Australia

Murray-Darling plan on brink of collapse as changes shot down in Senate

The Murray-Darling Basin Plan is at risk after government changes were shot down in the Senate. (AAP) Source: AAP

Furious Victorian and NSW water ministers could be poised to pull their states out of the Murray Darling Basin Plan after federal government changes seeking to distribute water differently were voted down.

The coalition was unable to strike a deal with Labor, which supported a Greens disallowance motion, with it passing 32 votes to 30 on Wednesday.

NSW Water Minister Niall Blair said the plan, which delivers healthy rivers and viable regional communities, had been thrown on the scrap heap in a "race for votes in South Australia".

"This move makes the basin plan untenable for NSW," he said.

His Victorian counterpart, Lisa Neville, has also flagged intentions to walk away.

"(It) is a slap in the face to communities and a slap in the face to the environment," she said.

"We want the Commonwealth to investigate all options to overturn this decision.

"If that is not possible the plan cannot be delivered."

The federal government was attempting to reduce the amount of water being returned to the environment in southern Queensland and northern NSW, easing pressure on farmers in those regions.

Water Minister David Littleproud said Labor had now brought back the "water wars" between the states.

"Australians are going to wake up this morning with 1000 gigalitres less because of the careless and reckless actions of the Labor party and the Greens," he told reporters on Thursday.

"I'm reaching out as the minister to get calm, to try and put this back on track but unfortunately I think a lot of damage has been done to the goodwill we started to build over this process."

He added in a statement: "Labor has killed the plan it worked on for years and had created huge uncertainty for thousands of businesses in regional towns which rely on water allocation."

Opposition Leader Bill Shorten said the deal was not yet dead.

"I think there's a deal to be done," he said during a press conference on Thursday morning.

"I think that people of goodwill can make it work, but, the government really has left it at five minutes to midnight."

But South Australian Greens senator Sarah Hanson-Young said blocking the changes would provide the chance for integrity to be restored to the plan after allegations of water theft in the northern part of the basin.

"We want an independent audit of where the water has gone, where the money has gone and how much is left for the river," she told the ABC's Radio National program.

"Billions of dollars has been spent buying water that is now not in the river because it's being sucked out, stolen by big corporate irrigators."

The National Farmers Federation said Labor's actions were at best short-sighted and reckless and at worst a "sign of contempt for regional Australia".

Water has been a hot issue in the South Australian election, where Labor is seeking to retain government.

- with AAP

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