorate of Dobell on the NSW central coast had yet to deliver any local or national water benefits.
As well, the Commonwealth paid out twice what was originally requested, covering the full cost of the project.
"The significant level of funding committed meant that potentially more competitive projects that were under consideration by the National Water Commission (NWC) at the time could not be progressed," it said.
ANAO said the Wyong-Mardi Link was first proposed in May 2007 by a pair of federal MPs who suggested the Commonwealth fund half the proposed $85 million cost.
The NWC advised that no application had been received, there was no open funding round, the project was unlikely to meet Water Smart Australia (WSA) criteria and it was contrary to the National Water Initiative (NWI) principle of cost recovery for core water infrastructure.
"The day after the NWC provided this advice, funding of $80.3 million was announced by the former prime minister on May 31, 2007, eight days after the letter from the local MPs," ANAO said.
The project aims to create a system of water supply pipes, pumping stations and water intakes to transfer water from the lower Wyong River by way of Mardi Dam to Mangrove Creek Dam.
Work is scheduled to start this year. Funding for the scheme was allocated through the WSA program launched by the former coalition government shortly after it won the 2004 election.
It established the NWC to oversee implementation of the National Water Initiative, signed by the Commonwealth and states in June 2004.
The government created a $2 billion water fund with $1.6 billion to be distributed through WSA to promote greater use of smart technologies and practices.
All up, the NWC assessed a total of 382 proposals, with 74 awarded Commonwealth funding, usually as a contribution to total costs.
As at June last year, a total of $1.52 billion had been committed, with eight projects completed.
The ANAO assessed whether the program had been administered effectively and concluded that it mostly had, although there had been various delays and some projects had not met agreed milestones.
It said in some cases advice from the NWC had not been accepted, although ministers were entitled to reach a different conclusion, provided they were satisfied spending was in accordance with government policy and an appropriate use of public money.
ANAO noted that the NWC wasn't always right. Two projects it assessed unfavourably have since produced regional water benefits while three projects it approved have experienced problems.
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