HUGHENDEN IRRIGATION PROJECT CORPORATION PTY LTD
Preliminary Business Case
Hughenden Irrigation Project
Volume One – Study Report FEBRUARY 2020
HUGHENDEN IRRIGATION PROJECT CORPORATION PTY LTD PRELIMINARY BUSINESS CASE
DISCLAIMER
This report has been prepared on behalf of and for the use of Hughenden Irrigation Project Corporation Pty Ltd and the Australian Government and is subject to and issued in accordance with Hughenden Irrigation Project Corporation Pty Ltd instruction to Engeny Water Management (Engeny).
Engeny accepts no liability or responsibility for any use of or reliance upon this report by any third party.
JOB NO. AND PROJECT NAME: M7220_003 HIP Preliminary Business Case DOC PATH FILE: M:\Projects\M7000_Miscellaneous Clients\M7220_002 HIP Prelim Business Case\07 Deliv\Docs\Report\Revs\Master Report\M7220_003-REP-001-0 Prelim Business Case - Master Report.docx REV DESCRIPTION AUTHOR REVIEWER PROJECT APPROVER / DATE MANAGER PROJECT DIRECTOR Rev 0 Client Issue Jim Pruss Andrew Vitale Andrew Vitale Aaron Hallgath 14 February 2020
Signatures
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CONTENTS
CONTENTS III
APPENDICES XI
LIST OF TABLES ...... XII
LIST OF FIGURES ...... XV
1. EXECUTIVE SUMMARY ...... 1 1.1 Setting the Scene ...... 1 1.2 The Importance of the Hughenden Irrigation Project ...... 1 1.3 Outline and Background ...... 2 1.4 Service Need and Base Case ...... 3 1.5 Governance and Risk ...... 4 1.6 Advantages and Opportunities ...... 5 1.7 Risks and Unknowns ...... 6 1.8 Approach ...... 8 1.9 Reference Project ...... 9 1.9.1 Key Metrics ...... 10 1.9.2 Constructed Assets Required ...... 11 1.10 Water and Environment ...... 11 1.10.1 Water Sources and Allocation ...... 11 1.10.2 Groundwater ...... 11 1.10.3 Access to Unallocated Water ...... 12 1.10.4 Current Volumes Available for Allocation ...... 13 1.11 Environmental Flow Objectives (EFOs)...... 13 1.12 Environmental, Planning, Social and Cultural ...... 15 1.13 Capital Cost Summary ...... 16 1.14 Revenue Summary ...... 17 1.14.1 Crop Selection ...... 17 1.14.2 Gross Margin Analysis ...... 19 1.15 Economic Analysis ...... 20 1.15.1 CBA Results ...... 20 1.15.2 Economic Contribution Analysis Results ...... 20 1.16 Financial Assessment ...... 21 1.17 Affordability ...... 22
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1.18 Proposed Capital/Government Contribution ...... 23 1.19 Conclusions ...... 25 1.20 Recommendations ...... 26
2. GOVERNANCE ...... 28 2.1 Key Points ...... 28 2.2 Background and Purpose ...... 28 2.3 Role of the Australian Government ...... 29 2.4 Role of the State Government ...... 29 2.5 Role of the Project Owner ...... 30
3. METHODOLOGY ...... 31 3.1 Key Points ...... 31 3.2 Background and Purpose ...... 31 3.3 Approach ...... 31 3.4 Summary Risks ...... 32 3.5 Risk Assessment and Treatment ...... 33
4. STAKEHOLDER ENGAGEMENT ...... 35 4.1 Key Points ...... 35 4.2 Purpose and Objectives ...... 35 4.3 Limitations and Risks ...... 35 4.4 Stakeholder Analysis ...... 36
5. PROPOSAL BACKGROUND ...... 38 5.1 Project Location ...... 38 5.2 Economic Overview - Key Points ...... 39 5.3 Industry ...... 39 5.3.1 Employment ...... 39 5.3.2 Agricultural Production ...... 40 5.3.3 Mining ...... 41 5.3.4 Business ...... 41 5.3.5 Services to Transport ...... 42 5.4 Local and Visitor Services ...... 42 5.4.1 Hughenden Aerodrome...... 42 5.4.2 Schools ...... 42 5.4.3 Health ...... 43
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5.4.4 Diggers Entertainment Centre...... 43 5.4.5 Flinders Discovery Centre ...... 43 5.4.6 Visitor Accommodation ...... 43 5.5 Current/Recent Developments ...... 43 5.5.1 Hughenden Recreational Lake ...... 43 5.5.2 Kennedy Energy Park ...... 44 5.5.3 Overland Sun Farm ...... 44
6. SERVICE NEED ...... 45 6.1 Key Points ...... 45 6.2 Why Service Need is an Important Concept? ...... 45 6.3 Previous Assessment of the Service Need ...... 46 6.4 Demand Assessment ...... 46 6.5 Stakeholder Views ...... 47 6.6 Criticality of Intended Outcomes and Possible Disbenefits ...... 48
7. BASE CASE ...... 49 7.1 Key Points ...... 49 7.2 Population Decline ...... 49 7.3 Employment Decline ...... 50 7.4 Socio-Economic Disadvantage ...... 50 7.5 Gross Regional Product ...... 51 7.6 Relative Disadvantage ...... 52 7.7 Future Trends ...... 52 7.8 Prospects of Further Decline ...... 54 7.9 Existing Water Resources ...... 54 7.9.1 Current Water Infrastructure ...... 54 7.9.2 Current Water Resources ...... 55 7.9.3 Surface Water Entitlements ...... 57
8. STRATEGIC CONSIDERATIONS ...... 60 8.1 Key Points ...... 60 8.1 Commonwealth Government ...... 60 8.1.1 White Paper on Developing Northern Australia ...... 60 8.1.2 Northern Australia Audit – Infrastructure for a Developing North ..... 60 8.1.3 Australian Infrastructure Plan (AIP) ...... 61 8.1.4 National Water Initiative (NWI) ...... 61 8.1.5 Reef 2050 Plan ...... 62
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8.2 Queensland Government ...... 62 8.2.1 Queensland Bulk Water Opportunity Statement ...... 62 8.2.2 Queensland Agricultural Land Audit and Addendums ...... 63 8.2.3 Advancing North Queensland Policy ...... 63 8.2.4 State Infrastructure Plan (SIP) ...... 63 8.3 Local Government ...... 64 8.4 Possible Proponent ...... 64
9. OPTIONS CONSIDERED ...... 65 9.1 Approach ...... 65 9.2 Review of Previous Studies ...... 66 9.2.1 Historical Dam Investigations ...... 66 9.2.2 Flinders and Gilbert Agricultural Resource Assessment (FGARA) .. 66 9.2.3 Flinders River Water Resources and Irrigation Project ...... 68 9.2.4 HIPCo Initial Dam Investigations ...... 69 9.2.5 15 Mile Irrigated Agricultural Development Project ...... 70 9.3 Options Long List ...... 71 9.3.1 Initial Options Screening ...... 71 9.3.2 Alstonvale Dam Options ...... 73 9.3.3 Stewart Creek Dam Options ...... 76 9.3.4 Options Assessment ...... 80 9.4 Options Short List ...... 95
10. REFERENCE PROJECT ...... 97 10.1 Introduction ...... 97 10.2 Reference Project Summary ...... 97 10.3 Infrastructure Design Summary ...... 99 10.4 Infrastructure Costs ...... 106 10.4.1 Capital Costs ...... 106 10.4.2 Operating and Maintenance Costs ...... 107 10.5 Yield Modelling ...... 108 10.5.1 Overview ...... 108 10.5.2 Assumptions and Methodology ...... 108 10.5.3 Dam Yield Results ...... 110 10.5.4 Independent Yield Assessment Using Flinders Source Model ...... 116 10.5.5 Climate Change Impact Assessment ...... 118 10.5.6 Reservoir Siltation Assessment ...... 121 10.6 Licensing of Water Take ...... 122 10.6.1 Water Plan and Resource Operations Plan Requirements ...... 122
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10.6.2 Applicability to the Project ...... 125 10.7 Assessment of Impacts to Downstream Stream Flows ...... 127 10.7.1 Overview ...... 127 10.7.2 Modelling Approach ...... 127 10.7.3 Stream Flow Impacts – Annual Flow Volumes ...... 129 10.7.4 Stream Flow Impacts – Daily Flow Volumes ...... 129 10.7.5 Stream Flow Impacts – Environmental Flow Objectives (EFOs) ... 132 10.8 Assessment of Impacts to Existing Water Users ...... 134
11. LEGAL AND REGULATORY CONSIDERATIONS ...... 137 11.1 Key Points ...... 137 11.2 Purpose and Approach ...... 137 11.3 Legal Considerations ...... 137 11.4 Water Planning and Infrastructure...... 138 11.4.1 Water Act ...... 138 11.4.2 Water Allocation and Flow Objectives (Water Act) ...... 138 11.5 Saego Dam and Associated Infrastructure (Water Act, Water Supply Act) ...... 138 11.5.1 Water Act: ...... 138 11.5.2 Water Supply (Safety and Reliability) Act: ...... 139 11.5.3 Other Infrastructure ...... 139 11.6 Planning, Environment, Native Title and Aboriginal Heritage ...... 139 11.7 Land Acquisition and Access ...... 140 11.7.1 Acquisition ...... 140 11.7.2 Access ...... 140 11.8 General Liabilities – Statutory Duty ...... 140 11.8.1 Health and Safety ...... 141 11.8.2 Legal Change ...... 141
12. MARKET CONSIDERATIONS ...... 142 12.1 Key Points ...... 142 12.2 Purpose ...... 142 12.3 Approach ...... 142 12.4 Summary ...... 143
13. PUBLIC INTEREST CONSIDERATIONS ...... 145 13.1 Key Points ...... 145 13.2 Purpose ...... 145
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13.3 Defining Public Interest ...... 146 13.4 Stakeholders ...... 146 13.5 Impact on Stakeholders ...... 146 13.5.1 Government ...... 146 13.5.2 Traditional Landowners...... 146 13.5.3 Environmental Advocates ...... 146 13.5.4 Property Owners Surrounding the Area ...... 147 13.5.5 Broader Community ...... 147 13.5.6 Media ...... 147 13.6 Public Access and Equity ...... 147 13.7 Safety and Security ...... 147 13.8 Future Stakeholder Engagement ...... 147
14. ENVIRONMENTAL ASSESSMENT ...... 149 14.1 Approach ...... 149 14.2 Legislative Review ...... 150 14.2.1 Commonwealth Legislation ...... 150 Environment Protection and Biodiversity Conservation Act 1999 ...... 150 14.2.2 Queensland Legislation ...... 151 State Development and Public Works Organisation Act 1971 ...... 151 Environmental Protection Act 1994 ...... 151 Planning Act 2016 ...... 152 Environmental Offsets Act 2014 ...... 152 Water Act 2000 ...... 152 Biosecurity Act 2014 ...... 153 Aboriginal and Cultural Heritage Act 2003 ...... 153 Native Title (Queensland) Act 1993 ...... 153 Queensland Heritage Act 1992 ...... 153 Land Act 1994 ...... 154 Nature Conservation Act 1992 ...... 154 Vegetation Management Act 1999 ...... 154 Fisheries Act 1994...... 155 14.2.3 Local Planning Schemes ...... 155 Flinders Shire Council Planning Scheme ...... 155 14.3 Existing Environment ...... 156 14.3.1 Climate ...... 156 14.3.2 Topography ...... 156 14.3.3 Geology and Soils ...... 157 Geology ...... 157 Soils 157 14.3.4 Surface Water ...... 158 Waterholes ...... 159
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Stream Flow and Downstream Environments ...... 159 14.3.5 Groundwater ...... 160 14.3.6 Biodiversity ...... 161 Protected Areas ...... 161 Wetlands ...... 161 Ecological Communities ...... 161 Flora 162 Fauna 162 Fish Passage ...... 163 14.3.7 Land Use and Tenure ...... 164 14.3.8 Noise, Vibration, Light, Odour and Air Quality ...... 165 14.3.9 Sensitive Receptors ...... 165 Traffic and Transport ...... 165 14.3.10 Cultural Heritage and Native Title...... 166 Indigenous Heritage ...... 166 Non-Indigenous Heritage...... 166 Native Title ...... 166 14.4 Environmental and Planning Constraints Assessment ...... 166 14.5 Regulatory Processes and Approvals ...... 175
15. SUSTAINABILITY ASSESSMENT ...... 182 15.1 Key Points ...... 182 15.2 Purpose ...... 182 15.3 Overview ...... 182 15.4 Approach ...... 182 15.5 Summary of Assessment ...... 187
16. ECONOMIC ANALYSIS ...... 188 16.1 Overview ...... 188 16.2 The Regional Economy ...... 189 16.3 The Project ...... 191 16.4 The Economic Analysis ...... 194 16.4.1 CBA Results ...... 194 16.4.2 Economic Contribution Analysis Results ...... 196 16.5 Future Refinement of Modelling Assumptions ...... 197
17. FINANCIAL AND COMMERCIAL ANALYSIS ...... 198 17.1 Findings and Conclusions ...... 198 17.2 Approach ...... 199 17.3 Project Description and Assumptions ...... 199
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17.4 Headline Financial Modelling Results ...... 202 17.5 Water Prices ...... 203 17.6 Future Refinement of Modelling Assumptions ...... 204
18. AFFORDABILITY ANALYSIS ...... 206 18.1 Key Points ...... 206 18.2 Purpose ...... 206 18.3 Method ...... 206 18.4 Conclusion ...... 208
19. CONCLUSIONS ...... 210
20. RECOMMENDATIONS ...... 212
21. QUALIFICATIONS ...... 214
22. REFERENCES ...... 215
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Appendices
APPENDIX A COMMUNICATIONS PLAN
APPENDIX B RISK REGISTERS
APPENDIX C ELECTRICITY STRATEGY REPORT
APPENDIX D DAM OPTIONS CONCEPT DESIGN REPORTS
APPENDIX E REFERENCE PROJECT CONCEPT DESIGN DRAWINGS
APPENDIX F DAM YIELD STUDY REPORT
APPENDIX G REFERENCE PROJECT FLOOD ASSESSMENT REPORT
APPENDIX H REFERENCE PROJECT INFRASTRUCTURE CONCEPT DESIGN REPORT
APPENDIX I SAEGO DAM GEOTECHNICAL INVESTIGATION REPORT
APPENDIX J AGRONOMY REPORTS
APPENDIX K REFERENCE PROJECT ENVIRONMENTAL CONSTRAINTS MAPPING
APPENDIX L ENVIRONMENTAL FLOW REVIEW REPORT
APPENDIX M ECONOMIC ANALYSIS REPORT
APPENDIX N FINANCIAL ASSESSMENT REPORT
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List of Tables Table 1.1 Currently Available Allocations (not including potential ‘buy- back or trading options’ ...... 13 Table 1.2 Capital Cost Summary –Scenario 1 Diversified Cropping ($2019) ...... 17 Table 1.3 Capital Cost Summary – Scenario 2 Grazier support ($2019) ...... 17 Table 1.4 Total Developed Agricultural Production Scenario 1 Diversified Cropping ...... 19 Table 1.5 Total Developed Agricultural Production Scenario 2 Grazier Support ...... 19 Table 1.6 Gross Margin Analysis ...... 20 Table 1.7 Economic Contribution Results ...... 21 Table 1.8 Required Payment from Farmers (if project was fully funded) ...... 23 Table 1.9 Required Government Contribution ...... 24 Table 3.1 Risk Assessment and Categorization...... 34 Table 5.1 Share of Employment in Hughenden, by Industry...... 39 Table 7.1 Growth in Gross Regional Product, All regions, 2000-01 to 2010-11...... 51 Table 7.2 Queensland Local Government Areas - Top 10 ranked by population decline. . 52 Table 7.3 Occupations of Those Employed in the Flinders Shire...... 54 Table 7.4 Gauged Mean Annual Flow Volumes Along the Flinders River ...... 57 Table 7.5 Current Volumes of Unsupplemented Water Entitlements in Flinders River catchment ...... 57 Table 7.6 Current Status of Unallocated Water in Flinders River catchment ...... 58 Table 7.7 Outcomes of 2015/16 Tender Process for Release of General Reserve in Flinders catchment ...... 59 Table 9.1 Dam Options Identified by CSIRO FGARA study within Flinders Shire ...... 67 Table 9.2 Details of Dam Yield Modelling Simulations for the Options Assessment ...... 81 Table 9.3 Dam Yield Results for Alstonvale Dam Options ...... 84 Table 9.4 Dam Yield Results for Stewart Creek Dam Options ...... 86 Table 9.5 High-Level Capital Cost Estimates for Alstonvale Dam Options ...... 88 Table 9.6 High-Level Capital Cost Estimates for Stewart Creek Dam Options ...... 88 Table 9.7 High-Level Capital Cost Estimates for Selected Alstonvale Dam Options ...... 91 Table 9.8 High-Level Capital Cost Estimates for Selected Stewart Creek Dam Options ... 91 Table 9.9 High-Level Total Project Cost Estimates for Selected Alstonvale Dam Options ...... 93 Table 9.10 High-Level Total Project Cost Estimates for selected Stewart Creek Dam Options ...... 93
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Table 9.11 Unit Cost Estimates for Selected Alstonvale Dam Options ...... 95 Table 9.12 Unit Cost Estimates for Selected Stewart Creek Dam Options ...... 95 Table 10.1 Reference Project Infrastructure Summary ...... 103 Table 10.2 Capital Cost Summary – Diversified Cropping Strategy ...... 107 Table 10.3 Capital Cost Summary – Grazier Support Strategy ...... 107 Table 10.4 Operating and Maintenance Cost Summary ...... 108 Table 10.5 Predicted Dam Yields for Reference Project – GoldSim Model ...... 111 Table 10.6 Comparison of Grazier Support Scenario Irrigation Supply Reliabilities ...... 118 Table 10.7 Climate Change Impact Assessment Parameters ...... 119 Table 10.8 Climate Change Impact Assessment Results – Diversified Cropping Scenario ...... 120 Table 10.9 Climate Change Impact Assessment Results – Grazier Support Scenario .... 121 Table 10.10 Estimated Average Annual Sediment Yields for the Saego Dam Catchment and Flinders River Diversion Weir Catchments ...... 122 Table 10.11 Current Status of Unallocated Water in Flinders River Catchment ...... 125 Table 10.12 Predicted Annual Stream Flow Volume Changes for the Flinders River Downstream of the HIP ...... 129 Table 10.13 EFO Performance Assessment for HIP ...... 132 Table 10.14 EFO Performance Assessment for Alternative HIP Scenario with a 25% Reduction in the Saego Dam Storage Capacity ...... 133 Table 10.15 Predicted Impacts of HIP on Existing Water Users ...... 136 Table 14.1 Geological Formations Identified Within the Project Area ...... 157 Table 14.2 Soil Types Identified Within the Project Area ...... 157 Table 14.3 Proximity of Sensitive Receptors to the Project Area ...... 165 Table 14.4 Environmental and Planning Constraints Assessment ...... 167 Table 14.5 Approvals Register ...... 176 Table 15.1 Options Assessed by Goal and Criteria ...... 183 Table 15.2 Comparison of Scenarioa A and Scenario B ...... 184 Table 16.1 Share of Employment in Hughenden, by Industry...... 190 Table 16.2 Volume of Production by Scenario ...... 192 Table 16.3 Water Requirements by Crop ...... 192 Table 16.4 Gross Margin Analysis ...... 193 Table 16.5 Capital Costs (discounted, undiscounted) – Scenario 1 and 2 ...... 194
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Table 16.6 Disaggregated CBA Results, Undiscounted and 7% Discount Rate – Scenario 1 ...... 195 Table 16.7 Disaggregated CBA Results, Undiscounted and 7% Discount Rate – Scenario 2 ...... 195 Table 16.8 Economic Contribution Results ...... 196 Table 17.1 Summary of Approach ...... 199 Table 17.2 Key assumptions ...... 199 Table 17.3 Key Assumptions ...... 200 Table 17.4 Water Tariff Structure ...... 203 Table 18.1 Required Payment from Farmers ...... 207 Table 18.2 Government Contribution ...... 208
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List of Figures Figure 1.1 FGARA Study Area and Reference Project Location ...... 3 Figure 1.2 General Arrangement Hughenden Irrigation Project – Reference Project ...... 10 Figure 1.3 Gulf Water Plan Area (Source: DNRME) ...... 12 Figure 3.1 ISO 31000:2018 Risk Management Process Overview ...... 32 Figure 4.1 Initial Stakeholder Identification and Mapping Process ...... 36 Figure 5.1 Flinders Shire LGA ...... 38 Figure 5.2 Mining Industry in Hughenden and Surrounds ...... 41 Figure 5.3 Total Businesses in the Agriculture, Forestry, and Fishing category, Flinders LGA, 2016-2018...... 42 Figure 7.1 Population in Flinders Shire (Source: Historical Data – ABS, 2019; Forecast Population – QGSO, 2018) ...... 50 Figure 7.2 Employment and Labour Force Trends, Flinders Shire (Source: Australian Bureau of Statistics, Census Data) ...... 53 Figure 7.3 Gulf Water Plan area (Source: Water Plan (Gulf) 2007)...... 55 Figure 7.4 Flinders River Water Management Area (Source: Gulf Resource Operations Plan) ...... 56 Figure 9.1 Locations of New Dam Options Assessed in CSIRO FGARA study (Source: Petheram et al., 2013) ...... 67 Figure 9.2 Dam Sites Considered in Stage 1 Dam Investigation for HIPCo (Source: Grace Detailed – GIS Services, 2018a) ...... 70 Figure 9.3 Location of Proposed 15 Mile Irrigated Agricultural Development Project (Source: GHD Pty Ltd, 2018) ...... 71 Figure 9.4 Preferred Dam Sites for Options Long List (Image source: Queensland Globe) ...... 73 Figure 9.5 Concept Infrastructure Arrangement for Alstonvale Dam Irrigation Scheme .... 75 Figure 9.6 Storage Characteristics for Alstonvale Dam and Canterbury Creek Dam ...... 76 Figure 9.7 Saego Impoundment Area Locality Plan ...... 77 Figure 9.8 Concept Infrastructure Arrangement for Stewart Creek Dam Options ...... 79 Figure 9.9 Storage Characteristics for the Stewart Creek Dam Options ...... 80 Figure 10.1 General Infrastructure Arrangement for the HIP Reference Project ...... 100 Figure 10.2 General Infrastructure Arrangement for the Water Diversion and Storage Infrastructure ...... 101 Figure 10.3 General Infrastructure Arrangement for the Irrigation Delivery Infrastructure 102 Figure 10.4 Storage characteristics for Saego Dam ...... 110
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Figure 10.5 Simulated Reservoir Performance for Saego Dam – Diversified Cropping Scenario ...... 111 Figure 10.6 Simulated Reservoir Performance for Saego Dam – Grazier Support Scenario ...... 112 Figure 10.7 Predicted Medium Priority Irrigation Supply Volumes – Diversified Cropping Scenario ...... 113 Figure 10.8 Predicted Low Priority Irrigation Supply Volumes – Diversified Cropping Scenario ...... 113 Figure 10.9 Predicted Irrigation Supply Volumes – Grazier Support Scenario ...... 114 Figure 10.10 Average Annual Inflows and Outflows – Diversified Cropping Scenario ..... 115 Figure 10.11 Average Annual Inflows and Outflows – Grazier Support Scenario ...... 115 Figure 10.12 Daily Flow Duration Curves for Flinders River at Richmond Gauging Station ...... 130 Figure 10.13 Daily Flow Duration Curves for Flinders River at Etta Plains Gauging Station ...... 131 Figure 10.14 Daily Flow Duration Curves for Flinders River at Walkers Bend Gauging Station ...... 131 Figure 16.1 Population in Flinders Shire (Source: Australian Bureau of Statistics) ...... 189 Figure 17.1 Water Pricing Approach ...... 204
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1. EXECUTIVE SUMMARY
1.1 Setting the Scene
The proposed Hughenden Irrigation Project (referred to as the HIP or Reference Project in this Preliminary Business Case) will be transformational for the Hughenden community and the broader region. The HIP project may end up being one of several irrigation projects carefully staged and delivered that will finally unlock the potential of the region. While there are some legislative and approvals issues yet to be resolved, in context, the HIP requires a relatively small amount of water from the Flinders River catchment to transform currently underutilised grazing land into economically productive irrigated agricultural enterprises. Some key statistics include:
▪ The catchment area of the Reference Project is 7,652km2 or approximately 7% of the total Flinders River catchment at 109,000 km2
▪ The Flinders River is the longest river in Queensland at 1,004 kilometres in length and contributes less than 15% to the freshwater flows into the Southern Gulf of Carpentaria (GoC) and only 3% of the entire freshwater inflows into the Gulf. The Reference Project requires only 4% of the mean annual flow of the Flinders River at Walkers Bend and is 700km upstream of the confluence with the Gulf of Carpentaria.
▪ The Reference Project’s average water take will be less than 0.15% of the mean annual freshwater flows into the Gulf.
▪ This small amount of water (109GL/year), if harvested and used correctly, can produce a Gross Regional Product of up to $72.8M and support up to 490 jobs.
▪ The project can also help alleviate the ‘boom and bust’ cycle and make the community and supporting industries more independent and resilient in times of flood and drought.
1.2 The Importance of the Hughenden Irrigation Project
The Hughenden region has long been a vibrant and integral part of the north Queensland, Queensland and Australian economies. It has been suffering long-term economic decline for several decades.
The region has abundant irrigable cropping lands but lacks a large-scale reliable water source. With the support of the Australian Government, and the vision and drive of local farmers and irrigators, the Hughenden Irrigation Project (HIP) has been developed to a stage where it demonstrates real potential to harvest environmentally-sustainable water from the Flinders catchment and to store and deliver this water for new irrigation enterprises.
Whilst further refinements to this proposal and resolution of some key regulatory issues are still required, including the appropriate allocation of water, no fatal flaws have been identified that would prevent the project from progressing to the next stage of assessment.
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This would normally be a Detailed Business Case (DBC) or similar. Furthermore, the project has the potential to reinvigorate the regional and local economy and improve social disadvantages. The economic and social improvements could be unparalleled in this part of North Queensland. It may also provide an ‘exemplar’ or ‘archetype’ project and governance procedures to implement a regional sustainability project in other areas thus transforming regional communities for local, regional and national resilience and prosperity.
1.3 Outline and Background
There has long been an interest in utilising the resources available in the relatively sparsely settled northern regions of Australia. As early as 1929 John Bradfield devised the Bradfield Scheme to utilise and divert floodwaters in the north to other areas in Australia. Over the years there have been various iterations of the Bradfield Scheme and it has once again gained some prominence in the national discussion due to the prolonged and severe drought. Both the Australian and State Government politicians are now referring to a ‘Revised Bradfield Scheme’ to help drought proof the grazing and irrigation lands.
While this PBC does not investigate the issues surrounding the various versions of the Bradfield Scheme it does however seek to be consistent with its objectives and to be easily integrated into any broader scheme should one come into existence in the future.
While the Bradfield Scheme commands public discussions, more contemporary and focussed investigations such as the North Queensland Irrigated Agriculture Strategy (NQIAS) have been undertaken to seek ways to productively and sustainably use water in this part of Australia. CSIRO led one component of this study aimed specifically at the Flinders and Gilbert Catchment areas. This study called the Flinders and Gilbert Agricultural Resource Assessment, FGARA, (Petheram at al., 2013) aimed to identify and evaluate water capture and storage options, identify and test the commercial viability of irrigated agriculture opportunities and assess potential environmental issues and identify social and economic impacts and risks. Among other things the FGARA studies concluded:
1. Thousands of hectares of soil are potentially suitable for irrigated agriculture across northern Australia but access to enough water constrains development.
2. In the Flinders catchment, ‘farm dams’ could support 10,000 to 20,000 ha of irrigation in 70%- 80% of years however irrigation may not be possible in very dry years.
3. ‘In-stream’ dams enable more reliable irrigated production than farm dams as they can more easily carry water from one year to the next.
4. Significant water use would, in the downstream environment, amplify the social and environmental challenges in dry years and impact commercial and recreational fishing although these effects have not been quantified.
While there is national interest in this region, there is also very active local interest with proponents seeking opportunities and solutions that enhance the region without harming the downstream environment. The FGARA study area can be seen in Figure 1.1 with the
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Hughenden Irrigation Project (HIP) or Reference Project shown in the insert box 45 kilometres downstream of Hughenden.
Figure 1.1 FGARA Study Area and Reference Project Location
1.4 Service Need and Base Case
The Hughenden Irrigation Project (HIP) is a scheme proposed by active local proponents for the Flinders River near Hughenden that seeks to capture and utilise a reliable water supply to realise the opportunities in this part of Australia.
The most recent 2016 Australian Census counted the population of the town of Hughenden at around 1,100. The broader Flinders Shire had an estimated population of 1,500 in 2017. The Shire’s population peaked at over 3,000 residents during the 1960s and has declined significantly in the decades since.
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Over the last two decades the Flinders Shire has experienced the fourth highest rate of decline across Queensland with a total decline of almost 30% over the period. Further, over the last five years, the Shire has exhibited an average rate of population decline of 3.0% per year, compared to the State-wide average increase of 1.6% per year.
In the absence of regional economic growth initiatives, the decline will likely continue with the Shire population projected to dip to around 1,260 by 2031, a further 17% decrease from the most recent population estimate.
Subsequent to this decline in population, the total number of people employed has also declined across all sections of the local economy as has the number of businesses, including farming enterprises.
The Flinders Shire economy is mostly comprised of:
▪ Primary production, farming and to a much lesser extent mining, of which agriculture and beef production is dominant.
▪ Transport-related services.
▪ Tourism-related services; and
▪ Support services to primary producers and mines and the broader community, including local government administration, health, education, and hospitality.
Based on the Australian Bureau of Statistics Socio-Economic Indexes – which measures socio-economic disadvantage – the Flinders Shire exhibits higher level of disadvantage than more than half of the local government areas in Australia.
The Base Case examination reveals that without significant regional development it is highly likely that Flinders Shire will experience further decline. This backdrop and clear Service Need provides important context for a large-scale regional infrastructure project such as the Hughenden Irrigation Project. Investment in irrigated agriculture is likely the most appropriate investment vehicle to turn around the declining indicators as this sector represents the core competency and skills of the region and will best meet the Service Need.
1.5 Governance and Risk
To start the evaluation and assess opportunities, the active local proponents incorporated the Hughenden Irrigation Corporation P/L (HIPCo). HIPCo’s prime objective was to oversee the completion of a study to assess the viability of an irrigated agriculture project in the upper sections of the Flinders River catchment. HIPCo engaged a Project Manager and contractors to examine broad scale options. To further assess and develop these options HIPCo engaged Engeny Water Management P/L (Engeny) to compile the requisite information and produce a Preliminary Business Case (PBC) to outline a concept, including net costs and benefits, of a sustainable scheme. The PBC was specified to comply with all
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required regulatory assessment processes required for a large-scale regional infrastructure project such as the HIP. The PBC was ultimately to make recommendations for progress if a feasible project was identified for further investment.
To facilitate the completion of the PBC, Engeny developed a template using the Building Queensland and Infrastructure Australia guidelines to ensure a wholistic approach was taken. Further, it was acknowledged that one or both entities may at some point review the proposal as per Commonwealth and State Government legislative requirements. Neither template was used in exact format as other recent PBCs and DBCs were used as guides and reference documents to inform the work program.
Risks were identified by a HIPCo Board workshop with input from consultants, stakeholders and other relevant parties. Risks assessment and controls were recommended and adopted by the Board with updates and mitigations tracked by the Project Manager. Risks were reviewed regularly at Board meetings.
The HIPCo Board oversaw all the major components of the work, approved work programs, stakeholder engagement processes, key messages and interactions. The Board also approved budgets, payments, risk mitigations and probity controls. The financials have been successfully audited and other governance processes are under active risk-based refinement.
1.6 Advantages and Opportunities
To transparently assess potential water supply schemes, the standard process of identification of risks, net costs and benefits was considered essential. However, the Board required equal focus on the changing economic climate, regional security drivers and the utilisation of the unique local and regional advantages. These advantages are well understood by the local proponents but are sometimes difficult to monetise or categorise as part of the net benefits or contextualise in compliance terms. The area has unique natural advantages and benefits such as:
▪ Extensive underutilised areas of potentially highly productive blacksoil plains.
▪ Opportunities exist for utilisation of the area’s industrial and agricultural characteristics and remaining structural integrity.
▪ Substantial volumes of unallocated water in the Flinders River system; 166,000 ML if all reserves are considered.
▪ Potential for a further 100,000 ML of water entitlement from trading or buy back of existing allocations and utilising any ‘sleeper’ allocations.
▪ A small catchment area required for flow harvesting of approximately 8,000 km2 or 7% of the entire Flinders River catchment.
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▪ The Project requires only a small percentage of water from the Flinders River catchment of approximately 4% of Mean Annual Flow measured at Walkers Bend.
▪ The region’s unique geospatial location to take advantage of early growing season and market opportunities.
▪ Easy, fast and reliable access to domestic markets via road or rail.
▪ Secure access to export facilities via Townsville that has triple road train access and is geographically close to World and Asian markets.
▪ Several potential dam sites close to the economic/service centre of Flinders Shire had been identified in previous studies.
▪ Few immediate environmental issues from both a State and Federal perspective (apart from the water allocation from the Gulf Water Plan and Environmental Flow Objective (EFO) issues which were identified early as ‘high risk’ and have been under active management as noted).
▪ Similar schemes have been established from relatively modest beginnings such as Fairbairn Dam and irrigation scheme at Emerald that might be considered as a comparator for successful implementation.
▪ Staging of infrastructure may be a successful approach to provide ‘proof of concept’ although this would be a fall-back position and not the primary approach.
▪ Potential for food, drought and flood resilience through the establishment of large local industries in concert with relevant government policies.
▪ Engaged and dedicated local scheme proponents.
▪ Trials and agricultural studies have been undertaken and fodder production from harvested surface water and local aquifers is well established in the region.
▪ Local community, Local Government and National support including through the Honourable Mr. Bob Katter and the Honourable Mr. Robbie Katter from the Katter Australia Party.
1.7 Risks and Unknowns
While these advantages and opportunities were immediately apparent the project also presented some risks and unknowns. In order to address these risks and opportunities in a systematic and efficient way, Engeny engaged NineSquared P/L for economic and financial assessment and Peritus Agriculture P/L for crop, market and farm return analysis. Other specialist consultants such as Epic Environmental, Hydrology and Risk Consulting (HARC), Dr. Sandra Brizga (Brizga Environmental), Newman Engineering, ARQ Consulting Engineers and W. Wightman Advisory were engaged to provide expert advice, opinion,
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review and analysis. HIPCo also engaged resources directly such as GIS, topographic survey, project management and web site design and establishment.
Some of the immediate high-level risks and unknowns identified were:
▪ Rainfall and runoff are variable and water harvesting is therefore only viable for a relatively short period of time on an annual cycle.
▪ The Gulf Water Plan imposes some strict limits on the amount and extraction regimes to protect downstream values and reduction of flows to the extent where water, at the reliability or location required, may not be available in the system or allowed for by the current Gulf Water Plan or Resource Operations Plan (ROP).
▪ The sub-catchments are relatively small this high in the Flinders catchment, therefore potential volumetric capture is small.
▪ Although there are highly productive rural industries based on Mitchell grass blacksoil plains there is no record or history of material irrigated agriculture being undertaken in the immediate region.
▪ Several studies, including the Flinders Gilbert Agricultural Resource Assessment Study (FGARA), have concluded that traditional infrastructure options are not likely to be feasible for the upper parts of this catchment therefore the study needed to be wide ranging and open to innovative options.
▪ There are existing users and multiple schemes proposed for the area bidding for the same water and funding. All schemes are at different stages of maturity and are yet to be considered by State and Federal governments.
▪ No immediate ‘foundation’ customer has been identified to pay for water.
▪ Limited geotechnical and soils information exists apart from at a generalised level.
▪ Limited environmental information for the potential dam site and downstream reaches of the rivers exists.
▪ The cost of infrastructure to harness the variable, short-term high flows is likely to be higher than the initially allocated $180M, therefore a proposal must demonstrate viability through addressing the Service Need and be based on efficient costs and realistic revenue projections.
▪ The Gulf prawn and aquaculture industry relies, to some unquantified degree, on flows from the Flinders River.
▪ Stakeholder consultation is essential, particularly to address the complex government approval processes at Federal, State and local government levels and this presents some potentially competing objectives.
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▪ A relatively short time frame and limited budget were available to complete the assessment and address risks and opportunities.
1.8 Approach
Under the guidance of the proponent HIPCo, Engeny and associates considered these risks and opportunities, among others, and developed an augmented desktop approach to most efficiently utilise the allocated $2M in grant funding from the Commonwealth Community Development fund in the short time allowed. That is, desktop analysis was only augmented by field work or more detailed studies where risks and uncertainty remained, and budget allowed. This approach allowed efficient allocation of funds and several rounds of optioneering.
As very large concrete dam structures were unlikely to be viable, the adopted approach to optioneering determined that more innovative solutions were evaluated to best utilise the unique features of the landscape such as topography, geology, hydrology, ecology, hydraulics and soil types. Further refinement of the methodology then included water availability and use, constructability and cost of infrastructure, realistic farm returns, market analysis, economic and financial analysis, affordability, environmental, cultural, social equity and public interest issues.
While many of the risks have been examined and quantified during the development of the PBC, others will likely require further work in the next phase. For example, market sounding and analysis of potential growers (irrigators) and their willingness to pay for water remains an unquantified risk although lower bound benchmarks have been adopted. Other risks such as the water availability will require more detailed examination during the development of the Detailed Business Case (DBC).
HIPCo, the proponent, also required that where possible, the approach should:
▪ Engage with all relevant stakeholders to ensure openness, transparency and address critical success factors.
▪ Present a balanced view of the information and neither concentrate on the advantages nor ignore the potential disadvantages.
▪ Integrate with other initiatives in the area including those outlined in the North Queensland Market and Agricultural Supply Chain Study (2019) and the Flinders Shire Council 15 Mile Project(s) Business Case and proposed Meatworks (Flinders Shire Council web site http://www.flinders.qld.gov.au/beef-processing).
▪ Where possible align, or be able to align, with other irrigated agricultural projects in the immediate vicinity of Hughenden including the Richmond agricultural scheme project and any future Bradfield Scheme.
▪ Refer to existing Australian and State Government policy such as the Queensland Bulk Water Opportunity Statement (DEWS, 2018) and the North West Queensland Economic
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Diversification Strategy (NWQEDS) (DSDMIP, 2019) and the Commonwealth Government Agricultural Competitiveness White Paper (Commonwealth of Australia, 2015). This paper is important in the context as it defines in broad terms exactly what the HIP project sets out to do. That is to ‘identify water infrastructure projects of interest to the Commonwealth in promoting agricultural development, including development in the Flinders and Gilbert river catchments. The NWQEDS particularly identifies among other things the need for ‘catalytic projects in high value dry-land and irrigated agriculture and co-investing in common user facilities, renewable energy policies, infrastructure funding opportunities and resilience projects‘.
▪ Assess the opportunity to produce power from hydro generation or pumped hydro.
▪ Have neutral or improved effect on local environment issues, downstream environmental and economic values and existing water users.
▪ Identify a ‘go-no/go’ point with a viable project to proceed to DBC, or recommend further risk reduction and quantification, or in a worst-case scenario recommend that no viable project is available in this part of the catchment; and
▪ If a viable project is identified, then assist with accessing enough funds from the $180M allocated to the project by the Australian Government to complete the detailed assessment. This would include approvals pathways, commencement of land acquisitions if required, establishment of governance structures, engaging the engineering and construction market and identify water users and their willingness to pay for water.
1.9 Reference Project
Based on the broad analysis of options using the stated approach, selection criteria, background investigation, risk, governance process and stakeholder engagement processes, the Reference Project as a concept is shown in General Arrangement in Figure 1.2.
The Reference Project defines a suite of bulk water infrastructure (dam, diversion channel and in-stream diversion weir) and distribution infrastructure (pumps and channels) to provide irrigation water to new farming enterprises. Two cropping scenarios are assessed for the project and both are subject to economic and financial analysis:
▪ Scenario 1 Diversified Cropping: a mix of medium and low priority water for diversified cropping comprising horticulture (avocados, mangoes, lemons and mandarins), grains and hay (sorghum, wheat, corn and rhodes grass hay).
▪ Scenario 2 Grazier Support: low priority water for grains and hay production.
While improved economic results would be generated by assuming all the production is high-value horticulture, it was deemed overly optimistic to transition to all high-value horticulture in the short term and forego the drought resilience objectives. Therefore, for
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Scenario 1 a mix of horticulture and broad-acre field crops is included. It is anticipated that evolution of the product type would occur over time. Scenario 2 is only grains and hay production and was used as a comparator given the different water uses, security and economic and financial outcomes.
Figure 1.2 General Arrangement Hughenden Irrigation Project – Reference Project
N.B. More details are available in the main report and graphics and animations on the HIPCo website https://hipco.com.au
1.9.1 Key Metrics
▪ 190 GL impoundment (Saego Dam) on Stewart Creek and Back Valley Creek
▪ 109 GL/year average annual water take (Diversified Cropping scenario) inclusive of irrigation supply and storage losses
▪ Gravity diversion channel from the Flinders River diversion weir to Saego Dam (250 cumecs or 21,600 ML/day capacity)
▪ Open channel delivery system to provide water to approximately 10,000 ha of irrigated agriculture to the south of the Flinders River.
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1.9.2 Constructed Assets Required
▪ In-stream diversion weir and diversion channel
▪ Water storage dam (Saego Dam)
▪ Irrigation offtake structure, pump station and under-river pipeline crossing
▪ Agricultural precinct – open channels, pipelines and pumping assets (two scenarios – expandable and adaptable)
1.10 Water and Environment
1.10.1 Water Sources and Allocation
The Flinders River catchment is one of 29 Australian Water Resource Council (AWRC) catchments in the Gulf of Carpentaria (GoC) Division. CSIRO (2009) shows that the Flinders River only contributes less than 15% of the flow into the Southern GoC and 3% of the total freshwater flows to the Gulf.
Water allocation, planning and governance in the Flinders catchment are detailed under the Gulf Water Plan (Queensland Government, 2017). The eight (8) Gulf Water Plan catchments that drain to the GoC are shown in Figure 1.3. The Flinders River is the largest catchment in the Plan by area covering approximately 109 000 km2 (35% of the Gulf Water Plan area), but is only the fourth largest contributor to the End of System (EOS) flows from the Gulf Water Plan area.
Water allocation and planning in the Gulf is not static as the sharing and allocation plans are implemented as part of the Resource Operations Plan (ROP). The requirement for a ROP is defined in Section 179 of the Water Act 2000.
1.10.2 Groundwater
The Project area is located within the Water Plan (Great Artesian Basin and Other Regional Aquifers) 2017 (GAB Water Plan) area. According to schedule 2 of the GAB Water Plan, the Project area may interact with several Groundwater units. Initial investigations showed unreliable and incomplete data and therefore water from groundwater sources has not been included in the Reference Project. However assessment of potential ‘extraction from’ and ‘impact on’ groundwater will be required in the next phase of the project.
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Figure 1.3 Gulf Water Plan Area (Source: DNRME)
1.10.3 Access to Unallocated Water
In 2014 the Queensland Government released a draft overview report (Department of Natural Resources and Mines, 2014) that describes the unallocated water strategy for the Flinders River catchment. The strategy was based around ‘farm scale’ water harvesting proposals within the catchment considering the CSIRO’s FGARA and fisheries assessments, community consultation and technical assessments undertaken on behalf of the Department.
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This Reference Project currently combines both in-stream water capture and water harvesting. DNRME advice, from personal correspondence, states that while “the Gulf Water Plan does not specifically prevent this option, impacts must be no greater than those associated with the water harvesting option. This means the maximum diversion of water from the catchment must not exceed the volumes obtained through either unallocated water release processes or water trading.”
The water harvesting only approach as currently defined potentially unfairly limits larger scale, more innovative and productive infrastructure options in the Flinders catchment. The risks while important, appear largely precautionary and unquantified, therefore and an openness to explore and test the current assumptions is logical. CSIRO do note however ‘critical emphasis should be placed on ‘first flush flows’ to renew and reconnect the aquatic ecosystem’. Subsequently, the 2014 Gulf Water Plan amendment proposed that;
“any new entitlements granted from the general unallocated water reserve will not be able to access water from 1 January each year until a specific volume of …. 152 480ML in the Flinders River Catchment has reached an end of system location at Walkers Bend gauge station. New entitlement holders can resume accessing water once the cumulative volume is reached (37 days on average) or in the event that the cumulative volume is not reached in low flow years over the whole wet season (11per cent of years in the FGARA simulation).”
1.10.4 Current Volumes Available for Allocation
The current status of remaining unallocated water reserves in the Flinders River catchment is summarised in Table 1.1. There is potential for a further 100,000 ML of water entitlements to be accessed from trading or buy back of existing allocations.
Table 1.1 Current Status of Unallocated Water Reserves in the Flinders River Catchment
Reserve Amount (ML)
General Reserve 139,650
Indigenous Reserve 8,500
Strategic Reserve 17,850
Total 166,000
1.11 Environmental Flow Objectives (EFOs)
One of the more pressing risks with this scale of infrastructure are the EFOs. Engeny, in association with HARC, undertook hydrological modelling for this project which included yield analysis and flood frequency and flow reductions analysis to assess compliance with the Gulf Water Plan Environmental Flow Objectives and related Environmental, Social and
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Economic Values. The Flinders Source Model developed by CSIRO, now owned by DNRME was used under licence by HARC from eWater. However, as the consequences of the risks are largely unquantified, the modelling outputs were provided to Dr. Sandra Brizga (Brizga Environmental) to provide:
▪ A description of the hydrological impacts of the Project (Reference Project) in relation to the Flinders River flow regime, with reference to the flow indicators relevant to environmental flows;
▪ A description of the environmental and other values (social, economic and cultural) associated with environmental flow requirements for the Flinders River system downstream of the Project (Reference Project), including values of the receiving waters in SGoC that are associated with Flinders River flows;
▪ An assessment of the implications of the hydrological impacts of the Project (Reference Project) for the environmental and other values identified; and
▪ An assessment of an alternate scheme with a 25% reduction in storage capacity.
Setting the context for Dr. Brizga’s study, the CSIRO FGARA Study found the risks of large- scale irrigation projects to be:
▪ Reduction in river connectivity and flushing flows supporting waterhole ecology
▪ Reduced frequency of coastal floodplain inundation
▪ Potential impacts to fisheries production in the Gulf of Carpentaria
▪ Species distribution and lifecycle requirements including migration.
Dr. Brizga notes that while the ‘Reference Project’ will ‘lead to flow reductions downstream of the project area …. the hydrological effects … will be mitigated by inflows from tributaries downstream… particularly below the Stawell River confluence.’ Dr. Brizga further qualifies this statement by noting that risks of affecting ecological processes will be higher in the reaches immediately below the Reference Project Area, reducing in the further downstream reaches as flows approach the Southern Gulf of Carpentaria. Dr. Brizga also notes that the Reference Project will comply with 4 out of 7 of the Gulf Plan EFOs at Walkers Bend and that HIPCo, through Engeny, are actively investigating why the 3 EFOs remain outside compliance targets.
An examination of why the EFOs remain outside the current compliance targets is important in understanding the assumptions made in the modelling and the development of the compliance targets. Therefore, in making these statement Dr. Brizga notes key knowledge gaps within the determination of allocations which include the following (these are not hydrological or modelling gaps but the quantification and implications of the likelihood and consequences of possible changes on the ecological processes):
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▪ The implications of transmission losses for the effectiveness of passing flows
▪ List of flow-reliant species for each reach to enable more accurate definition of the species that would potentially be affected by flow regime change
▪ The lack of detailed modelling of the Flinders River between Richmond and Etta Plains to enable clearer definition of the sections of river subject to various degrees of risk
▪ Quantification of the effects of flow regime changes resulting from the Project on White Banana Prawns and barramundi using existing quantitative models.
These qualifications are important in assessing an optimal scheme size in the upper Flinders. It is possible, even likely, that the EFO targets and flow harvesting rules are too conservative, but by how much is unclear. Therefore, any further investigation should test these boundary conditions in defining a sustainable allocation in this area. Dr. Brizga notes in her Report (Appendix L) that a nominal 25% reduction in planned water storage capacity will comply with 6 of 7 EFOs and misses the 7th by 1% indicating an EFO compliant scheme is feasible. HIPCo, while noting the knowledge gaps acknowledges the Reference Project may be feasible with amendments to the Gulf Water Plan and therefore a more detailed investigation should be undertaken as part of the DBC. This has been scoped accordingly into the next round of investigations.
While making these observations to assess a sustainable scheme HIPCo reiterates its objective to not inappropriately affect environmental issues, existing users or downstream economics but to define and construct an optimal scheme while balancing the variables in play.
1.12 Environmental, Planning, Social and Cultural
A preliminary assessment of the Environment, Planning, Social and Cultural risks have been undertaken by Epic Environmental P/L in association with Engeny Water Management engineers and scientists and with Dr. Brizga for specialised advice. The main review was a desktop study to;
▪ Review relevant environmental and planning legislation
▪ Understand existing environment information including Cultural and Heritage issues.
The results of the environmental and planning constraints assessment for the Reference Project have been categorised using a High, Medium and Low rating scale.
Two High risk items were initially identified in the report notably:
1. Stream Flow and Downstream Environments (consistent with CSIRO and Dr. Brizga’s report)
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2. Built Environment – proposed inundation area will impact on roads and access and some sensitive receptors. This risk has been mitigated to Low with controls already identified in the engineering reports, therefore only 1 High Risk item remains.
Six medium risks were identified however these will be further defined in an Environmental Impact Statement (EIS) or an equivalent next stage notably:
1. Ecosystems – Wetlands, insufficient information requiring field surveys as local landowners accounts do not always accord with the scientific record. 2. Flora – Mapped regulated vegetation needs clarification, some species with conservation status known within 50 kilometres of the site. Field surveys will be required. 3. Fauna - species with conservation status known within 50 kilometres of the site. Field Surveys will be required. 4. Aquatic Ecology – Fish passages and waterway barriers works. 5. Land Use and Tenure – inundation and impact on lease hold and freehold land. Quarrying and excavation are extractive industries, dam construction and operation are considered as a Material Change of Use (MCU). 6. Cultural Heritage and Native Title – no known features of indigenous or non- indigenous cultural heritage within the project area however an Indigenous Land Use Agreement (ILUA) with the Yirendali People exists and a cultural heritage assessment may be required with a possible Cultural Heritage Management Plan (CHMP).
Two Low Risks items notably
1. Surface Water – Water extraction allowed, buy back of allocation likely required. Requiring lodgement of an Initial Advice Statement (IAS) to the Coordinator General (CG). 2. Groundwater – No extraction planned, some bores will be removed, application to relevant department to seek clarification on requirements of this Controlled Action.
The assessment also outlined the regulatory processes and approvals pathways. While not exhaustive, as other approvals may be required, the process is well defined with no high- risk items or fatal flaws being identified. The Approvals Register is documented in the Environmental Assessment section (Section 14).
1.13 Capital Cost Summary
Table 1.2 and Table 1.3 outline the capital cost summaries for both cropping scenarios. The total project cost for both scenarios are approximately $500M as there are no differences in the bulk water storage assets and some minor differences in the irrigation assets. Operational and sustaining capital costs have also been estimated and were included in the economic and financial assessments undertaken for the Project.
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Table 1.2 Capital Cost Summary –Scenario 1 Diversified Cropping ($2019)
Description Contractor Contractor Principals Cost Contingency Total ($M) Direct Indirect ($M) ($M) Costs ($M) Costs ($M)
Saego Dam $160.90 $24.20 $63.60 $88.20 $336.90
Diversion Channel $32.50 $4.90 $5.70 $15.10 $58.20
Weir $14.40 $2.20 $2.50 $6.70 $25.80
Irrigation $36.50 $5.50 $15.30 $20.10 $77.40
Total $244.30 $36.80 $87.10 $130.10 $498.30
Table 1.3 Capital Cost Summary – Scenario 2 Grazier Support ($2019)
Description Contractor Contractor Principals Cost Contingency ($M) Total ($M) Direct Costs Indirect Costs ($M) ($M) ($M)
Saego Dam $160.90 $24.20 $64.30 $88.40 $337.80
Diversion Channel $32.50 $4.90 $5.70 $15.10 $58.20
Weir $14.40 $2.20 $2.50 $6.70 $25.80
Irrigation $40.60 $6.10 $20.70 $23.60 $91.00
Total $248.40 $37.40 $93.20 $133.80 $512.80
1.14 Revenue Summary
1.14.1 Crop Selection
The agronomy and revenue studies were based on known and proven irrigation techniques. More efficient protected agriculture, drip irrigation and technologically controlled system efficiencies were not included in the current analysis as these are likely impractical at this stage in the project. However, it is anticipated that both cropping, and irrigation practices will evolve to include the use of technology to improve efficiency and farm returns as the
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scheme develops. The study also acknowledges that crop types selected by growers, based on conditions at the time of planting, may differ widely from those selected for analysis.
Given the lack of existing viable irrigated agriculture in the region, the HIPCo Board considered viability and credibility of the Project as a high risk. Therefore, a specific and detailed agronomic investigation and analysis with consideration of associated market opportunities was undertaken. The multistep strategy was developed to address these risks and to produce feasible, realistic and transparent farm revenue assessments.
The first step in defining revenue from crops required an assessment against the following criteria which narrowed the ‘long list’ cropping options:
▪ Climatic conditions
▪ Soil types
▪ Gross margin analysis
▪ Proximity to markets
▪ General suitability to the region
The second stage further refined the crop options to include region-suitable crops using a more refined set of criteria as follows:
▪ Fit to regional requirements (support for other industries)
▪ Production window and alignment with consumer demand
▪ Domestic and export demand and price return
▪ Logistics management
The crops selected for inclusion and indicative revenue analysis based on this two-step process are as follows:
▪ Avocados ($4-$7/kg)
▪ Mangoes ($3-$4/kg)
▪ Citrus – lemons ($2-$4.5/kg)
▪ Citrus – mandarins ($2-$3/kg)
▪ Cereal grains – Sorghum, Wheat, Barley, Corn ($300-$500/t)
▪ Hay and fodder ($100-$411/t)
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PeritusAg also undertook a sensitivity analysis on these crops and price estimates and the results can be found in Appendix J.
It should also be noted that while other crops will grow successfully in the region the second stage selection criteria prioritised locally consumed livestock feed grains to maximise drought and food security and facilitate existing key competitive advantages, noting this in the context that high value crops will produce the best net farm returns and scheme economics.
The selected crops were matched against water availability and usage which enabled a draft farm definition plan which incorporates the number, size and type of lots, and water use. The outcomes are shown in Table 1.4 for Scenario 1 Diversified Cropping and Table 1.5 for Scenario 2 Grazier Support.
Table 1.4 Total Developed Agricultural Production Scenario 1 Diversified Cropping
Crop Lots Area (ha) Total Area (ha)
Avocadoes 1 900 900
Mangoes 1 600 600
Lemons 1 300 300
Mardarins 1 300 300
Grazier Support Lots 27 200 5,404
Total 31 7,505
Table 1.5 Total Developed Agricultural Production Scenario 2 Grazier Support
Crop Lots Area (ha) Total Area (ha)
Cereal Grains/Hay/Fodder 57 200 11,400
Total 57 11,400
1.14.2 Gross Margin Analysis
Table 1.6 shows the gross margin analysis of the chosen crops. This information was then used in the Economic Analysis.
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Table 1.6 Gross Margin Analysis
Crop Type Total Cost ($/ha) Total Revenue ($/ha) Total Gross Margin ($/ha)
Avocado $29,848.00 $44,899.92 $15,051.92
Mango $44,148.40 $50,194.20 $6,045.80
Lemon $66,600.00 $122,655.00 $56,055.00
Mandarin $51,000.00 $71,730.00 $20,730.00
Sorghum $897.00 $2,600.00 $1,703.00
Wheat $856.00 $2,275.00 $1,419.00
Corn $1,443.00 $4,200.00 $2,757.00
Rhodes Grass Hay $3,537.00 $5,920.00 $2,383.00
1.15 Economic Analysis
The project was assessed using two types of economic modelling:
▪ Cost-Benefit Analysis (CBA), which assesses community costs and benefits.
▪ Economic Contribution Analysis, which also assesses the wider impacts to the community as a result of the project, but through an Input-Output model estimating the impact of the project on Gross Regional Product and employment.
1.15.1 CBA Results
Scenario 1 (diversified cropping) generates higher economic benefits compared to scenario 2 (grains and hay), due to the higher returns from the horticultural production. Capital and ongoing costs are marginally higher for Scenario 2 due to a larger cropping area able to be irrigated. Headline CBA results are a Benefit Cost Ratio of 0.72 for Scenario 1, compared to 0.47 for Scenario 2.
1.15.2 Economic Contribution Analysis Results
The impacts of the project on both employment and Gross Regional Product are summarised in Table 1.7, as estimated on an annual basis over the 50-years of the economic analysis.
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Table 1.7 Economic Contribution Results
Employment Benefit to Gross Regional Product (FTEs) ($M)
Scenario 1 – Diversified Cropping
Construction and Ongoing 61 $8.0M Maintenance
Agriculture 429 $64.9M
Total 490 $72.8M
Scenario 2 – Grazier Support
Construction and Ongoing 66 $8.8M Maintenance
Agriculture 211 $20.9M
Total 277 $29.7M
Note 1: Some jobs will be construction only and others operations only however the ongoing numbers are substantial and sustainable over the life of the project
The economic analysis builds on the Service Need conclusion for a significant regional investment project and the suitability of the Hughenden Irrigation Project in this respect. This project has the potential to dramatically reshape the Hughenden and wider Flinders Shire communities. Population and employment have been declining in the region for an extended period, with forecasts showing a continuation of the decline. This Project has the potential to not only inject employment into the local community but to provide a significant regional economic benefit well into the future.
The primary economic benefit associated with the Project is the increase in agricultural production associated with improved availability of water supply. Development of agriculture in the region has previously been constrained due to the variability of water supply.
Total cost of the Project is estimated to be around $500 million escalated (for either option), with construction costs mostly incurred between 2022 and 2024, with the Project’s first year of operation assumed as 2025.
1.16 Financial Assessment
The financial analysis is complementary to the economic assessment. It considers the Project as a stand-alone investment, rather than assessing broader costs and benefits that might flow to the community. This analysis is also important to assess how affordable the
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project might be to the potential funders of the project, notably the customers (irrigators) and the Government. The financial analysis was undertaken through a conventional Financial Net Present Value approach, where all capital and ongoing operational costs and revenues are assessed over a 50-year period and then discounted back into present-day dollar terms.
A key challenge for this Project, common to large regional bulk water infrastructure projects, is the magnitude of the capital costs and the gap between likely revenues, based on the capacity-to-pay of irrigation customers.
Costs Main Findings: ▪ The capital costs are high relative to the volume of water stored, irrespective of the project scenario (e.g. medium and low priority water mix, or low priority water only). ▪ Most of the costs are those incurred during construction, which is assumed to be during the period 2022 to 2024. ▪ The dam is the most expensive component of the project, accounting for around two- thirds of the total capital costs. ▪ The contingencies attached to each of the sub-projects account for around one-quarter of the overall capital cost estimate, which is not unreasonable at this stage of the assessment process. ▪ The capital costs need to be considered after cost escalations are applied, as this is the best representation of the cost required to deliver the Project.
Revenue Main Findings: ▪ There are three key revenue streams: government capital grant funding (timed to match the construction costs incurred); the sale of water allocations, at the commencement of water sales; and ongoing revenues from water sales to customers. ▪ It is highly improbable that customer (irrigator) willingness-to-pay for water allocations would be enough to negate the need for significant government funding of the Project’s capital costs. ▪ Revenues from customers – both upfront water allocation charges and ongoing charges once water sales commence – also need to be escalated, as these revenue payments in future years will be more than the current estimates.
An analysis of the impact of changes in cost and revenue assumptions to the financial results concluded that it makes little difference to the headline conclusions in most cases since the gap between capital costs and indicative water allocation charges remains significant.
1.17 Affordability
The analysis reviewed the up-front allocation charge customers (irrigators) would need to pay in order fully fund the capital costs and negate the need for government funding. To
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undertake this analysis, the capital costs of the Project were compared to the water allocation in each scenario. Where a higher cost per megalitre results, farmers would be required to pay a higher initial allocation.
Results are presented both discounted and undiscounted and considered with and without escalation. The discounted figures represent the cost of the Project with considerations for the time value of money. Broadly, this captures peoples’ preference to spend money in the future rather than today. Conversely, the undiscounted results may be looked at as a total with no consideration for when expenditure is incurred. For the purposes of funding allocations, the undiscounted escalated figure in Table 1.8 of $6,816 to $7,948/ML is the most relevant as this an estimate of the cash cost of the Project at the time of construction for water but does not include other farm set up costs.
Table 1.8 Required Payment from Farmers (if project was fully funded)
Discounted Undiscounted
Unescalated Escalated Unescalated Escalated
Scenario 1 – Diversified Cropping
Capital Costs ($M) $375.1 $418.3 $498.3 $556.4
Yield (GL, or ‘000 ML) 70 70 70 70
Cost ($/ML) $5,358 $5,975 $7,119 $7,948
Scenario 2 – Grazier Support
Capital Costs ($M) $386 $430.4 $513 $572.6
Yield (GL, or ‘000 ML) 84 84 84 84
Cost ($/ML) $4,595 $5,124 $6,105 $6,816
The assessment concludes, consistent with other contemporary regional bulk water infrastructure assessments, that the Project is affordable if significant government capital grant funding is committed. Other sources of non-customer funding sources, such as loan funding, are not considered practical as repayment of capital contributions and interest is required. Likewise, equity injections from government or private sector investors, also seem impractical at this stage, as these would require water prices to cover a return to the investors.
1.18 Proposed Capital/Government Contribution
As the prices listed in Table 1.8 are not realistically recoverable from the sale of water, a government funding contribution will be required. Therefore, further analysis was
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undertaken to quantify the level of funding required assuming customers (irrigators) will pay $2,000/ML for medium priority water and $1,000/ML for low priority water. The results of this analysis are detailed in Table 1.9.
Table 1.9 Required Government Contribution
Discounted Undiscounted
Unescalated Escalated Unescalated Escalated
Scenario 1 – Diversified Cropping
Capital Costs ($M) $375.1 $418.3 $498.3 $556.4
Up-Front Payment ($M) $52.6 $65.7 $100 $121.9
Government Contribution $322.5 $352.6 $398.3 $434.6 ($M)
Scenario 2 – Grazier Support
Capital Costs ($M) $386 $430.4 $512.8 $572.6
Up-Front Payment ($M) $44.2 $55.2 $84 $102.3
Government Contribution $341.8 $375.3 $428.8 $470.2 ($M)
Based on the assumptions outlined, specifically the amount of customer contributions required towards the capital costs through the purchase of water allocations, the funding gap for the project is approximately $400 million for Scenario 1 (Diversified Cropping), expressed in 2019 dollars.
The difference in these estimates relates to which of the two modelled cropping scenarios is adopted, as there are differing distribution infrastructure requirements between the two.
When account is taken of cost escalations from now in 2019 to the when the construction window opens and costs are incurred, this rises to $435 million for Scenario 1. This is a matter that will require further negotiations between the proponent and the Australian Government as matters proceed.
The option of funding the Project via acquisition of subsidised loans from the Australian Government merits further consideration as it has been the subject of discussions between the proponent and the Government; however, this is closely linked to the customer willingness and capacity to pay for water and is not the preferred option.
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The capacity of customers to pay even the currently assumed upfront water allocation charges and ongoing water charges are identified later in this report as areas needing further refinement. This will have a large bearing on the capacity of the Project to support loan fund repayments and is recommended to be further assessed after this additional customer information is attained. Further, the impact on water pricing would also impact the economic assessment of the Project’s viability as the gross margins would be impacted.
1.19 Conclusions
The investigation and analysis show a strategic water infrastructure project is required to meet the identified service need to improve economic outcomes within the Finders Shire region. The implementation of high value agriculture to the region is not only consistent with the Service Need but also aligns to various government policy and strategic documents and aligns to the region’s key capabilities. The Project also takes advantage of the natural geography and regional advantages.
The PBC makes a strong case for further investment to refine and further de-risk the Reference Project before a commitment to construction is made. This can be done either through committing funding for a complete DBC or alternatively adopting a staged and gated approach with commensurate funding.
The PBC shows that significant and sustainable local and regional economic growth is almost certain, and the lack of a reliable water supply is the key limiting factor.
Importantly, no fatal flaws have been identified at the time of completion of the PBC noting the importance of resolving the water licencing and willingness to pay risks.
In overall terms the Project requires only 4% of the Mean Annual Flow from the Flinders River and utilises only 7% of the Flinders catchment area upstream of diversion and capture points.
Unallocated water, buyback or trading of existing water licences are available in the Gulf Water Plan although the product type, reliability and accessibility are to be addressed and resolved with the DNRME.
The Project will manifestly improve regional and local economic conditions and substantially alleviate the relative disadvantage evident in the Flinders Shire.
The Project has a headline BCR for Scenario 1 diversified cropping scenario of 0.72 and will support up to 490 jobs and will have a positive impact on the GRP of up to $72.8M per year.
The potential impact to downstream flow conditions is the most significant risk for the Project and warrants further investigation in subsequent Project phases. Other environmental risks have been assessed as medium to low and mitigations are under active consideration.
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The Project requires substantial government support by way of upfront capital contribution to the value of approximately $400M however this is relative and contextualised as the Project addresses the Service Need.
The Project has local, regional and Federal support, strategic goals and initiatives to productively use water in the northern parts of Australia and has a very good chance of success as it utilises the current skills and depth in the region and sustainably utilises an unrealised potential. It has limited downsides therefore warranting further refinement and funding commitments.
1.20 Recommendations
As a result of the investigation and conclusion and the compelling evidence to enable a viable agricultural water supply scheme near Hughenden it is recommended the HIPCo Board:
1. Approach the Australian Government, potentially through the North Queensland Water Infrastructure Authority (NQWIA), to progress to the next phase of the Project to refine the Reference Project, analysis and design including probabilistic risk adjusted cost assessments. 2. Consider a staged and gated approach to the DBC thereby de-risking funding exposure. 3. Commence the preparation of the scope for the full DBC or gated components. 4. If the gated component approach is adopted, seek interim funding to address remaining higher interest items while the PBC is undergoing review and critique. 5. Negotiate a new deed with the Australian Government for the development of the DBC with appropriate legal and probity advice and suitable public interest tests. 6. Engage with the State Government (through DNRME) for review of the PBC and any suggestions or advice for inclusion in the scope for DBC. 7. Engage with Infrastructure Australia to provide opinion and recommendations on the scope of the next phase of work. This will likely entail a review of the PBC and appendices and a ‘gap analysis’ with a focus on DBC specification. 8. Engage with SunWater to provide opinion and recommendations on the scope of work for DBC and make comment and provide strategic advice. 9. Establish a governance and review structure to deliver the DBC (with appropriately qualified individuals or expert advisors/panels) and engage the market as required for prudent and efficient delivery of DBC or in defined stages as suitable. 10. Continue the stakeholder engagement process with DNRME for allocation of water and include the required studies in the next phase of work to quantify risk of changes to downstream flows and EFO compliance and amendments to the Gulf Water Plan. 11. Continue de-risking activities including geotechnical investigation for critical infrastructure design work. 12. Engage the market as soon as funding allows to establish ‘willingness to pay’ parameters. 13. Develop ownership and operational models consistent within Government requirements for public funding, allocation of risk, efficient and contemporary
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operational use, realistic and economic returns and market opportunities, and contemporary asset management approaches. 14. Continue with stakeholder engagement to ensure both public interest, sustainability, and cultural and indigenous issues are managed and reflective of contemporary expectations. 15. Explore efficiency options in the scope of works of the DBC to minimise evaporation and other environmental losses, use of protected agriculture and technology to maximise water use efficiency. 16. Commit further resources to investigate land suitability and land preparation to enable the proposed cropping strategy, or include sensible modifications, to be successful. 17. Refine pricing, financial and economic models based on updated costs and projected revenues including willingness to pay surveys.
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2. GOVERNANCE
2.1 Key Points
The Governance Chapter identifies:
▪ the governance arrangement for the project including key roles and responsibilities
▪ Interactions with various governments, auditing and milestone requirements
▪ The key requirements in probity, equity and stakeholder engagement.
2.2 Background and Purpose
Several active local proponents had a vision and desire to oversee a contemporary study of irrigated agricultural options in the upper catchments of the Flinders River. As described in Section 9 there have been many previous studies undertaken to assess the viability of larger irrigated agricultural schemes however none have progressed past concept and feasibility.
For this project, HIPCo successfully applied for funds from the Federal Department of Infrastructure, Regional Development and Cities established to support needed infrastructure that promotes stable, secure and viable local and regional economies. Funding from the Community Development Grants Programme of $2M (GST exclusive) was subsequently allocated, under Deed, with payment in three components subject to meeting various milestones and requirements. In simple terms the Deed requires several things including registration with a Commonwealth, State or Territory Regulatory Body or provide satisfactory evidence of correct statutory authority status. The recipient (proponent in this case) must also have an ABN.
To satisfy these conditions the proponents established the Hughenden Irrigation Project Corporation P/L with appropriate ABN. Five Board members were appointed to bring a range of local representation and an in-depth knowledge of the local and regional community. The Board has also appointed an independent project manager, probity and governance consultant and a range of specialist companies to complete the activity in accordance with the requirements of the Deed.
Engeny Water Management P/L (Engeny) was engaged as the main contractor although HIPCo reserved the right to engage others as needed outside the agreement with Engeny. To facilitate the completion of the project Engeny developed a template using the Building Queensland and Infrastructure Australia guidelines to ensure a wholistic approach was taken. Further, it was acknowledged that one or both entities may at some point review the work as per Commonwealth and State Government legislative requirements if investment is committed. Neither template was used in exact format as other recent PBCs and DBCs were used as guides and reference documents to inform the work program.
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The HIPCo Board oversaw all the major components of the work, approved work programs, stakeholder messages and interactions and approved budgets, risk and probity control. The financials have been successfully audited and other governance processes are active and under refinement.
2.3 Role of the Australian Government
The main interaction with the Australian Government has been through the North Queensland Water Infrastructure Authority (NQWIA). NQWIA was established to provide strategic planning and coordination throughout the region and specifically for this project. HIPCo have had ongoing open engagement with representatives from the NQWIA throughout the PBC study. Other Federal stakeholders and departments have also been involved although not in a governance role at this time. For example, representatives from the National Water Infrastructure Development Fund (NWIDF) have been briefed on the project and the possible funding requirements but no formal approaches for loan funding have been made at this time.
Federal environmental involvement will also likely be required and has been flagged as part of the environmental and compliance assessment. Formal engagement with the Department of Environment and Energy as federal regulators will be required during the development of the DBC.
Infrastructure Australia (IA) has been engaged in the early stages for advice and opinion as the Australian Government is the main funding agent for the construction. It is possible that IA may also do a review of the PBC although this would be informal as the IA charter does not include a formal review capacity for PBC.
Other Federal Departments will also be engaged as required and as noted in the stakeholder analysis and Communications Plan for the Project.
2.4 Role of the State Government
The main State entity in a governance role has been the Department of Natural Resources, Mines and Energy (DNRME). Other departments have also been involved however, none in a governance role at this time.
The main source of governance is the assessment and possible allocation of unallocated water in the Gulf Water Plan.
SunWater Limited has also been engaged in an informal way to date given their role, statutory status and possible future proponent and infrastructure owner. No formal agreement is in place yet and the interactions have been informal and for information purposes.
The HIPCo Board recognises and acknowledges the open and professional response from all the entities mentioned above.
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2.5 Role of the Project Owner
The Project owner for the delivery of the PBC is HIPCo, an incorporated entity registered in Queensland and subject to legislative and fiduciary responsibilities specific by ASIC as well as the responsibilities outlined in the Deed. At the PBC stage there is no difference between Owner and Proponent although this may change for future stages.
The HIPCo Board, under the Chairman’s authority, makes all decisions for this Project passed via resolution during Board meetings or as required outside meetings and resolutions are recorded as required by the constitution.
The current project will reach a milestone with the completion of the PBC after approval by the Board. Subsequent to the Board meeting an assessment of the best model for delivery of the Detailed Business Case (DBC) will be required. Part of the considerations may require a skills-based Board comprising a range of experts or subject matter advisors or review panels. The Board will also need to consider appropriate management, delivery and project structures and processes to ensure functional delivery and effective risk management.
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3. METHODOLOGY
3.1 Key Points
▪ This chapter defines the methodology for identification of key risks, their assessment and mitigation strategies relevant to the delivery of the PBC and potential for future funding.
▪ The risk methodology, while rudimentary for the PBC, has followed the Building Queensland Guidelines and used AS/NZS ISO 31000:2018 Risk Management – Guidelines.
▪ The Board’s risk appetite is defined in the strategies adopted.
▪ All high risks were deemed to be unacceptable and detailed mitigation strategies were actioned.
▪ The risk register is attached as Appendix B.
3.2 Background and Purpose
This chapter outlines the risk methodology adopted for the Project. The purpose is to systematically identify and manage risk in accordance with the Boards appetite and ‘Project context.
3.3 Approach
The risk approach, while cognisant of the respective frameworks including BQ and AS/NZS, was relatively simple for the PBC. The owner specified risks of a certain level be actioned in detail where others were controlled or monitored. This approach aligns with AS/NZS 31000:2018 as the first process requires ‘Establish the context’ as shown in Figure 3.1. The context in this case was to examine the risks globally that might prevent successful transition to a DBC or future funding or identify any fatal flaws.
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Figure 3.1 ISO 31000:2018 Risk Management Process Overview
3.4 Summary Risks
Risks were identified in several ways through workshops and discussions with the proponent. Apart from governance risks, which have been managed by the HIPCo Board, project risks were identified with management controls and mitigations identified. The risks have been monitored and actioned by the HIPCo Project Manager with regular updates being provided to the Board.
1. Rainfall and runoff are variable and water harvesting is therefore only viable for a relatively short period of time on an annual cycle. Management Control – include storage and harvesting options not just harvesting options alone to mitigate for ‘dry periods’. 2. The Gulf Water Plan imposes some strict limits on the use of the water to protect downstream values and reduction of flows where water, at the reliability or location required, may not be available in the system or allowed for in the current Gulf Water Plan or ROP. Management Control – Stakeholder engagement with DNRME and DES, independently assessed modelling, expert advice on EFOs, options iterations and quantification. 3. The sub-catchments are relatively small in this part of the Flinders catchment. Management Control – assess storage opportunities, pumped and gravity diversions to utilise available flows. 4. Although there are highly productive rural industries based on Mitchell grass blacksoil plains there is no record or history of large-scale irrigated agriculture being undertaken in the immediate region. Management Control – Undertake detailed agronomical study, for PBC to quantify and justify and remove potential negative perceptions. 5. A number of studies, including the Flinders Gilbert Agricultural Resource Assessment Study (FGARA), have concluded that large dams or traditional infrastructure options are not likely to be feasible for the upper parts of this catchment. Management Control
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– assess options in stages, large, medium, small, combinations, both on-stream and off-stream, explore innovative options. 6. There are existing users and multiple schemes proposed for the area bidding for the same water and funding. Management Control – produce PBC with best combination of headline metrics, realistic and clear CBA, implement stakeholder Communications Plan. 7. No immediate ‘foundation’ customers identified and their willingness to pay for water. Management Control – assume water prices based on benchmarks for PBC, undertake ‘willingness to pay’ as part of DBC or interim process as budget allows. 8. Limited geotechnical and soils information exist apart from at a general level of detail. Management Control – undertake limited geotechnical investigation on high importance areas including appropriate testing for local quarriable materials. 9. Limited environmental information for the potential construction and operations site and downstream reaches. Management Control – Engage expert(s) to assess and advise. 10. The cost of infrastructure to harness the variable, short-term high flows is likely to be higher than initially allocated ($180M). Management Control – Reference Project addresses the Base Case and Service Need with realistic costs and revenue projections. Consider staging or smaller infrastructure as a fall-back position. 11. The Gulf prawn and aquaculture industry relies, to some unquantified degree, on high flows from river however the contribution from the upper catchment around Hughenden is inconsequential at least when compared to annual mean flows. Management Control – engage expert to advise of risk and recommended controls including reference to Griffith University Australian Rivers Institute studies. 12. Stakeholder consultation and addressing the multitude of government and approval processes at Federal, State and local government levels presents some potentially competing objectives. Management Control – engage expert to develop stakeholder management plan and implement. 13. A relatively short time frame was available to complete the PBC. Management Control – augmented desktop analysis process. No time to conduct detailed mitigation assessments or investigations. Only go past desktop when risk remains High. 14. Limited budget. Management Control – augmented desktop analysis process without committing all funds up front. Retain contingencies to address risks as they become apparent.
3.5 Risk Assessment and Treatment
Table 3.1 outlines how risks were assessed and categorised.
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Table 3.1 Risk Assessment and Categorization
As the risk context was relatively simple at this early stage of the Project, the risks were categorised and prioritised for action as per Table 3.1. All risks were under active management throughout the Project unless noted as D grade. For A, B and C grade risks mitigation objectives and strategies were identified and are outlined in Section 3.4. The number, complexity and timing of the actions was reflective of the risk category.
Some risks will require further mitigation such as Risk 7 ‘willingness to pay’.
The currently active risk registers are included in Appendix B.
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4. STAKEHOLDER ENGAGEMENT
4.1 Key Points
▪ A structured stakeholder engagement program was developed by Epic Environmental P/L (Epic).
▪ The process outlined a Phased Communication Approach which will be ongoing as the technical studies are completed.
▪ The process outlined a Key Audience Snapshot and prioritisation and type of engagement required.
▪ The process provided a Roadmap for engagement post-completion and submission of the PBC.
▪ Establishment of a HIPCo website for clarification of messages, project updates and key materials repository.
▪ A great deal of informal local stakeholder engagement and formal Australian Government engagement has been undertaken by HIPCo.
4.2 Purpose and Objectives
The purpose of this chapter is to outline the processes undertaken and describe the context. The noted objectives were to:
▪ Identify key stakeholders, understand their drivers and ensure a no surprises approach;
▪ Ensure consistency of messaging across media and stakeholders in a way which supports the future success of the Project;
▪ Ensure key messages are developed and refined over time to address current and potential stakeholder issues; and
▪ Evolve the communications material to ensure the most up to date information is available to any interested parties.
4.3 Limitations and Risks
▪ While the stakeholder engagement plan is a risk mitigation measure, presentation of Project briefing information to potential competitors is a risk. Therefore, all stakeholder engagement activities were either approved or monitored by the HIPCo Board and any official meetings required Board consideration if a Board member was to be in attendance. All briefing material for meetings was pre-approved by the Board.
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▪ The Board Chairman is the nominated point for stakeholder engagement
▪ Media will not be proactively engaged until the PBC findings are reviewed and made public. However, there will be times when opportunity presents that the Project would benefit by engagement with the media.
4.4 Stakeholder Analysis
Stakeholder identification was undertaken in an initial workshop run by Epic with staff from Engeny and NineSquared in May 2019.
The workshop identified a number of stakeholders, however it was recognised this list would need to be cross checked with HIPCo and the list will likely evolve over time. The initial stakeholder list was categorised and mapped against the desired engagement strategy and objectives as shown in Figure 4.1
Figure 4.1 Initial Stakeholder Identification and Mapping Process
For simplicity the stakeholders identified in ‘Manage Closely’ were generally approached personally and often repeatedly for comment, updates, recommendations and meetings during the PBC. These engagements were mostly face to face, but some were over the phone and others via email depending on the stakeholder’s needs. The ‘Keep Informed’ group were contacted as required throughout the development of the PBC as required depending on process. Most of the other groups identified in ‘Keep Satisfied’ or ‘Monitor’ were not contacted directly however some interactions did occur. These priorities may change for the DBC.
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Key messages, Questions and Answers, presentations and project visualisations were prepared and placed on the HIPCo Website. A stakeholder register and action plan was developed and populated with interactions, recommendations and updates.
The website can be accessed at https://hipco.com.au/ and the Communications Plan is included in Appendix A.
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5. PROPOSAL BACKGROUND
5.1 Project Location
The Project is in the Hughenden region, in the Flinders Shire, Queensland. The Flinders Shire covers a total area of 41,632km2, with Hughenden being the main business centre, situated on the banks of the Flinders River.
The town of Hughenden has a population of 1,136 as of the 2016 Australian Census. There are two schools in the town – Hughenden State School, which caters for approximately 100 primary and secondary students, and St Francis Catholic primary school. Hughenden Hospital provides inpatient, outpatient, 24-hour emergency, and general practice care for the town. For more complex health conditions, the main referring hospital is Townsville Hospital, almost 400km to the east.
While the Project is expected to have direct impacts primarily on the town of Hughenden itself, indirect and flow-on impacts to the remainder of the Flinders Shire are to be expected. As such, the Local Government Area (LGA) of Flinders is considered to be within the study area. Figure 5.1 below shows the extent of Flinders Shire LGA.
Figure 5.1 Flinders Shire LGA
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5.2 Economic Overview - Key Points
The economy of the area is driven by four major elements:
▪ Primary production and export, with mining an important secondary industry
▪ Services to and associated with transport, for example the Townsville – Mt Isa rail and road transport such as the Flinders Highway
▪ Services to holiday and other visitors
▪ Supporting industries to primary producers and mines, as well as supporting services for the wider shire (for example, Local Government administration, health, education, and hospitality).
The area is geared to produce relatively large volumes of primary exports and has some supplementary and outside income coming into it from rail and road servicing and offices and visitors. It has a limited local servicing structure. But otherwise, it imports the bulk of the goods and services it requires from outside its boundaries from the rest of Australia and overseas.
5.3 Industry
5.3.1 Employment
Table 5.1 outlines industries of employment in 2011 and 2016 within Flinders Shire. Notably, the total number of people employed across all industries decreased over the period by more than 11%. The largest change in share of employment was seen in the transport industry. This percentage share is likely to have declined further since 2016 due to Aurizon cutting more than two thirds of its workforce in the Shire since this data was derived. The table also shows that the agriculture, forestry and fishing industry is the largest employer in Flinders Shire, with over one third of the population employed in this industry.
Table 5.1 Share of Employment in Hughenden, by Industry
Industry 2011 (% Share) 2016 (% Share)
Agriculture, Forestry and Fishing 35.3 35.2
Public administration and safety 11.4 12.7
Transport, Postal and Warehousing 11.9 8.2
Retail trade 8 7
Education and training 5.8 5.5
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Industry 2011 (% Share) 2016 (% Share)
Accommodation and food services 5 4.9
Health care and social assistance 4.1 4.7
Construction 5.9 4.3
Administrative and support services 1.3 2
Electricity, Gas, Water & Waste Services 0.9 1.5
Manufacturing 2.7 1.4
Wholesale trade 0.8 1
Mining 1 0.9
Professional Scientific & Technical Services 0.7 0.9
Financial and insurance services 1 0.6
Rental, Hiring, & Real Estate Services 0.9 0.4
Arts and recreation services 0.3 0.4
Other services 2.1 2.5
Total persons employed (no.) 898 (total no.) 795 (total no.)
5.3.2 Agricultural Production
Beef cattle production is the major industry in Flinders Shire, with a gross value of production of $73.5 million (Flinders Shire Council. 2018). Agriculture is the largest industry within the Shire, making up around 35% of employment.
Historically, Flinders Shire also had a major sheep industry. Estimates in 1993 had 443,137 sheep in the Shire (Australian Bureau of Statistic. 1993), however, the sheep industry has since mostly disappeared.
The sheep industry in Flinders Shire has largely been replaced by cattle. In 1993 the number of cattle in the Shire was 227,071, which has now increased to 293,000. The cattle industry is more land-intensive and is likely to have contributed to the decrease in agricultural employment in Flinders Shire, alongside other factors such as the decline in the sheep industry. Investing in alternative crops could yield more employment and increase productivity.
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5.3.3 Mining
Mining is not a major industry of direct employment in Flinders Shire, as only 0.9% of residents were classified as employed by the mining industry in 2016. However, due to a significant number of mines located in the area surrounding the Shire (see Figure 5.2) mining drives employment in supporting industries within Flinders Shire such as transport.
Figure 5.2 Mining Industry in Hughenden and Surrounds
5.3.4 Business
1. As of June 2018, there were 186 registered businesses in the Flinders Local Government Area. This is down from 199 businesses in June 2017, a reduction of approximately 6.5%. 2. Of these 186 businesses, approximately 41% were registered as businesses in the Agriculture, Forestry, and Fishing Industry, equating to 76 businesses: the largest out of all business categories. 3. Figure 5.3 displays how the number of businesses in this category changed over the period 2016 to 2018. As seen in the figure, number of businesses in this sector increased from 2016 to 2017, however fell again by approximately 16% in 2018. Most of these businesses are small non-employing businesses with an annual turnover of less than $200k. 4. The region has existing potential to sustain high-value agricultural production, with three of the employing agricultural businesses in 2018 reporting annual turnover of between $2 million and $5 million. Hence, it is clear that if investment in the region is able to stimulate productivity and growth in the agricultural sector, allowing the currently non- employing businesses to expand and hire new workers, then there is the potential for businesses in the region to experience large increases in output and economic benefit.
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90 81 76
2016 2017 2018
Figure 5.3 Total Businesses in the Agriculture, Forestry, and Fishing category, Flinders LGA, 2016-2018.
5.3.5 Services to Transport
Hughenden’s location in northern Queensland has made it a large part of the regional freight network. As of 2016, 8.2% of workers in Flinders Shire were part of the transport industry. Hughenden services the Townsville to Mount Isa rail link, which includes the Inlander long distance passenger service as well as freight. Hughenden’s location on the cross section of the Flinders Highway and Kennedy Developmental Road places it as a major thoroughfare for road freight, having linkages to Cairns, Townsville, Mt Isa and the Northern Territory.
However, since 2016 there has been a further reduction in transport employment in Hughenden. Specifically, Aurizon shed 25 positions in Hughenden in 2017 which led to a corresponding reduction in economic activity (Queensland Country Life. 2016).
5.4 Local and Visitor Services
5.4.1 Hughenden Aerodrome
Hughenden aerodrome allows residents to be connected to larger regional centres via air travel. Regional Express (REX) airlines flies from Townsville to Mount Isa and return, with a stopover in Hughenden, every Monday, Wednesday and Friday.
5.4.2 Schools
Flinders Shire is home to four different schools offering primary education, two of which are in Hughenden. Secondary education is available at Hughenden State School, which also offers traineeship opportunities, or by distance education. Hughenden is also home to a kindergarten and early childhood centre.
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5.4.3 Health
The Hughenden Health Service provides inpatient, outpatient and 24 hour emergency care services. Visiting services are also provided, giving residents access to dental, mental health, women’s health and allied health care (Queensland Health, 2019).
5.4.4 Diggers Entertainment Centre
Diggers Entertainment Centre functions as a community hall, sporting facility and conference centre in Hughenden. The hall has capacity to easily accommodate 650 guests.
5.4.5 Flinders Discovery Centre
Flinders Discovery Centre is the main visitor information centre located in Hughenden. This facility also houses a dinosaur display and museum that is part of the region’s history.
5.4.6 Visitor Accommodation
Visitors to Hughenden have access to a variety of accommodation. Hughenden has one hotel, one hotel/motel, two motels, and one caravan park.
5.5 Current/Recent Developments
There are several recent and current developments in Flinders Shire that demonstrate the positive effect of investment on boosting opportunities in the region. These have been outlined below.
It is important to note that the current declining population and employment statistics capture the short term increases in employment in the construction sector that were experienced as a result of these projects. However, once these projects were/will be completed, it is expected that those contractors who relocated to Flinders Shire during the construction of the project will leave the Shire to seek new opportunities, further decreasing the population in the region. Additionally, some projects hired from within the region – for example, Kennedy Energy Park, which provided 30 jobs for locals. Once construction was completed, these locals were left jobless at least for a period. This highlights the importance of investing in projects which provide long-term job opportunities that encourage people to settle in Flinders Shire.
5.5.1 Hughenden Recreational Lake
More than $6 million has been dedicated towards the construction of Hughenden Recreational Lake. The lake will be 900 metres in length, and up to 400 metres wide and will provide opportunities to participate in aquatic activities, as well as a boat ramp, beach and playground area. This project is scheduled for completion by the end of 2019 and will include subcontracting local businesses where possible.
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5.5.2 Kennedy Energy Park
Kennedy Energy Park is a utility-scale hybrid wind, solar and energy storage project, located just outside of Hughenden. This was a $160 million investment, completed in late 2018, that has the capacity to provide 60 MW of clean energy. An estimated 30 local residents were employed as labourers for the construction phase. Additionally, several local businesses were awarded subcontracts to assist in construction (Windlab. 2018).
5.5.3 Overland Sun Farm
Completed in 2017, the Overland Sun Farm has the capacity to provide 22.5 MW of clean energy. During construction the project provided employment and subcontracting opportunities.
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6. SERVICE NEED
6.1 Key Points
▪ The identified Service Need addresses the Base Case issues raised in the PBC as an opportunity to capitalise on the regional advantages to establish new agricultural production in the region.
▪ The Service Need will be addressed by the Reference Project which constructs assets to harvest and store currently unallocated water or buy back of existing allocations as required and construction of irrigation infrastructure. Gulf Water Plan amendments will likely be required for the Reference Project.
▪ Regional economic outcomes are strongly aligned with the increasing value of agricultural products from the Reference Project.
▪ Benefits not only include an increase in the value of agricultural production and subsequent improvements to Gross Regional Product (GRP) but also in construction of new infrastructure and establishment of supporting industries for both construction and ongoing operations.
▪ Benefits also include improvements to job opportunities, direct and indirect, permanent, temporary and itinerant, in agricultural production and related service industries.
▪ Benefits will also flow to improvements in social disadvantage indices, heath and well- being.
▪ The Reference Project also addresses the need for more resilient, self-sufficient and self-reliant communities by providing sources of income and fodder when drought or flood isolates these communities or makes products difficult to import.
▪ Initial discussions with Flinders Shire Council indicates there is no immediate need for additional urban water supply. Further investigation to enhance water resilience measures would be included in future studies including alignment with Regional Water Supply Strategies. However, as the water sought from this Project is not in contest for drinking water, a key point of tension does not exist.
▪ Available and suitable land far exceeds the water serviceability therefore evolution of water efficient practices including evaporation control will allow expansion of the scheme and evolution of crops and cropping practices.
6.2 Why Service Need is an Important Concept?
This PBC outlines the need for a large-scale water infrastructure project in the Hughenden region. In business-case terminology there is a “Service Need” that needs to be addressed in this region. That is, the agricultural sector has been in decline for some decades and this
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has flowed through into those sectors that provide supporting services. This has led to a decline in the population, employment prospects and social services that are available in Hughenden and surrounds.
Significantly, the Hughenden region now has a strong dependence on the beef cattle industry, especially since the decline of the wool industry.
These trends are likely to continue, with further declines in population, employment and standards of living. There is a Service Need to redress this trend and create employment opportunities for the longer-term economic and social survival of the region. Diversification into other economic and value-adding activities is therefore an important need for this region.
This Service Need is to be considered in the context of the “Base Case”; i.e. a description of what the situation would be in the absence of the proposed Project.
The proposed Project is termed the “Reference Project” and needs to demonstrate that it will meet this Service Need, which for this proposal is a large new irrigation scheme with water stored in a new dam from the Flinders River and its’ tributaries. The Reference Project – and indeed the two variations of this proposal – are described in detail later in this report.
This PBC demonstrates that this Reference Project would address the Service Needs as articulated in this chapter.
This is done by demonstrating that the Reference Project leads to better outcomes than the Base Case; i.e. what is projected to occur in the absence of this Project.
6.3 Previous Assessment of the Service Need
While the term ‘Service Need’ is a relatively recent addition to business case language many previous studies have been undertaken in the region to assess the viability of irrigated agriculture schemes and address the problem or ‘Base Case’. These have exclusively been options studies to address the Service Need for dams to harvest the ‘unallocated’ water in the Flinders River catchment. These studies are summarised in Section 9 Options Considered.
6.4 Demand Assessment
Service Need or opportunity assessment usually includes town or urban supply needs with subsequent examinations of the Water Security Plans or Demand forecasts as well as agricultural demand and willingness to pay for combined schemes. In this case, no urban need is required, or forecast to be required, and there are no service providers and service areas apart from Flinders Shire Council to consider in this regard. Flinders Shire Council advise their urban water supply is secure and serviced by bores with recent upgrades to treatment facilities however the Richmond Shire may be a different matter.
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Regarding agricultural demand and willingness to pay, these studies have not yet been undertaken as a viable Reference Project and concept design was the first line of investigation. Willingness to pay parameters for inclusion in the analysis were benchmarked from previous studies and publicly available information on water sales and were used in the modelling and analysis exercises. $2000/ML for medium security and $1000/ML for lower security allocations were assumed in the models. The risk register contains an action to undertake a more extensive study to assess willingness to pay, demand forecasts and customer interest as part of the DBC. This study is scoped and ready to implement when funds become available. At this stage demand is assumed as 100% of the allocation and provided the price is reasonable this is considered reasonable. The financial models assume ramp-up of crop production over a number of years (10 years for horticulture crops and 4 years for grain and hay crops).
Therefore, the demand projection, and subsequent analysis, assumes a series of steps to 100% use and not an immediate change as this was not reasonable. Rigorous assessment of demand projections and willingness to pay, linked to the construction timetable and sale of water allocations will be required to further reduce the risk profile.
6.5 Stakeholder Views
Mutli-level stakeholder engagement assessments have been undertaken to establish the Service Need and ability to address the Base Case. The Stakeholder Engagement chapter (Section 4) outlines the process adopted. The indicative issues that have arisen are;
▪ There is competition for the unallocated water. This may lead to tensions however the HIPCo Board has directed, as one of its objectives, to work with the other parties to resolve these issues where possible. This includes Council, existing users, landowners, regulators and other scheme proponents.
▪ Unanimous agreement that a feasible irrigated agriculture scheme is sensible, required and possible and innovative means should be explored for sustainable harvesting.
▪ There is water available in the system and the dam options assessed in the past are not feasible.
▪ The form and function and location are not agreed as similar schemes are proposed further downstream and the Gulf Water Plan does not have enough unallocated water for two large schemes in the immediate vicinity.
▪ The Gulf Water Plan is the first point of reference and downstream users and EFOs need to be considered.
▪ The Flinders Shire Council 15 Mile Scheme Stages 1 and 2 are not in conflict with the Reference Project and are considered complimentary and potentially different stages of a series of reinvigoration projects across the region.
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▪ A potential tension exists with other proponents with similar schemes however it is understood that all schemes will be assessed on their individual merits by the DNRME for water allocation and potential funding.
6.6 Criticality of Intended Outcomes and Possible Disbenefits
There are some identified potential ‘disbenefits’ identified in the Environment Assessment section (Section 14) regarding potential effects on downstream environmental, social and environmental indicators. However, these disbenefits are largely unquantified and are precautionary in nature. The DBC scope for this project recommends a detailed investigation to quantify the potential issues before a scheme is finalised.
The criticality of the project to the regional economy is another matter. The benefits have been quantified and are substantial. Injection of resources into a suitable irrigated agriculture project is considered essential to the functioning of the local and regional economies.
The Base Case shows the current and likely future situation if the Project is not completed. The likelihood is the region will suffer further declines in population and economic and social conditions.
The Service Need is to arrest this decline and replace it with a project(s) to stimulate economic and population growth and rising regional living standards.
The Base Case is not defined as an urban sector running out of water. It is defined as the agricultural sector having never had enough water to realise its potential and without which the current Base Case problem will persist and further decline.
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7. BASE CASE
7.1 Key Points
▪ The Base Case represents the ‘business as usual’ situation, which is premised on dominance of beef cattle production and support services underpinning the Hughenden regional economy. It is likely to feature:
• Continuing decline in population, services, GRP, resilience, business opportunities, employment opportunities • Continuing decline in economic and social indicators • Inability to attract new investment and hold continuing investors, families and businesses • Declines in serviceability and maintenance of key infrastructure • Inability to contribute to Gross National Product (GNP) and national and state food resilience measures • Continued decline from the region’s most under-utilised resource, unharvested but sustainable water supplies.
▪ The Service Need opportunity presented by the Reference Project has few disbenefits and is an essential element of the economic and social recovery of the region.
7.2 Population Decline
The most recent 2016 Australian Census counted the population of the town of Hughenden at around 1,100. The Flinders Shire, in which it is located had an estimated population of around 1,500 in 2017. The Shire’s population peaked at over 3,000 residents during the 1960s and has declined significantly in the decades since.
Over the last two decades the Flinders Shire has experienced the fourth highest rate of population decline across Queensland with a total decline of almost 30% over the period. Further, over the last five years, the Shire has exhibited an average rate of population decline of 3.0% per year, compared to the State-wide average increase of 1.6% per year.
Continuation of this decline, in the absence of regional economic growth initiatives, has the Shire population projected to decline to around 1,260 by 2031, a further decrease of approximately 17% from the most recent population estimate. Figure 7.1 illustrates the historical decline in population along with the forecast continued decline.
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2,500
2,000
1,500 Population (Historical)
1,000 Population Population (Forecast)
500
0 2000 2005 2010 2015 2020 2025 2030
Figure 7.1 Population in Flinders Shire (Source: Historical Data – ABS; Forecast Population – QGSO)
7.3 Employment Decline
Similarly, the total number of people employed in the Flinders Shire has declined and across all sections of the local economy. The number of businesses, including farming enterprises, has also declined.
The Flinders Shire economy is mostly comprised of:
▪ Primary production (farming and to a much lesser extent mining) of which agriculture and beef production is dominant;
▪ Transport-related services;
▪ Tourism-related services; and
▪ Support services to primary producers and mines and the broader community, including local government administration, health, education, and hospitality.
There has also been a shift of employment categories and their importance for the region as described in Section 5.3.1.
7.4 Socio-Economic Disadvantage
Based on the Australian Bureau of Statistics Socio-Economic Indexes for Areas index – which measures socio-economic disadvantage – the Flinders Shire exhibits higher level of disadvantage than more than half of the local government areas in Australia.
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While the unemployment rate in the Shire is below the State average, this is driven by population decline, rather than representative of a high level of employment opportunities in the region. Accordingly, the number of people in employment declined by around 12% between 2011 and 2016.
7.5 Gross Regional Product
While estimates of the Gross Regional Product (GRP) for Flinders Shire specifically are not available, the Queensland Government Statistician’s Office (QGSO) published data over the period from 2000-01 to 2010-11 which showed that the GRP for the North West region of Queensland (which Flinders Shire is a part of) grew at 0.1 per year. This rate is significantly below the whole-of-Queensland rate, and the slowest growth rate of all regions (aside from the decline seen in the Central West) (see Table 7.1).
Table 7.1 Growth in Gross Regional Product, All Queensland regions, 2000-01 to 2010-11 (Source: Queensland Government Statistician’s Office)
Rank Region GRP Growth, 2000-01 to 2010-11
1 Sunshine Coast 5.1%
2 Gold Coast 4.8%
3 Brisbane 4.7%
4 Mackay 4.6%
5 Darling Downs 3.7%
6 Fitzroy 3.5%
7 Wide Bay-Burnett 3.0%
8 Northern 2.9%
9 West Moreton 2.6%
10 Far North 2.3%
11 South West 0.3%
12 North West 0.1%
13 Central West -1.9%
Queensland 4.1%
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7.6 Relative Disadvantage
According to the Australian Bureau of Statistics Socio-Economic Indexes for Areas (SEIFA), in terms of socio-economic disadvantage, the Flinders Shire is in the 43rd percentile of advantage compared to other local government areas in Australia. In Queensland specifically, it ranks marginally higher, being in the 61st percentile; this is due to a relatively larger proportion of disadvantaged areas being in Queensland.
In other words, Flinders Shire exhibits less disadvantage than 61% of Local Government areas in Queensland and 43% of Local Government Areas in Australia. However, this index is a broad measurement of relative socio-economic advantage and disadvantage in terms of “people's access to material and social resources, and their ability to participate in society”. It does not provide a complete indication of a region’s economic prospects into the future, which has a bearing on future social amenity.
7.7 Future Trends
As is the case in most rural areas, urban drift poses a significant threat to Flinders Shire. Regional development can mitigate some of these effects. Table 7.2 shows the downward population trend in Queensland local government areas with the Flinders Shire ranking fourth highest.
Table 7.2 Queensland Local Government Areas - Top 10 Ranked by Population Decline (Source: Queensland Government Statistician’s Office)
Rank Local Government Area % Growth in population, 1998-2018
1 Barcoo -42.1%
2 Quilpie -34.2%
3 Bulloo -32.0%
4 Flinders -29.1%
5 Paroo -29.1%
6 Winton -28.4%
7 Richmond -27.3%
8 McKinlay -27.1%
9 Boulia -23.6%
10 Blackall-Tambo -23.0%
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Another factor exacerbating the risk to the future of Flinders Shire is the ageing population. In 2017 the median age of the Flinders population was 43.1 years, which is above the Australian average of 37.5 years.
While the unemployment rate within Flinders Shire is relatively low, this is driven by population decline, rather than representative of a high level of employment opportunities in the region. The number of people in employment declined by 11.5% between 2011 and 2016 (equating to approximately 103 jobs), however over the same period the size of the labour force also declined by 11.5%.
As the decline in the labour force seems primarily driven by the decline in population, this may indicate that as people leave their employment in Flinders Shire (either voluntarily or after redundancy), they migrate to an area with better employment prospects, removing them from the Flinders Shire labour force (allowing the unemployment rate to remain relatively low). There is a strong downward trend in the employment prospects in the town, with a growth rate of approximately -2% per year (i.e. a decline).
1200
1000
800
600
400 NUMBER OF PEOPLE OF NUMBER
200
0 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Employment Labour Force
Figure 7.2 Employment and Labour Force Trends, Flinders Shire (Source: Australian Bureau of Statistics)
Table 7.3 outlines employment categories in Flinders Shire as at the 2016 Census. It is evident that most of the employment is within agriculture (predominantly business owners who are classed as ‘managers’), labouring and machinery operators and drivers.
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Table 7.3 Occupations of Those Employed in the Flinders Shire (Source: Australian Bureau of Statistics)
Occupation Percentage
Managers 32.2%
Labourers 18.5%
Machinery operators and drivers 10.2%
Clerical and administrative workers 9.1%
Technicians and trade workers 8.8%
Community and personal service workers 6.9%
Professionals 6.8%
Sales workers 5.0%
Other 1.3%
7.8 Prospects of Further Decline
Without significant regional development it is likely that Flinders Shire will experience further decline. Ongoing technological change and improvements in efficiency is likely to continue to gradually reduce the demand for labour-based jobs. Furthermore, the future prosperity of the region has a large dependence on local industry remaining in the area. For example, when Aurizon cut 25 jobs in Hughenden due to the loss of a contract it had a huge impact on the local economy. It caused the relocation of many families which is a significant ratio in a small community.
Increasing regional investment and creating more jobs in the area will be the only way to sustain Flinders Shire into the future.
7.9 Existing Water Resources
7.9.1 Current Water Infrastructure
There are currently no significant impoundment structures along the Flinders River. The only significant in-stream water storages within the Flinders River catchment are:
▪ Chinaman Creek Dam – 2.75 GL capacity dam on Chinaman Creek (tributary of Cloncurry River) used to supply water to the town of Cloncurry.
▪ Cloncurry Weir – low height weir on the Cloncurry River used to facilitate pumping of water from the Cloncurry River into Chinaman Creek Dam.
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▪ Lake Corella (Corella Dam) – 10 GL capacity dam on the Corella River that was previously used to supply water to the Mary Kathleen Uranium Mine.
7.9.2 Current Water Resources
The Project study area is within the upper reaches of the Flinders River catchment which falls within the Gulf Water Plan area (refer Figure 7.3). The Project location is within the Flinders River Water Management Area Zone 7 (refer Figure 7.4).
Figure 7.3 Gulf Water Plan area (Source: Water Plan (Gulf) 2007)
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Figure 7.4 Flinders River Water Management Area (Source: Gulf Resource Operations Plan)
The Flinders River is the longest river in Queensland. The Flinders River rises on the western slopes of the Great Dividing Range to the north-east of Hughenden in North West Queensland and flows generally north-west through the Gulf Country, across a large, flat clay pan, before entering the Gulf of Carpentaria near the town of Karumba. The total catchment area of the Flinders River is approximately 109,000 km2. Major tributary drainage systems that flow into the Flinders River include:
▪ Galah/Porcupine Creek that enters the Flinders River near the town of Hughenden
▪ Dutton River and Stawell River which enter the Flinders River near the town of Richmond
▪ Cloncurry River and Saxby River which enter the Flinders River in the lower reaches of the catchment.
Historical stream flow gauging data for the Flinders River is summarised in Table 7.4.
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Table 7.4 Gauged Mean Annual Flow Volumes Along the Flinders River
Gauging Station Gauging Station Catchment Area Period of Record Mean Annual Flow Number Name (km2) (GL/year)
915003A Flinders River at 1,958 1972 to 2012 135 Glendower
915004A Flinders River at 2,519 1969 to 1988 127 Hughenden
915008A Flinders River at 17,380 1971 to current 381 Richmond
915012A Flinders River at Etta 46,130 1972 to current 919 Plains
915003A Flinders River at 106,300 1969 to current 3,186 Walkers Bend
7.9.3 Surface Water Entitlements
There are no supplemented surface water entitlements (water entitlements linked to water storage infrastructure) within the Flinders River section of the Gulf Water Plan area. All surface water entitlements are unsupplemented entitlements that are based on run-of-river flows. The vast majority of the unsupplemented surface water entitlements within the Flinders River catchment are for agricultural/rural use. A smaller volume of unsupplemented surface water entitlements are held by Councils for urban and recreational use. The current volumes of unsupplemented surface water entitlements in the Flinders River section of the Gulf Water Plan area are summarised in Table 7.5. These volumes include water licences that have been previously granted from the sale of the general reserve unallocated water.
Table 7.5 Current Volumes of Unsupplemented Water Entitlements in Flinders River catchment
Authorised Purpose Total Nominal Entitlement Volume (ML)
Any 10,798
Rural 209,014
Mining 200
Total 220,012
There is currently a small but increasing number of growers growing irrigated crops on a commercial scale in the Flinders River catchment. Crops that have been successfully grown in the region historically include sorghum, cotton, corn, chickpeas, mung beans and adzuki
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beans. In addition to the current small-scale commercial irrigated cropping, there are other producers who grow forage crops, both irrigated and dryland, for their own use. These crops are grown for hay or silage.
Irrigation water is currently supplied from water harvesting licences which rely on run-of- river flows and accordingly the supply volumes from these licences are highly variable and susceptible to limited supplies during drought periods. Some irrigation water is also sourced from groundwater aquifers including the Flinders River alluvium and the Great Artesian Basin.
Flinders Shire Council source their urban water supplies from groundwater but hold unsupplemented water entitlements for other purposes such as the supply of water from the Flinders River to the recently constructed Hughenden Recreational Lake. Flinders Shire Council also recently acquired a 5,000 ML water licence on the Flinders River downstream of Hughenden for rural use from the recent sale of the general reserve unallocated water.
The current status of the unallocated water reserves in the Flinders River section of the Gulf Water Plan area is summarised in Table 7.6. The total volume of unallocated water currently remaining in the Flinders River catchment is 166,000 ML.
Table 7.6 Current Status of Unallocated Water in Flinders River Catchment
Unallocated Water Type Reserve Volume (ML) – Unallocated Water Remaining Unallocated Water Plan (Gulf) 2007 Granted Since Water Plan Water Volume (ML) (ML)
Indigenous 8,500 0 8,500
Strategic (State Purpose) 17,850 0 17,850
General 239,650 100,000 139,650
Totals 266,000 100,000 166,000
The unallocated water reserves are unsupplemented water entitlements and the nominal volume of these entitlements corresponds to an Annual Volumetric Limit (AVL) which represents the maximum volume of water that can be taken in any year (water year basis). Hydrologic modelling of the unallocated water reserves in the Flinders River catchment undertaken by the Queensland Government for the Water Plan (Gulf) 2007 (i.e. Flinders Source Model) indicates that the average volume of water that can be taken under the unallocated water reserves (Mean Annual Diversion, MAD) varies between 55% and 70% of the AVL, with an average value of approximately 60% of the AVL. This indicates that the remaining unallocated water volume of 166,000 ML (AVL) in the Flinders River catchment corresponds to a MAD of approximately 100,000 ML/year.
The Queensland Government has provided for the release of the general reserve unallocated water in the Gulf Water Plan area through two separate tender processes:
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▪ Public tender in late 2015/early 2016 for the sale of the general reserves in the Flinders, Norman, Nicholson, Gregory and Leichhardt catchments.
▪ Public tender commencing in mid-2017 (tender process is still open) for the sale of the general reserve in the Gilbert catchment and remaining general reserve (not sold in first tender) in the Cloncurry River section of the Flinders catchment.
In the Flinders catchment, the general reserve was offered for sale as two different unsupplemented water entitlements (Product 1 and Product 2) each with different AVLs, daily extraction limits and flow thresholds/conditions. Product 2 had higher flow thresholds than Product 1 and accordingly has a lower reliability of supply compared to Product 1. Limits were applied on the volumes of Products 1 and 2 offered for sale in different parts of the catchment. The outcome of the 2015/16 tender process for the Flinders River catchment are summarised in Table 7.7. The remaining Product 1 volume of 7,500 ML in Reach 3 (Cloncurry River catchment) was subsequently offer for sale in the tender process for the Gilbert and Cloncurry catchments that commenced in mid-2017. The entire remaining Product 1 volume for the Cloncurry River catchment (7,500 ML) has been sold as part of this tender process.
Table 7.7 Outcomes of 2015/16 Tender Process for Release of General Reserve in Flinders catchment
Part of Catchment Product 1 Product 1 Product 2 Product 2 Volume Volume Sold Volume Volume Sold Available for (ML) Available for (ML) Sale (ML) Sale (ML)
Reach 1 – Flinders River and 25,000 18,000 0 - tributaries upstream of Richmond Gauging Station
Reach 2 – Flinders River and 10,000 4,500 70,00 0 tributaries between Richmond Gauging Station and Cloncurry River confluence
Reach 3 – Cloncurry River catchment 7,5001 0 50,000 50,000
Reach 4 – Flinders River and 12,500 12,500 184,650 7,500 tributaries downstream of Cloncurry River confluence
Total for Flinders River Catchment 55,000 35,000 184,650 57,500
1 This Product 1 volume was subsequently sold in the 2017 unallocated water tender for the Gilbert and Cloncurry catchments.
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8. STRATEGIC CONSIDERATIONS
8.1 Key Points
▪ The Base Case, Service Need and Reference Project align
▪ There is also strong alignment between the Strategy and Policy objectives outlined in the various levels of documentation from the Australian Government, State Government and Local Governments.
▪ The selected Reference Project will address the issues within the broader and local context.
▪ Several conditions of the various government strategies and policies will need to be addressed in the next phase of the project.
▪ During the DBC a scheme proponent will be engaged via alignment with corporate strategies, policies and government mandates and charters.
8.1 Commonwealth Government
8.1.1 White Paper on Developing Northern Australia
The Our North, Our Future: White Paper on Developing Northern Australia (2015) outlines the Commonwealth Government’s vision for the future of Northern Australia and profiles the region, outlines the available resources, the challenges, the infrastructure required and the workforce issues. The White Paper also talks about reducing barriers to better use of the land and water. Although the White Paper does not specifically identify the HIP project, the PBC and Reference Project are in close alignment with the White Paper.
A strategic goal in the White Paper is to provide greater access to water across northern Australia. The Reference Project identified in this PBC is consistent with this objective as it:
▪ Provides increased water supply security and reliability to underpin sustainable economic growth
▪ Increases water supply for irrigated agriculture on suitable soils with few environmental issues (noting some compliance aspects of the Gulf Water Plan that require further consideration)
8.1.2 Northern Australia Audit – Infrastructure for a Developing North
The Northern Australia Audit: Infrastructure for a Developing North was published in 2015 and assessed critical economic infrastructure gaps and requirements to meet projected Northern Australia population and economic growth through to 2031.
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The Northern Australia Audit, like the White paper, found that water availability varies dramatically in Northern Australia and highlighted continuing challenges including limited existing infrastructure. This study concluded that prospective agricultural developments may utilise a range of potential water supply options analysed on a case-by-case basis. Water is noted as coming from trading, expansion of existing agricultural water supply schemes and planning and construction of new infrastructure.
This PBC once again aligns with the findings of this audit by considering infrastructure and non-infrastructure solutions (such as sensible amendments to the Gulf Water Plan and Resource Operations Plan) to access water supplies to address the Base Case and meet the Service Need.
8.1.3 Australian Infrastructure Plan (AIP)
The AIP (2016) sets out the infrastructure challenges and opportunities and solutions for Australia over the next 15 years. The infrastructure is required to drive productivity and growth, and not only maintain but enhance the nation’s standard of living, ensuring the current world-class standards are maintained. The Plan highlights the need for infrastructure investment in Northern Australia to enhance regional productive capacity and take advantage of growing demand for produce in South-East Asia and China; at the same time, noting that regulatory frameworks and operational arrangements should align with any new infrastructure investments to maximise potential productive capacity. This has a slightly different emphasis in this report as it implies both regulatory frameworks and infrastructure proposals need to align, not one being necessarily subservient to the other.
The Reference Project proposed in this PBC is very well aligned with the AIP as it increases water security for agricultural production, responds to the increasingly variable climate and capitalises on the strategic objective of the Australian Infrastructure Plan to develop Northern Australia through the development of water infrastructure for irrigated agriculture.
8.1.4 National Water Initiative (NWI)
The Commonwealth Government and State and Territory governments are parties to the Intergovernmental Agreement on a National Water Initiative (NWI). The NWI, established in 2004, is a blueprint for national water reform and a shared commitment by governments to increase the efficiency of Australia's water use, provide greater certainty for investment and productivity, and to ensure improved environmental outcomes. Developments have included changes to:
▪ Water access entitlements
▪ Water markets
▪ Water pricing
▪ Water use efficiency
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▪ The integrated management of water resources.
This PBC sets out affordability positions that acknowledges a Commonwealth or State grant. However, as reflective of the Full Cost Pricing (FCP) principles set out in the NWI, the DBC should further examine the willingness to pay and likely capital contributions once again acknowledging that ‘commercial’ viability is unlikely. Economic viability and ability to address the Service Need is clearly achievable.
8.1.5 Reef 2050 Plan
The Reef 2050 Plan was released by the Commonwealth and Queensland Governments in March 2015. The Plan is the overarching framework for the protection and management of the Great Barrier Reef (GBR) until 2050. Among other priorities and initiatives, the Plan outlines management measures to ensure the universal value of the GBR is preserved.
Water quality is a key focus of the Reef 2050 Plan, particularly in relation to the potential impact of infrastructure projects on the quality of water that is discharged into the GBR. The potential for agricultural practices to impact on the nutrient, sediment and pesticide loads in the GBR is identified in the Plan, as is the need to have consideration for the quality of agricultural run-off.
The Reference Project has been assessed against the objectives of the Reef 2050 Plan. The environmental impacts from a proposed HIP Reference Project on the Great Barrier Reef are expected to be inconsequential as the Flinders River and its tributaries flow into the Southern Gulf of Carpentaria (SGoC) which is not part of the Great Barrier Reef or included in the Reef 2050 plan. Therefore, not only does the Reference Project not impact on the Great Barrier Reef, it potentially removes some need for agricultural production in the areas covered by the Reef 2050 Plan.
8.2 Queensland Government
8.2.1 Queensland Bulk Water Opportunity Statement
The Queensland Bulk Water Opportunity Statement (QBWOS), originally released in July 2017 and updated in December 2018, provides a framework through which the Queensland Government can support and contribute to sustainable regional economic development through better use of existing bulk water infrastructure and investment in new infrastructure. The QBWOS is discussed in various sections of this PBC however a summary of its intent is provided here to contextualise the Reference Project in the QBWOS policy hierarchy.
The QBWOS is the Queensland Government’s outline for investment and competition in bulk water supply opportunities where public funds are required. The QBWOS objectives are stated as:
▪ Safety and reliability of dams and urban water supplies
▪ Use existing water resources more efficiently
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▪ Support infrastructure developments that provide a commercial return
▪ Consider projects that will provide regional economic benefits.
The QBWOS identifies opportunities for both regional communities and the State to use bulk water for economic growth. The primary focus is on maximising the use of, and benefits from, existing investments and carefully considering the benefits and costs of new infrastructure. One of the main enablers inherent in the QWBOS is on reducing the barriers to using water within existing bulk water supply infrastructure and considering new projects that demonstrate economic benefits within the context of competing budget and environmental constraints.
8.2.2 Queensland Agricultural Land Audit and Addendums
Where QBWOS deals with water opportunities, the Queensland Agricultural Land Audit released in May 2013, with addendums released in 2014, 2015, 2016 and 2017, outlines the land opportunities. The Audit identifies land classes, current and potential agricultural production land, crop studies, climate risk and the constraints on development to meet the 2040 Agricultural Vision of ‘efficient, innovative, resilient, profitable and by 2040 to ‘double Queensland’s Agricultural Production’.
Chapter 5 of the Queensland Agricultural Land Audit covers the Gulf and North West Queensland which encompasses the Reference Project. Chapter 5 identified large areas of land, approximately 2,000,000 hectares, that is suitable for perennial or annual irrigated agriculture that is currently used for grazing. The Reference Project aligns with the findings of the Queensland Agricultural Land Audit, having identified areas suitable for future agricultural development.
8.2.3 Advancing North Queensland Policy
The Advancing North Queensland Policy was released in June 2016 and highlights several priorities that support the regional economic development potential with a focus on the competitive natural advantages of the region.
Water security is one of the priorities under this policy, with the Advancing North Queensland Policy acknowledging that water security and water infrastructure are critical to sustain agricultural industries and boost regional development throughout the region.
The Reference Project is once again in alignment with this policy of contributing further economic growth of the Gulf and North West Queensland regions and the state of Queensland.
8.2.4 State Infrastructure Plan (SIP)
The SIP (DILGP, 2016) outlines the strategic direction for planning, investment and delivery of infrastructure in Queensland. The SIP identifies the government’s infrastructure objectives and sets out how the objectives are to be achieved. Among other objectives the
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SIP requires ‘water supply infrastructure is in place or in train where there is a sound business case and water resources are available’. This PBC and documented Reference Project meets this objective. The standard measures of a ‘sound business case’ are clearly described as is the availability and accessibility of water.
8.3 Local Government
There are no overlaps or conflicts with town water supply for Hughenden or Richmond currently. However, there are currently no published Regional Water Security Plans for the region to assess the potential benefits either. Personal conversations with officers from Flinders Shire Council advise that the town has secure access to bores for drinking water.
The Flinders Shire Council is the Proponent of a water development in the vicinity of the reference project. This project is called the 15 Mile Irrigated Agriculture Development Project and is an approved project by the Co-ordinator General. The project is located 12 km north-west of Hughenden and is immediately east of the HIP Reference Project. The project plans to use bore water to irrigate a relatively small citrus and table grape farm.
Discussions with the Flinders Shire Council has revealed no conflict for water and many synergies. The 15 Mile Project may even be considered as an early phase of a series of complementary irrigation projects in the region. This project also provides possible interconnectivity with Hughenden town water supply if required in the future.
Richmond Shire Council also has a proposal for an Irrigated Agricultural Scheme as detailed in a report prepared by the Mount Isa to Townsville Economic Zone (MITEZ, 2018). This project has been under consideration for some time and in concept is similar to the HIP Reference Project. While they may be ultimately incompatible or in competition for the same water and funding, these potential issues should be explored in more detail as part of the DBC. No comparison is made of the schemes, as this will be the role of the various governments. However, the fundamental arguments for irrigated agriculture schemes in the region are similar.
8.4 Possible Proponent
The Project Proponent for the PBC is HIPCo. No decision has yet been made on the most suitable proponent for the completion of the DBC and possible construction phases. There are numerous possibilities and a proponent will be appointed through the DBC process and will lead the establishment of governance and risk processes and define ownership and operational models and structures.
The scope for DBC contains a requirement to establish suitable governance and review structures to ensure the DBC is delivered on time and on budget and at the highest quality.
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9. OPTIONS CONSIDERED
9.1 Approach
Options were identified to address the Service Need of supplying water to the Flinders Shire for agricultural use. For the purpose of the options identification, it was assumed that a water yield of 50 to 100 GL/year would be required to have a significant beneficial impact on the economic activity and associated socio-economic wellbeing within the Flinders Shire. There are sufficient volumes of water within the remaining unallocated water reserves in the Flinders River catchment to support the required water yield.
The Queensland Government’s State Infrastructure Plan (SIP) hierarchy and its supporting water policy document, the Queensland Bulk Water Opportunities Statement (QBWOS), provide the following hierarchy for considering water supply options and solutions:
a. Reform – reform of existing institutions and laws b. Better use – better use of existing resources c. Improve existing – investing relatively low capital expenditure to augment existing infrastructure d. Build new – investing relatively high capital expenditure to construct new infrastructure.
Since there is currently no regional scale water supply infrastructure in the Flinders Shire LGA, the only water supply options considered feasible to address the Service Need involve the construction of new dams. Groundwater resources were not considered feasible to support an irrigation supply of the scale of 50 to 100 GL/year.
There have historically been numerous investigations into the feasibility of new water supply dams within the Flinders River catchment. The approach for the options identification involved a review of these previous investigations to make best use of the information and findings from these studies.
The general approach used for the identification of options involved the following steps:
▪ Review of previous dam feasibility investigations in the wider Flinders River catchment and more locally within the Flinders Shire.
▪ Identification of new dam options within the Flinders Shire considered worthy of further assessment (options long list).
▪ Assessment of potential water supply yields for the dam options.
▪ High level assessment of infrastructure requirements and costs for the dam options.
▪ Identification of value-adding opportunities.
▪ Short-listing of options and identification of the Reference Project.
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9.2 Review of Previous Studies
9.2.1 Historical Dam Investigations
There have been a number of historical investigations of potential dam sites and irrigation areas in the vicinity of Hughenden. These include:
▪ Upper Flinders River Irrigation Scheme - Flinders River Damsite 828.5km Investigations (QWRC, 1985):
• Investigation of dam site on Flinders River at Glendower (north-east of Hughenden) by the Queensland Government • Dam storage capacity: 200 GL • Estimated water supply yield: 25 GL/year at 100% reliability (historical no failure yield) to 30 GL/year at 75% annual reliability • Dam capital cost: $85 to $100 million
▪ Irrigation Project – Alstonvale (SMEC, 2003):
• Investigation of dam sites at Alstonvale on Betts Gorge Creek (north-west of Hughenden) and Mt Beckford on the Flinders River (east of Hughenden) commissioned by Flinders Shire Council. • A number of different irrigation scheme options were assessed for each dam option. • Alstonvale Dam scheme not considered viable due to high cost of external catchment diversion works required to augment the scheme yield. • Mt Beckford Dam scheme involved: o Dam storage capacity: 250 GL o Estimated water supply yield: 60 to 70 GL/year at 92 to 96.5% monthly reliability o Irrigation area: 15,000 to 17,000 ha o Scheme capital cost: $90 to $100 million (including irrigation delivery system)
9.2.2 Flinders and Gilbert Agricultural Resource Assessment (FGARA)
The feasibility of in-stream dams within the Flinders River catchment was assessed as part of the CSIRO Flinders and Gilbert Agricultural Resource Assessment (FGARA) (Petheram et al., 2013). Fifteen potential dam locations in the Flinders River catchment were identified and assessed (dam locations shown in Figure 9.1). These dam locations were all in the upper reaches of the Flinders and Cloncurry River catchments. The topography in the middle and lower reaches of the Flinders River catchment is not suitable (too flat) for large dams.
Seven of the fifteen dam options identified are within the Flinders Shire part of the Flinders River catchment (i.e. most upstream part of catchment). These dam options are summarised in Table 9.1. The dam option with the highest water supply yield was Glendower Dam with an estimated yield (85% annual reliability) of 57 GL/year.
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Figure 9.1 Locations of New Dam Options Assessed in CSIRO FGARA study (Source: Petheram et al., 2013)
Table 9.1 Dam Options Identified by CSIRO FGARA study within Flinders Shire
Dam Dam Name Watercourse Catchment Storage 85% Annual Dam Capital ID Area (km2) Capacity Reliability Cost as at (GL) Dam Yield 2013 (GL/year)
1 Alston Vale Betts Gorge Ck 1,132 241 12 $275M
8 Flinders 856 km Flinders River 1,694 89 39 $275M
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Dam Dam Name Watercourse Catchment Storage 85% Annual Dam Capital ID Area (km2) Capacity Reliability Cost as at (GL) Dam Yield 2013 (GL/year)
9 Glendower Flinders River 1,912 309 57 $375M
10 Mt Beckford Flinders River 2,065 245 45 $450M
11 Mt Oxley Flinders River 690 62 22 $225M
13 Porcupine Creek Porcupine Creek 1,051 31 11 $179M
15 White Mountains Flinders River 1,085 111 34 $225M
Three of the fifteen potential dam sites in the Flinders catchment were short-listed and assessed in more detail because each was initially deemed to be one of the more promising sites in each of three distinct geographical areas (Hughenden, Richmond and Cloncurry). The selection of these three sites was based on consideration of topography of the dam axis, geological conditions, proximity to suitable soils and water yield. The short-listed sites were:
▪ Cave Hill Dam on the Cloncurry River upstream of Cloncurry – 248 GL storage capacity dam (capital cost $249M) with 40 GL/year yield
▪ O’Connell Creek Offstream Storage – 127 GL storage capacity dam (capital cost $229M) with 34 GL/year yield
▪ Porcupine Creek Dam – details provided in Table 9.1.
9.2.3 Flinders River Water Resources and Irrigation Project
SMEC (2014) developed a concept design of a water supply scheme on the Flinders River downstream of Hughenden on behalf of Flinders Shire Council. Details of the proposed scheme are as follows:
▪ 200 GL storage capacity weir on the Flinders River downstream of the confluence with Galah/Porcupine Creek
▪ Gravity canal system supplying irrigation water from the Flinders River dam to irrigation areas (up to 18,000 ha) on the southern side of the Flinders River extending for a distance of approximately 80 km to the west of Hughenden
▪ Separate water storages on Walker Creek, Sloans Creek and Cannum Creek connected to the irrigation areas and Flinders River dam by gravity canals
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▪ Estimated water supply yield: 60 GL/year
▪ Estimated capital cost: $357 million.
9.2.4 HIPCo Initial Dam Investigations
In 2018 Grace Detailed – GIS Services investigated dam options in the Flinders Shire on behalf of HIPCo. These investigations were undertaken in two stages:
▪ Stage 1 (Grace Detailed – GIS Services, 2018a): Preliminary assessment of dam site suitability (including catchment areas, dam storage characteristics, catchment inflows and feasibility of external catchment diversions) for the following dam sites (refer Figure 9.2):
• Mt Beckford dam site on the Flinders River – not considered feasible due to interactions with road and rail infrastructure • Alstonvale dam site on Betts Gorge Creek – considered feasible • Porcupine Creek diversion into Alstonvale Dam – not considered feasible due to the expected high cost of the required diversion works • Dam site on Stewart Creek upstream of confluence with Jones Valley Creek – not considered feasible due to smaller catchment area and catchment inflows. • Dam site at The Gap on Stewart Creek downstream of confluence with Jones Valley Creek – considered feasible • Dutton River diversion into The Gap dam site – considered possibly feasible.
▪ Stage 2 (Grace Detailed – GIS Services, 2018b): Further feasibility assessment of Alstonvale and The Gap dam sites including dam yield assessment and consideration of construction costs:
• The Gap dam site (with or without the Dutton River diversion) was not considered feasible based on unfavourable storage characteristics (high storage losses) limiting the dam yield. • Alstonvale Dam configuration assessed: o 224 GL storage capacity dam o 24 GL/year water supply yield at 89% annual reliability o Irrigation area supported: 2,500 ha o Capital cost: $112 million
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Figure 9.2 Dam Sites Considered in Stage 1 Dam Investigation for HIPCo (Source: Grace Detailed – GIS Services, 2018a)
9.2.5 15 Mile Irrigated Agricultural Development Project
Flinders Shire Council is currently progressing the development of the 15 Mile Irrigated Agricultural Development Project (GHD Pty Ltd, 2018) approximately 15 km to the north- west of Hughenden.
The site for the 15 Mile Project (Lot 168 SP262319) is located on the southern bank of the Flinders River immediately downstream of the confluence with Galah/Porcupine Creek (refer Figure 9.3). Council purchased the site from the Queensland Government in 2016 and has since been undertaking necessary works to facilitate the Project.
Initial crops planned for the Project will comprise intensive horticulture and tree crops consisting of 60 ha of table grapes and 60 ha of citrus. These will fulfil current market opportunities within Council’s initial third-party investor’s supply chains for major supermarkets within Australia and internationally. These crops are planned to be grown on alluvial soils which are considered suitable for irrigated agriculture, having excellent drainage, good root depth and texture, and few chemical limitations.
The estimated water use for the third-party investor development crops is 2,160 ML/year which is planned to be supplied from groundwater aquifers (Flinders River Alluvium and Great Artesian Basin).
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Figure 9.3 Location of Proposed 15 Mile Irrigated Agricultural Development Project (Source: GHD Pty Ltd, 2018)
Council also holds a surface water licence (Licence No. 618019) for extraction of up to 5,000 ML/year from the Flinders River under certain flow conditions; however, Council do not intend on relying on this licence for the Project.
The Project was recently awarded Coordinated Project status by the Queensland Government.
9.3 Options Long List
9.3.1 Initial Options Screening
Based on the outcomes of the previous dam feasibility studies in the Flinders River catchment, a list of dam options were identified for further assessment. The dam options were selected to meet the following key requirements linked to the identified Service Need and other regulatory and stakeholder constraints:
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▪ Proximity to the town of Hughenden
▪ Proximity to large areas of land extending to the west of Hughenden and on the southern side of the Flinders River that are suitable for irrigated agriculture due to soils characteristics and topography, are outside of floodplain areas and are mostly already cleared due to the current grazing land use of these areas
▪ Dam locations which are suitable to achieving a water supply yield of 50 to 100 GL/year either via direct catchment inflows or through external catchment diversions into the dams
▪ Suitable topography at dam sites for economic dam construction and efficient storage characteristics
▪ Suitable geotechnical conditions for dam construction
▪ Minimal impacts to third party infrastructure
▪ Dam locations will not inundate high value environmental or cultural/social features
▪ Potential for future expansion of water storage infrastructure (i.e. dam raising).
All of the previously identified dam sites on the Flinders River do not comply with a number of the criteria listed above and were excluded from the assessment. The topography in the lower reaches of Galah/Porcupine Creek is also not considered suitable for a large dam.
The following dam sites were selected for further assessment based on their conformance with the key project criteria listed above:
▪ Alstonvale Dam site on Betts Gorge Creek located on the northern side of the Flinders River approximately 25 km to the north-west of Hughenden– excellent dam site but will require external catchment diversions from Galah/Porcupine Creek and/or the Flinders River to provide sufficient water supply yield.
▪ Dam site/s near the outlet of the Stewart Creek catchment located on the northern side of the Flinders River approximately 45 km to the north-west of Hughenden – dam sites are not as suitable as Alstonvale Dam but are located further downstream and in closer proximity to the Flinders River which makes them potentially suitable to achieve the required water supply yield at a lower infrastructure cost.
These dam options are generally consistent with the outcomes of the preliminary HIPCo dam investigation studies (Grace Detailed – GIS Services, 2018a,b) which recommended the Alstonvale and The Gap dam sites as suitable for further assessment.
The options long list was developed as a combination of a number of different infrastructure configurations for these two main dam site options.
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Stewart Creek dam sites
Alstonvale Dam site
Potential irrigation area
Figure 9.4 Preferred Dam Sites for Options Long List (Image source: Queensland Globe)
9.3.2 Alstonvale Dam Options
The Alstonvale Dam site is an excellent dam site from a topographic perspective because the Betts Gorge Creek valley is closely surrounded by steep basalt plateaus on both sides of the valley. These topographical features will provide an economical dam construction (short dam wall length) and efficient storage characteristics (low ratio of ponded area to storage capacity) to minimise storage losses (evaporation and seepage).
The catchment area of Betts Gorge Creek is only 1,127 km2 at the proposed dam site and previous investigations have identified that only a small water supply yield (approximately 20 GL/year) is possible based on the direct catchment area of the dam.
The Flinders River and Galah/Porcupine Creek (lower reaches referred to as Galah Creek) catchments are larger adjacent catchments to the south of Betts Gorge Creek and options for diversion of stream flows from these catchments into Alstonvale Dam to increase the yield of the scheme were assessed. This identified that gravity diversions from the Flinders River and Galah Creek into Canterbury Creek (small creek between Galah Creek and Betts Gorge Creek) were feasible; however, the presence of the 70 m high plateau between Canterbury Creek and Betts Gorge Creek is a significant constraint to the gravity flow of water into Alstonvale Dam.
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Options considered for the gravity flow of water between Canterbury Creek and Betts Gorge Creek (minimum diversion distance of 4 km) included either an excavated channel or a tunnel through the plateau (plateau is formed from basalt flows overlying mudstone). Both gravity diversion options were not considered to be feasible due to high capital costs, concerns over the long-term stability of either an excavated channel or tunnel constructed through low strength mudstone, and the absence of an elevation difference between Canterbury Creek and Betts Gorge Creek which will prevent gravity flows from occurring when there is a significant volume of water stored in Alstonvale Dam.
The preclusion of gravity transfers meant that a pumped diversion system between Canterbury Creek and Alstonvale Dam would be required. This system requires another water storage to be constructed on Canterbury Creek to provide temporary storage to buffer the imbalance between the gravity diversion inflows from Galah Creek/Flinders River (high flows but of relatively short duration corresponding to periods of high stream flow in the waterways) and the pumped outflows to Alstonvale Dam (smaller flow capacity but of significantly longer duration than the gravity inflows).
Review of topographic data identified the following preferred scheme to facilitate flow diversions from the Flinders River and Galah/Porcupine Creek into Alstonvale Dam (refer Figure 9.5):
▪ Gravity diversion between the Flinders River and Galah Creek:
• Diversion weir on the Flinders River near Glendower, approximately 35 km to the north-east of Hughenden • Excavated diversion channel between the Flinders River and Orange Tree Creek (Orange Tree Creek flows into Boundary Creek which then flows into Galah Creek)
▪ Gravity diversion between Galah Creek and Canterbury Creek:
• Diversion weir on Galah Creek, approximately 23 km to the north-east of Hughenden • Excavated diversion channel between Galah Creek and Coolibah Creek (Coolibah Creek flows into Canterbury Creek) • Levee across Crescent Creek where the diversion channel crosses Crescent Creek
▪ Dam on Canterbury Creek approximately 14 km to the north-east of Hughenden
▪ Pump station at Canterbury Creek Dam with rising main pipeline over the basalt plateau between Canterbury Creek Dam and Alstonvale Dam.
▪ Alstonvale Dam on Betts Gorge Creek.
▪ Potential for pumped hydropower generation utilising the pumping system between the Canterbury Creek Dam and Alstonvale Dam reservoirs.
Storage characteristics at the Alstonvale and Canterbury Creek dam sites were assessed using LiDAR ground survey of these areas acquired by HIPCo in May 2019. The storage characteristics are shown in Figure 9.6.
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Figure 9.5 Concept Infrastructure Arrangement for Alstonvale Dam Irrigation Scheme
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6,000
5,000
4,000
3,000 Area (ha) Area
2,000
1,000 Alstonvale Dam
Canterbury Creek Dam
0 0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 Volume (ML) Figure 9.6 Storage Characteristics for Alstonvale Dam and Canterbury Creek Dam
A number of different sub-options were assessed for the Alstonvale Dam scheme which represent different combinations of the following infrastructure configurations:
▪ Alstonvale Dam storage capacity
▪ Canterbury Creek Dam storage capacity
▪ Flow capacity of pumping system between Canterbury Creek Dam and Alstonvale Dam.
The total catchment area reporting to the Alstonvale Dam scheme is 5,071 km2, comprising:
▪ 1,127 km2 catchment area for Betts Gorge Creek upstream of Alstonvale Dam
▪ 1,935 km2 catchment area upstream of the diversion weir on the Flinders River
▪ 1,912 km2 catchment area upstream of the diversion weir on Galah Creek
▪ 97 km2 catchment area for Canterbury Creek upstream of Canterbury Creek Dam.
9.3.3 Stewart Creek Dam Options
The Stewart Creek dam options are based on a primary impoundment area on the Saego Plains property (Lot 2 DU15) near the mouth of Stewart Creek, approximately 47 km to the north-west of Hughenden. This dam site is located in a low energy area on the northern
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floodplain of the Flinders River. The impoundment area is surrounded by steep basalt plateaus to the west and north, and by a low height mudstone ridge to the east which divides the lower reaches of Stewart Creek from the adjacent Back Valley Creek (refer Figure 9.7).
The Saego impoundment area has relatively poor storage characteristics (high ratio of ponded area to storage capacity) at low storage volumes, but once the floor of the valley is fully submerged (i.e. water ponded against the surrounding plateau walls) the storage capacity increases with only minor increase in ponded area.
The Saego impoundment area is connected to a much larger natural basin upstream of a narrow opening between the basalt plateaus known as The Gap. This basin is formed at the confluence of Stewart Creek and Jones Valley Creek and is referred to as Expressman Downs. The storage characteristics of the Expressman Downs basin area are even poorer than the Saego impoundment area and a dividing wall will be required in The Gap to prevent the Saego impoundment area from expanding out into the Expressman Downs basin upstream of The Gap, resulting in high storage losses.
Stewart Creek
Expressman Downs basin area
The Gap Saego basin area
Betts Gorge Creek Flinders River
Figure 9.7 Saego Impoundment Area Locality Plan
The following water diversion and storage infrastructure was identified for the Stewart Creek dam options (refer Figure 9.8):
▪ Diversion weir on the Flinders River downstream of the confluence with Betts Gorge Creek
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▪ Excavated diversion channel to facilitate gravity diversions of water out of the Flinders River into the Catch Dam on Back Valley Creek
▪ Catch Dam on Back Valley Creek to provide buffer storage between the gravity diversions out of the Flinders River and pumped transfers into Saego Dam
▪ Saego Dam on Stewart Creek approximately 800 m upstream of the confluence with the Flinders River (Saego Dam shares a common embankment with the Catch Dam)
▪ Pumping system to allow transfers of water from the Catch Dam into Saego Dam (gravity transfers are possible through a sluice gate arrangement when storage levels are low in Saego Dam)
▪ Dam wall across The Gap to confine the impoundment area of Saego Dam to minimise storage losses (the elevation of The Gap dam wall is nominally equal to the Saego Dam wall elevation)
▪ Pumping system to transfer water impounded behind the Gap dam wall (from Stewart Creek and Jones Valley Creek inflows) into Saego Dam.
Storage characteristics for the Saego Dam, The Gap Dam and Catch Dam sites were assessed using LiDAR ground survey of these areas acquired by HIPCo in May 2019. The storage characteristics are shown in Figure 9.9.
A number of different sub-options were assessed for the Stewart Creek dam options which represent different combinations of the following infrastructure configurations:
▪ Saego Dam storage capacity
▪ Flow capacity of pumping system between Catch Dam and Saego Dam.
The total catchment area reporting to the Stewart Creek dam options is 7,652 km2, comprising:
▪ 6,568 km2 catchment area upstream of the diversion weir on the Flinders River
▪ 957 km2 catchment area for Stewart Creek and Jones Valley Creek upstream of the Gap Dam
▪ 64 km2 catchment area between Gap Dam and Saego Dam
▪ 63 km2 catchment area for Back Valley Creek upstream of the Catch Dam.
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Figure 9.8 Concept Infrastructure Arrangement for Stewart Creek Dam Options
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6,000
5,000
4,000
3,000 Area (ha) Area
2,000
1,000 Saego Dam The Gap Dam Catch Dam
0 0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 500,000 Volume (ML) Figure 9.9 Storage Characteristics for the Stewart Creek Dam Options
9.3.4 Options Assessment
Overview
The long listed dam options were assessed in terms of the water supply yield and the infrastructure costs. Water supply yields were identified for a 90% monthly supply reliability (i.e. the yield able to be supplied in 90% of months). Infrastructure costs were estimated as the present value (PV) cost corresponding to the capital cost and annual operating costs over a 50 year operating period. The options were compared using the PV cost of the infrastructure per unit volume of annual yield that can be supplied by the options (i.e. $/ML supplied).
Dam Yield Assessment
Water supply yields for the Alstonvale and Stewart Creek dam options were assessed using a continuous historical reservoir simulation model. The reservoir simulation model was developed using the GoldSim Montecarlo simulation software. GoldSim is a general purpose simulation software for dynamically modelling complex systems in business, engineering and science. GoldSim supports decision and risk analysis by simulating future performance while quantitatively representing the uncertainty and risks inherent in all complex systems. GoldSim is used extensively for modelling of water resource applications and was selected for its’ ability to undertake complex simulations efficiently with short simulation timeframes. Given the large number of options to be assessed for the HIP,
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GoldSim was considered a more efficient simulation platform than the Flinders Source Model used by the Department of Environment and Science (DES) for the Gulf Water Plan.
The GoldSim reservoir simulations were undertaken for the same historical period as the Flinders Source Model (122 water years spanning the period July 1889 to June 2011) since some of the stream flow sequences from the Flinders Source Model were used as inputs for the GoldSim model. The reservoir simulations were undertaken using a daily time step.
For the options assessment, the water supply yields were identified for a 90% monthly supply reliability which is defined as the yield able to be supplied in 90% of months in the historical simulation period.
Full details of the dam yield modelling are provided in the HIP Dam Yield Study technical report which is provided in Appendix F. Key aspects of the dam yield modelling simulations are detailed in Table 9.2.
Table 9.2 Details of Dam Yield Modelling Simulations for the Options Assessment
Model Aspect Description
Simulation period July 1889 to June 2011 (122 water years)
Simulation time step 1 day
Stream flow sequences for Betts Gorge Creek dam site: Historical daily stream flow sequence derived using Alstonvale Dam options AWBM daily rainfall runoff model calibrated to stream gauging data for Station No. 915007A (Betts Gorge Creek at Alstonvale) Canterbury Creek dam site: Historical daily stream flow sequence derived using AWBM daily rainfall runoff model with same parameters as Betts Gorge Creek
Galah Creek diversion structure: Stream flows from Flinders Source Model scaled to diversion structure location Flinders River diversion structure: Stream flows from Flinders Source Model at Node 001-GS915013A (Glendower gauging station) (Note that there are no surface water licences upstream of the Alstonvale Dam scheme)
Stream flow sequences for Gap Dam, Saego Dam and Catch Dam sites (Stewart Creek and Back Valley Stewart Creek dam options Creek): Historical daily stream flow sequences derived using AWBM daily rainfall runoff model with same parameters as Betts Gorge Creek Flinders River diversion weir: Stream flows from Flinders Source Model at confluence of Flinders River and Betts Gorge Creek (Node 009-confluence). Stream flows were applied for a minimum development scenario (i.e. no upstream water use) assuming that upstream water licences would be relinquished in lieu of the HIP
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Model Aspect Description
Historical daily rainfall data (for SILO Data Drill gridded daily rainfall data stream flow calculations and For stream flow calculations, averaging of the gridded data within the catchment direct rainfall inflows to dam areas was undertaken. reservoirs)
Historical daily evapotranspiration SILO Data Drill gridded Morton’s potential evapotranspiration data data (for stream flow calculations) For stream flow calculations, averaging of the gridded data within the catchment areas was undertaken.
Historical daily evaporation data SILO Data Drill gridded Morton’s lake evaporation data at dam site locations (for evaporation losses from dam reservoirs)
Dam reservoir seepage losses Constant seepage loss rate of 0.82 mm/day (300 mm/year) from the ponded surface areas of the dams
Dam storage capacities Alstonvale Dam options:
• Alstonvale Dam: Different storage capacities investigated in range 150 to 700 GL
• Canterbury Creek Dam: Different storage capacities investigated in range 100 to 500 GL
Stewart Creek dam options:
• Saego Dam: Different storage capacities investigated in range 300 to 500 GL
• Gap Dam: Storage capacity varies in response to Saego Dam storage capacity (Gap Dam has same full supply level as Saego Dam)
• Catch Dam: 35 GL (maximum storage capacity to allow gravity diversions out of Flinders River into Catch Dam)
Dam dead storage capacities No dead storage volumes assumed for all dams (i.e. assumes all water in the dams is accessible for irrigation supply)
Diversion/transfer capacities Alstonvale Dam options:
• Flinders River diversion structure (diversion to Galah Creek): 250 m3/s (21.6 GL/d) diversion capacity
• Galah Creek diversion structure (diversion to Canterbury Creek Dam): 500 m3/s (43.2 GL/d) diversion capacity (diversion of stream flows from both Flinders River and Galah Creek)
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Model Aspect Description
• Canterbury Creek Dam pumping system (pumped transfers to Alstonvale Dam: Different pumping capacities investigated in range 5 to 20 m3/s (432 to 1,728 ML/d)
Stewart Creek dam options:
• Flinders River diversion structure (diversion to Catch Dam): 250 m3/s (21.6 GL/d) diversion capacity
• Catch Dam pumping system (pumped transfers to Saego Dam: Different pumping capacities investigated in range 10 to 600 m3/s (864 ML/d to 51.8 GL/d)
• Transfers between Saego Dam and Gap Dam: Assumed that Saego Dam overflows into Gap Dam once the storage capacity in Saego Dam is reached
• Transfers between Gap Dam and Saego Dam: 23 m3/s (2,000 ML/d) • Transfers between Saego Dam and Gap Dam occur to maximise the volume of water stored in Saego Dam to minimise storage losses
Environmental release/pass flow Alstonvale Dam options: requirements • Flinders River diversion structure: 4 m3/s (346 ML/d) pass flow (i.e. all upstream stream flows up to pass flow threshold allowed to pass the diversion structure)
• Galah Creek diversion structure: 4 m3/s (346 ML/d) pass flow (i.e. all upstream stream flows up to pass flow threshold allowed to pass the diversion structure)
• Alstonvale Dam: 1 m3/s (86.4 ML/d) capacity environmental release (environmental releases occur when there are catchment inflows to the dam)
• Canterbury Creek Dam: No environmental release Stewart Creek dam options:
• Flinders River diversion structure: 8 m3/s (691 ML/d) pass flow (i.e. all upstream stream flows up to pass flow threshold allowed to pass the diversion structure)
• Saego Dam: No environmental release (dam location is near downstream limit of Stewart Creek)
• Catch Dam: No environmental release (dam location is near downstream limit of Back Valley Creek) Note: Environmental release/pass flow requirements were assigned to achieve a compromise between the dam yield and downstream environmental flow
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Model Aspect Description
requirements. Increased environmental release/pass flow thresholds were shown to cause a significant reduction in dam yield.
Irrigation demand An annual water supply demand was applied for 6 months of the year from May to October. Annual supply demand rates were adjusted for each dam option to achieve a 90% monthly supply reliability (i.e. supply reliability calculated only for months in which there is an irrigation demand)
A summary of the dam yield results for the Alstonvale Dam options is provided in Table 9.3 and includes variations of the following infrastructure configurations:
▪ Alstonvale Dam only (no external catchment diversions or Canterbury Creek Dam)
▪ Canterbury Creek Dam only (with Flinders River and Galah Creek catchment diversions but no Alstonvale Dam)
▪ Full scheme with Alstonvale Dam, Canterbury Creek Dam and Flinders River and Galah Creek catchment diversions.
Table 9.3 Dam Yield Results for Alstonvale Dam Options
Alstonvale Dam Storage Canterbury Creek Dam Canterbury Creek Dam to 90% Monthly Reliability Capacity (GL) Storage Capacity (GL) Alstonvale Dam Transfer Yield (GL/year) Capacity (m3/s)
150 No dam - 14
500 200 7.5 86
500 300 7.5 90
500 100 7.5 74
700 100 7.5 76
300 100 7.5 69
300 100 5 67
300 100 10 71
300 100 20 72
500 100 5 72
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Alstonvale Dam Storage Canterbury Creek Dam Canterbury Creek Dam to 90% Monthly Reliability Capacity (GL) Storage Capacity (GL) Alstonvale Dam Transfer Yield (GL/year) Capacity (m3/s)
500 200 5 82
500 200 10 87
No dam 300 - 46
No dam 400 - 50
No dam 500 - 54
The dam yield modelling for the Alstonvale Dam options indicated the following findings:
▪ The 90% monthly reliability yield for the option involving Alstonvale Dam only (no external catchment diversions) is only 14 GL/year. The yield is limited by the stream flows in Betts Gorge Creek rather than the storage capacity of Alstonvale Dam.
▪ The 90% monthly reliability yield for the options involving Canterbury Creek Dam only (no Alstonvale Dam) varies from 46 to 54 GL/year for dam storage capacities of 300 to 500 GL.
▪ The 90% monthly reliability yield for the options involving both Alstonvale Dam and Canterbury Creek Dam varies from 67 to 90 GL/year for the options investigated.
▪ The maximum possible yield for the full scheme with no restrictions on dam storage capacities or transfer capacity between the two reservoirs was determined as 130 GL/year (result not shown in Table 9.3).
▪ Storage losses are significant and typically equal to 50 to 100% of the system yield depending on the infrastructure configuration.
A summary of the dam yield results for the Stewart Creek dam options is provided in Table 9.4.
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Table 9.4 Dam Yield Results for Stewart Creek Dam Options
90% Monthly Reliability Yield (GL/year)
Catch Dam to Saego 300 GL Saego Dam 400 GL Saego Dam 500 GL Saego Dam Dam Transfer Capacity Storage Capacity Storage Capacity Storage Capacity (m3/s)
10 62 65 65
25 75 80 84
50 87 95 98
100 96 110 116
200 103 121 133
300 105 126 141
400 106 127 145
500 106 129 148
600 107 129 149
The dam yield modelling for the Stewart Creek dam options indicated the following findings:
▪ The 90% monthly reliability yield varies from 62 to 149 GL/year for the options investigated.
▪ A large pumping capacity (in excess of 50 m3/s) is required between the Catch Dam and Saego Dam to achieve a yield of 100 GL/year.
▪ The maximum possible yield with no restrictions on dam storage capacities or transfer capacities was determined as 210 GL/year (result not shown in Table 9.4).
▪ Storage losses are significant and typically equal to 50 to 100% of the system yield depending on the infrastructure configuration.
Dam Cost Estimates
High-level concept designs and capital cost estimates were developed for the dams associated with the Alstonvale Dam and Stewart Creek dam options by ARQ Australia Pty Ltd (2019a and 2019b) in collaboration with Newman Engineering Pty Ltd.
Concept designs and capital cost estimates were developed for the following dam configurations:
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▪ Alstonvale Dam options:
• Alstonvale Dam: 300, 500 and 700 GL storage capacity • Canterbury Creek Dam: 100, 200 and 300 GL storage capacity.
▪ Stewart Creek dam options:
• Catch Dam: 35 GL storage capacity • Saego Dam: 300, 400 and 500 GL storage capacity • Gap Dam: 325, 550 and 850 GL storage capacity (corresponding to full supply levels nominally 300 mm higher than each of the Saego Dam configurations).
No detailed geotechnical investigations were undertaken to support the concept dam designs (a site visit and minor test pitting was undertaken for the Alstonvale Dam site). Conservative assumptions were made in relation to foundation and cut-off depths for the Saego Dam and Catch Dam which would be expected to be founded on alluvial soils given the locations of the dams within the floodplain area of the Flinders River.
The following types of dam construction were considered suitable for the dams based on the dam configurations and expected foundation conditions:
▪ Alstonvale Dam options:
• Alstonvale Dam: Roller compacted concrete gravity dam • Canterbury Creek Dam: Clay core rockfill embankment with concrete gravity spillway.
▪ Stewart Creek dam options:
• Catch Dam: Clay core rockfill embankment with concrete gravity spillway • Saego Dam: Clay core rockfill embankment with concrete gravity spillway • Gap Dam: Roller compacted concrete gravity dam.
The capital cost estimates for the dams included the following allowances for direct and indirect costs:
▪ Lump sum allowances for construction accommodation camp, temporary construction facilities, permanent infrastructure and land acquisition costs
▪ 10% measurement growth allowance (applied to direct costs)
▪ 40% allowance for contractor preliminaries and general costs (applied to direct costs)
▪ 10% allowance for planning and design costs (applied to direct costs and preliminaries)
▪ 10% contingency allowance (applied to direct costs and preliminaries).
Design details and assumptions, concept design plans and cost estimates for the dams are detailed in the design basis reports prepared by ARQ Australia Pty Ltd (2019a and 2019b)
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which are included in Appendix D. A summary of the dam design configurations and cost estimates is provided in Table 9.5 for the Alstonvale Dam options and Table 9.6 for the Stewart Creek dam options.
Table 9.5 High-Level Capital Cost Estimates for Alstonvale Dam Options
Dam Storage Full Supply Dam Crest Dam Capital Unit Cost ($ per Capacity (GL) Level (m AHD) Level (m AHD) Cost ($million) ML of storage capacity)
Alstonvale Dam 300 314 318 $283M $944
Alstonvale Dam 400 320 324 $326M $652
Alstonvale Dam 500 325 329 $361M $566
Canterbury 100 308 311.5 $184M $1,843 Creek Dam
Canterbury 200 311.5 315 $239M $1,194 Creek Dam
Canterbury 300 314 317.5 $278M $928 Creek Dam
Table 9.6 High-Level Capital Cost Estimates for Stewart Creek Dam Options
Dam Storage Full Supply Dam Crest Level Dam Capital Unit Cost ($ per Capacity Level (m AHD) (m AHD) Cost ($million) ML of storage (GL) capacity)
Catch Dam 35 269 274 $581M1 $16,6061
Saego Dam 300 278.5 282.5 $869M $2,898
Saego Dam 400 283.5 287.5 $1,229M $3,072
Saego Dam 500 288.5 292.5 $1,313M $2,626
Gap Dam 325 278.82 282.8 $202M $622
Gap Dam 550 283.82 287.8 $263M $478
Gap Dam 850 288.82 292.8 $333M $392
1 Catch Dam cost includes diversion weir on Flinders River and diversion channel into Catch Dam. 2 Gap Dam full supply levels are nominally 300 mm higher than corresponding Saego Dam full supply levels.
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The estimated cost of Saego Dam is significantly higher than the other dams, primarily as a result of the long embankment length and the deeper foundation and cut-off requirements.
To facilitate assessment of the options, a smaller list of options was selected to determine overall capital and operating costs. These options were assessed as the options considered likely to be the most cost effective (cost per unit yield) options for each of the Alstonvale Dam and Stewart Creek dam schemes. The options selected for costing are as follows:
▪ Alstonvale Dam options:
• 500 GL capacity Alstonvale Dam, 300 GL capacity Canterbury Creek Dam and 7.5 m3/s transfer capacity between the dams • 300 GL capacity Canterbury Creek Dam only (no Alstonvale Dam).
▪ Stewart Creek dam options:
• Three options corresponding to Saego Dam storage capacities of 300, 400 and 500 GL with a transfer capacity between the Catch Dam and Saego Dam of 100 m3/s • Three options corresponding to Saego Dam storage capacities of 300, 400 and 500 GL with a transfer capacity between the Catch Dam and Saego Dam of 200 m3/s.
High-level capital cost estimates were developed for the following infrastructure elements:
▪ Alstonvale Dam options:
• Alstonvale Dam and/or Canterbury Creek Dam (as detailed above) • Flinders River diversion (i.e. diversion weir and channel) • Galah Creek diversion (i.e. diversion weir and channel) • Canterbury Creek Dam to Alstonvale Dam pump transfer system (electric powered) • Irrigation delivery system assumed to consist of a regulating weir on the Flinders River downstream of the confluence with Betts Gorge Creek (dams to release water to the regulating weir) and a pumping system (electric powered) between the regulating weir and the irrigation area on the southern side of the Flinders River (no further allowance for distribution of water within the irrigation area) • Electricity supply upgrade to the new pump station sites (concept details identified in the HIPCo Electricity Strategy – Phase 1 Report by W. Wightman Advisory, 2019).
▪ Stewart Creek dam options:
• Catch Dam (includes diversion weir and channel on Flinders River), Saego Dam and Gap Dam (as detailed above) • Catch Dam to Saego Dam pump transfer system (diesel powered) • Irrigation delivery system comprising a pumping system (electric powered) between Saego Dam and the irrigation area on the southern side of the Flinders River (no further allowance for distribution of water within the irrigation area) • Electricity supply upgrade to the Saego Dam irrigation delivery pump station (concept details identified in the HIPCo Electricity Strategy – Phase 1 Report by W. Wightman Advisory, 2019).
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A summary of the infrastructure capital cost estimates for the selected options is presented in Table 9.7 (Alstonvale Dam options) and Table 9.8 (Stewart Creek dam options).
Annual operating and maintenance costs and periodic sustaining capital costs were estimated as follows:
▪ Infrastructure annual operating and maintenance costs (excluding power costs):
• Dams: 0.15% of capital cost • Weirs and diversions: 1% of capital cost • Pipelines: 0.25% of capital cost • Electric pumps: 2% of capital cost • Diesel pumps: 4% of capital cost.
▪ Power costs for pumping:
• Electricity: 17.3c/kWh as identified in the HIPCo Electricity Strategy – Phase 1 Report (W. Wightman Advisory, 2019) • Diesel (Catch Dam to Saego Dam pumping system): $17/ML (assuming average 10 m pumping head and $1/L diesel cost after the diesel rebate).
▪ Sustaining capital:
• Replacement of mechanical and electrical components of pump stations after 25 years.
Equivalent PV total project lifecycle costs for the capital, annual operating and maintenance and sustaining capital costs for the selected options were estimated over a project life of 50 years and assuming a discount rate of 7%. The total project lifecycle costs are summarised in Table 9.9 (Alstonvale Dam options) and Table 9.10 (Stewart Creek dam options).
To facilitate comparison of the cost effectiveness of the different options, the total project lifecycle costs were expressed as a unit cost per megalitre of yield. The unit costs of the selected options are listed in Table 9.11 (Alstonvale Dam options) and Table 9.12 (Stewart Creek dam options).
The unit costs for the Stewart Creek dam options are approximately 60% higher than the Alstonvale Dam options.
None of the long list options are considered economically viable, with a cost per megalitre significantly higher than what irrigators would be willing to pay for water allocations (around $2,000/ML).
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Table 9.7 High-Level Capital Cost Estimates for Selected Alstonvale Dam Options
Option Configuration Capital Costs ($million)
Alstonvale Dam Canterbury Canterbury Total Dams Total Canterbury Irrigation Electricity Total Capital Storage Creek Dam Creek Dam to Cost Diversions Creek Dam to Delivery Supply Cost Capacity (GL) Storage Alstonvale Dam Cost Alstonvale Dam System Cost Upgrade Cost Capacity (GL) Transfer Transfer Cost Capacity (m3/s)
500 300 7.5 $605M $180M $62M $100M $20M $967M
No dam 300 - $278M $180M - $68M $15M $541M
Table 9.8 High-Level Capital Cost Estimates for Selected Stewart Creek Dam Options
Option Configuration Capital Costs ($million)
Saego Dam Gap Dam Storage Catch Dam to Total Dams Cost Catch Dam to Irrigation Delivery Electricity Supply Total Capital Cost Storage Capacity Capacity (GL) Saego Dam Saego Dam System Cost Upgrade Cost (GL) Transfer Capacity Transfer Cost (m3/s)
300 325 100 $1,653M $100M $67M $20M $1,840M
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Option Configuration Capital Costs ($million)
Saego Dam Gap Dam Storage Catch Dam to Total Dams Cost Catch Dam to Irrigation Delivery Electricity Supply Total Capital Cost Storage Capacity Capacity (GL) Saego Dam Saego Dam System Cost Upgrade Cost (GL) Transfer Capacity Transfer Cost (m3/s)
400 550 100 $2,073M $100M $77M $20M $2,270M
500 850 100 $2,227M $100M $81M $20M $2,429M
300 325 200 $1,653M $200M $72M $20M $1,945M
400 550 200 $2,073M $200M $85M $20M $2,378M
500 850 200 $2,227M $200M $93M $20M $2,541M
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Table 9.9 High-Level Total Project Cost Estimates for Selected Alstonvale Dam Options
Option Configuration Costs ($million)
Alstonvale Dam Canterbury Creek Canterbury Creek Total Capital Cost Total Sustaining Total Annual Present Value of Storage Capacity Dam Storage Dam to Alstonvale Capital Cost (cost Operating and Total Project (GL) Capacity (GL) Dam Transfer every 25 years) Maintenance Cost Lifecycle Cost (50 Capacity (m3/s) (cost every year) year project life)
500 300 7.5 $967M $20M $11.6M $1,131M
No dam 300 - $541M $2M $4.2M $600M
Table 9.10 High-Level Total Project Cost Estimates for selected Stewart Creek Dam Options
Option Configuration Costs ($million)
Saego Dam Storage Gap Dam Storage Catch Dam to Saego Total Capital Cost Total Sustaining Total Annual Present Value of Capacity (GL) Capacity (GL) Dam Transfer Capital Cost (cost Operating and Total Project Capacity (m3/s) every 25 years) Maintenance Cost Lifecycle Cost (50 (cost every year) year project life)
300 325 100 $1,840M $42M $12.5M $2,020M
400 550 100 $2,270M $44M $13.8M $2,468M
500 850 100 $2,429M $45M $14.2M $2,634M
300 325 200 $1,945M $68M $14.3M $2,155M
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Option Configuration Costs ($million)
Saego Dam Storage Gap Dam Storage Catch Dam to Saego Total Capital Cost Total Sustaining Total Annual Present Value of Capacity (GL) Capacity (GL) Dam Transfer Capital Cost (cost Operating and Total Project Capacity (m3/s) every 25 years) Maintenance Cost Lifecycle Cost (50 (cost every year) year project life)
400 550 200 $2,378M $71M $15.8M $2,609M
500 850 200 $2,541M $73M $16.6M $2,784M
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Table 9.11 Unit Cost Estimates for Selected Alstonvale Dam Options
Option Configuration
Alstonvale Dam Canterbury Canterbury Present Value 90% Monthly Unit Cost Storage Creek Dam Creek Dam to of Total Project Reliability Yield ($million per Capacity (GL) Storage Alstonvale Dam Lifecycle Cost (GL/year) ML of Yield) Capacity (GL) Transfer ($million) Capacity (m3/s)
500 300 7.5 $1,131M 90 $12,566
No dam 300 - $600M 46 $13,041
Table 9.12 Unit Cost Estimates for Selected Stewart Creek Dam Options
Option Configuration
Saego Dam Gap Dam Catch Dam to Present Value 90% Monthly Unit Cost Storage Storage Saego Dam of Total Project Reliability Yield ($million per Capacity (GL) Capacity (GL) Transfer Lifecycle Cost (GL/year) ML of Yield) Capacity (m3/s) ($million)
300 325 100 $2,020M 96 $21,043
400 550 100 $2,468M 110 $22,436
500 850 100 $2,634M 116 $22,704
300 325 200 $2,155M 103 $20,921
400 550 200 $2,609M 121 $21,562
500 850 200 $2,784M 133 $20,930
9.4 Options Short List
Since none of the long list options were considered to be economically viable, a revised and flexible approach was adopted for the progression of the PBC study to consider smaller dams with less pumping/energy requirements. It was decided to proceed with further investigation of an alternative Stewart Creek dam option for the following reasons:
▪ A smaller Saego Dam can be filled with gravity diversions out of the Flinders River without the need for the separate Catch Dam reservoir or any pumping into Saego Dam.
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▪ HIPCo advised that geological conditions along the majority of the Saego Dam and Catch Dam alignments are expected to comprise relatively shallow mudstone. Accordingly, dam foundation excavation and cut-off depths are likely to be significantly less than that assumed in the Stewart Creek dam option cost estimates prepared by ARQ Australia Pty Ltd.
▪ For a smaller Saego Dam, the Gap Dam may not be required since the incremental increase in yield that results from the Gap Dam (due to reduced storage losses) may be relatively minor.
▪ It may be possible to achieve gravity transfers of water from Saego Dam to the lower parts of the irrigation area.
▪ Operating the storages to provide a combination of higher and lower reliability water allocations to customers could allow higher value horticulture crops to be grown which will significantly improve the economic outcomes of the Project.
Further consideration of these factors and investigation of costs and yields for smaller Stewart Creek dam configurations led to the preferred project option described in Section 10 which involves gravity diversions out of the Flinders River directly into a smaller Saego Dam on Stewart Creek, without the need for the Catch Dam, Gap Dam or any pumping into Saego Dam. This preferred option is different to any of the water supply options previously investigated for the Hughenden area.
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10. REFERENCE PROJECT
10.1 Introduction
Based on the findings of the options assessment process (refer Section 9), a Reference Project was identified to achieve improved economic outcomes in terms of reduced capital and operating costs and optimised use of water to maximise agricultural production opportunities from the Project.
The Reference Project is located along the section of the Flinders River between Betts Gorge Creek and Stewart Creek and is based on a primary water storage dam (Saego Dam) that is configured to facilitate gravity diversion of stream flows out of the Flinders River into the dam. Geotechnical investigations were undertaken to inform the design of the water storages.
This section of the PBC report describes the following aspects of the proposed Reference Project:
▪ Bulk water diversion and storage infrastructure and irrigation delivery infrastructure proposed for the Reference Project.
▪ Capital, operating and sustaining capital costs for the proposed infrastructure.
▪ Estimated water yields from the Reference Project for two alternative cropping scenarios:
• Diversified cropping scenario consisting of horticulture crops supplied with higher reliability irrigation water and grazier support crops supplied with lower reliability irrigation water; and • Grazier support crops supplied with medium reliability irrigation water.
▪ Licensing requirements for the proposed water take from the Reference Project.
▪ Potential impacts of the Reference Project on the stream flow characteristics in the downstream reaches of the Flinders River.
▪ Compliance of the Reference Project with the Environmental Flow Objectives specified for the Flinders River catchment in the Gulf Water Plan.
▪ Potential impacts of the Reference Project on existing water users.
10.2 Reference Project Summary
The Reference Project for the Hughenden Irrigation Project comprises a 190 GL storage capacity dam (Saego Dam) on Stewart Creek and Back Valley Creek approximately 45 km to the north-west of the township of Hughenden, with associated gravity diversion
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infrastructure on the Flinders River and a delivery system to irrigation areas located to the south of the Flinders River.
The total catchment area reporting to the Reference Project is 7,652 km2, comprising:
▪ 6,568 km2 catchment area upstream of the diversion weir on the Flinders River
▪ 1,084 km2 direct catchment area of Saego Dam comprising the Stewart Creek, Jones Valley Creek and Back Valley Creek catchments.
The Reference Project is predicted to be able to supply up to 84 GL/year of irrigation water at an 80% monthly reliability to support a maximum irrigation area of approximately 11,400 ha of crops comprising cereal grains, hay and fodder to support the local cattle industry (grazier support strategy). As an alternative cropping scenario (diversified cropping strategy), the Reference Project could supply up to 30 GL/year of irrigation water at a higher reliability (94% monthly reliability) to support a maximum irrigation area of approximately 2,100 ha of higher value horticulture crops (avocados, mangoes, lemons and mandarins) and an additional 40 GL/year of irrigation water at a lower reliability (70% monthly reliability) to support a maximum irrigation area of approximately 5,400 ha of cereal grains, hay and fodder crops to support the local cattle industry.
Key infrastructure elements for the Reference Project include:
▪ In-stream diversion weir on the Flinders River downstream of the confluence with Betts Gorge Creek
▪ Excavated diversion channel to facilitate gravity diversions of water out of the Flinders River (upstream of the diversion weir) into the Saego Dam
▪ 190 GL storage capacity Saego Dam on the lower reaches of Stewart Creek and Back Valley Creek
▪ Irrigation delivery system to supply water from Saego Dam to the irrigation areas on the southern side of the Flinders River, comprising:
• Irrigation delivery offtake structure at Seago Dam • Inverted siphon (gravity pipeline) under the Flinders River channel and floodplain • Gravity open channel distribution system to supply water to farms within the lower parts of the irrigation area • Pumping system (pump station and rising main) to lift water into the channel distribution system supplying water to higher parts of the irrigation area • Gravity open channel distribution system to supply water to farms within the higher parts of the irrigation area.
Concept design drawings for the Reference Project infrastructure are included in Appendix E. The general infrastructure arrangement for the Reference Project is shown in Figure 10.1. Zoomed in views of the general infrastructure arrangements for the water diversion
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and storage infrastructure and irrigation delivery infrastructure are provided in Figure 10.2 and Figure 10.3 respectively.
10.3 Infrastructure Design Summary
Concept design of the Reference Project infrastructure was undertaken to demonstrate proof of concept and to allow construction costs of the infrastructure to be estimated. The concept design utilised the findings of flood and hydrology assessments, preliminary geotechnical investigations of the Saego Dam and Flinders River diversion weir sites and visual inspections of the infrastructure sites. A technical report that details the basis of the infrastructure concept design is provided in Appendix H. Key design aspects of the proposed Reference Project infrastructure are summarised in Table 10.1.
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Figure 10.1 General Infrastructure Arrangement for the HIP Reference Project
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Figure 10.2 General Infrastructure Arrangement for the Water Diversion and Storage Infrastructure
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Figure 10.3 General Infrastructure Arrangement for the Irrigation Delivery Infrastructure
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Table 10.1 Reference Project Infrastructure Summary
Design Criteria Description
Saego Dam Embankment
Failure impact rating Category 1 (referable dam)
Population at risk 20 (1:10,000 AEP flood failure)
Watercourses impounded Stewart Creek and Jones Valley Creek
Embankment type Clayfill core and rockfill shoulders with transition zones
Crest length 9,500 m
Direct catchment area 1,084 km2 (excluding Flinders River diversion)
Impoundment area at FSL 44 km2
Dam crest elevation RL 270.5 m AHD
Full supply level (FSL) RL 266.0 m AHD
Storage volume at FSL 190 GL (including volume impounded behind the Flinders River diversion weir)
Maximum embankment height 21 m (above natural surface level)
Crest width 8.0 m
Upstream batter slope 1V:1.75H
Downstream batter slope 1V:1.75H
Downstream batter toe flood 2 m above 1:10,000 AEP Flinders River flood level scour protection (berm)
Outlet structure Reinforced concrete inlet tower with 2 No. DN2100 RCP pipes through the embankment
Fish passage provisions Fish passage between Stewart Creek/Back Valley Creek and the Flinders River provided via the diversion channel and fish ladder on the Flinders River diversion weir
Saego Dam Spillway
Spillway type Ogee crest spillway
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Design Criteria Description
Construction Roller-compacted concrete with structural concrete facing
Length 300 m
Discharge Stilling basin discharging into Back Valley Creek
Design discharge capacity 2,853 m3/s (1:10,000 AEP design storm event)
Discharge coefficient 2.1
Spillway freeboard 4.5 m
1:10,000 AEP storm event (2.73 m) + 1:10 AEP wind event (1.75 m)
Diversion Channel
Invert level RL 260.0 m AHD
Length 6,600 m
Invert grade 0%
Base width 50 m (increasing to 100 m from CH 5,500 to 6,600)
Side slope 1V:4H
Maximum excavation depth 13 m
Design channel flow rate 250 m3/s (prior to overtopping of Flinders River diversion weir)
Flinders River Diversion Weir
Weir crest elevation RL 266.0 m AHD
Weir crest length 125 m
Maximum weir height 7 m (above natural surface level)
Weir construction Roller-compacted concrete
Embankment crest levels Northern embankment: RL 272.0 m AHD
Southern embankment: RL 268.0 m AHD
Embankment construction Northern embankment: Earth embankment comprising a clayfill core and rockfill shoulders
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Design Criteria Description
Southern embankment: Homogenous clay embankment with rock protection
Fish passage provisions Vertical slot fish ladder
Irrigation Delivery System
Irrigation supply volume Diversified cropping strategy: 30 GL/year higher reliability water (94% monthly reliability) for horticulture crops and 40 GL/year lower reliability water (70% monthly reliability) for grazier support crops Grazier support strategy: 84 GL/year water at 80% monthly reliability
Irrigation area supplied Diversified cropping strategy: 7,505 ha comprising 2,100 ha of horticulture crops and 5,405 ha of grazier support crops
Grazier support strategy: 11,351 ha of grazier support crops
Flinders River pipeline crossing 2 no. DN2100 reinforced concrete pipes (RCP) – buried installation (with cement (inverted siphon) stabilised sand backfill through the Flinders River channel)
Open channel delivery system Channel depth: 3 m (2m design flow depth and 1 m freeboard)
Channel longitudinal gradient: 1V:15,000H
Channel base width: 3 m
Channel side slope: 1V:3H
Channel construction type: Excavated channel Channel lengths:
• Lower (gravity) channel: 16,850 m (both cropping strategies)
• Higher (pumped) channel: o Diversified cropping strategy: 15,920 m
o Grazier support strategy: 29,420 m
Design flow rates:
• Lower (gravity) channel:
o Diversified cropping strategy: 5.4 m3/s (467 ML/d)
o Grazier support strategy: 5.3 m3/s (458 ML/d)
• Higher (pumped) channel:
o Diversified cropping strategy: 3.7 m3/s (320 ML/d)
o Grazier support strategy: 4.0 m3/s (346 ML/d)
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Design Criteria Description
Pump station for higher delivery Design flow rate: channel • Diversified cropping strategy: 3.7 m3/s (320 ML/d)
• Grazier support strategy: 4.0 m3/s (346 ML/d)
Power requirement (diesel powered pumps):
• Diversified cropping strategy: 1.9 MW • Grazier support strategy: 2.1 MW
Rising main: 2,800 m of DN1500 steel pipe (buried installation)
10.4 Infrastructure Costs
Initial capital expenditure (CapEx) and operating expenditure (OpEx) costs have been estimated for the Reference Project infrastructure based on the concept designs. The cost estimates are priced in 2019 dollars and are exclusive of GST. Details of the basis and assumptions for the infrastructure cost estimates are described in the Reference Project Infrastructure Concept Design technical report which is provided in Appendix H.
10.4.1 Capital Costs
A summary breakdown of the capital costs for each crop strategy is provided in Table 10.2 and Table 10.3. The following indirect and contingency cost allowances were adopted for the capital cost estimates.
▪ Contractor indirect costs: 15% of contractor direct costs
▪ Principal’s costs: 15% of total direct costs (contractor direct and indirect costs) in addition to costs for acquisition of land and water entitlements
▪ Contingency: A deterministic contingency allowance of 35% (applied to total contractor direct and indirect costs and Principal’s costs) in lieu of a formal probabilistic risk assessment/adjustment for capital costs which has not been undertaken in the PBC study.
The equivalent capital costs per unit volume of annual water supply yields are:
▪ Diversified cropping strategy: $7,119 per megalitre of annual yield (70 GL/year total yield)
▪ Grazier support strategy: $6,105 per megalitre of annual yield (84 GL/year total yield).
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Table 10.2 Capital Cost Summary – Diversified Cropping Strategy
Description Contractor Contractor Principal's Contingency Total ($M) Direct Costs Indirect Cost ($M) ($M) ($M) Costs ($M)
Saego Dam $160.90 $24.20 $63.60 $88.20 $336.90
Diversion Channel $32.50 $4.90 $5.70 $15.10 $58.20
Weir $14.40 $2.20 $2.50 $6.70 $25.80
Irrigation Delivery $36.50 $5.50 $15.30 $20.10 $77.40
Total $244.30 $36.80 $87.10 $130.10 $498.30
Table 10.3 Capital Cost Summary – Grazier Support Strategy
Description Contractor Contractor Principal’s Contingency Total ($M) Direct Costs Indirect Cost ($M) ($M) ($M) Costs ($M)
Saego Dam $160.90 $24.20 $64.30 $88.40 $337.80
Diversion Channel $32.50 $4.90 $5.70 $15.10 $58.20
Weir $14.40 $2.20 $2.50 $6.70 $25.80
Irrigation Delivery $40.60 $6.10 $20.70 $23.60 $91.00
Total $248.40 $37.40 $93.20 $133.80 $512.80
10.4.2 Operating and Maintenance Costs
Annual operating and maintenance costs were estimated as a percentage of the capital costs with additional allowance for power costs to run the irrigation delivery pump stations. The OpEx cost factors (% of capital costs excluding the contingency allowance) adopted are as follows:
▪ Saego Dam: 0.25%
▪ Flinders River diversion weir: 3%
▪ Diversion channel: 2%
▪ Irrigation delivery channels: 1%
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▪ Pipelines: 0.25%
▪ Pumps: 4%
The estimated annual operating and maintenance costs are summarised in Table 10.4.
Table 10.4 Operating and Maintenance Cost Summary
Description Diversified Cropping Strategy Grazier Support Strategy Total Total Annual OpEx ($/year) Annual OpEx ($/year)
Saego Dam $528,000 $528,000
Diversion channel $862,000 $862,000
Flinders River diversion weir $573,000 $573,000
Irrigation delivery $1,947,000 $2,941,000
Total $3,910,000 $4,904,000
10.5 Yield Modelling
10.5.1 Overview
The GoldSim reservoir operation simulation model described in Section 9.3.4 was used to identify the water supply yields available for the Reference Project. The scheme yield was also independently assessed using the Flinders Source Model developed by the Queensland Government for the Gulf Water Plan. An assessment of the potential impacts of future climate change on the dam yield estimates has also been undertaken. The dam yield modelling performed for the Reference Project is described in detail in the HIP Dam Yield Study technical report which is included in Appendix F. The following sections provide a summary of the dam yield modelling outcomes.
10.5.2 Assumptions and Methodology
The GoldSim reservoir simulation model utilised for the assessment of the Stewart Creek dam options described in Section 9.3.4 was used for the dam yield assessment for the Reference Project with the following changes to reflect the revised infrastructure and operating details:
▪ The Catch Dam, Saego Dam and Gap Dam storages were combined into a single storage for Saego Dam with a maximum storage capacity of 190 GL (including the storage capacity upstream of the Flinders River diversion weir) and a direct catchment area of 1,084 km2. The storage characteristics for Saego Dam are shown in Figure 10.4
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and have been derived using LiDAR ground survey of the Saego Dam impoundment area acquired by HIPCo in May 2019.
▪ The irrigation demand pattern was changed to a constant demand pattern with water supplied over all 12 months of the year.
▪ Two different water allocation products were simulated for the diversified cropping strategy:
• Higher reliability (Medium Priority) water allocations for irrigation of horticultural crops: 94% monthly reliability • Lower reliability (Low Priority) water allocations for irrigation of grazier support crops: 70% monthly reliability.
▪ A single water allocation product was simulated for the grazier support strategy representing a monthly reliability of 80%.
▪ The water sharing rules assumed for the diversified cropping strategy (i.e. two water allocation products) were as follows:
• Saego Dam volume greater than 47.5 GL (i.e. greater than 25% full): 100% of allocations available for both Medium Priority and Low Priority allocations. • Saego Dam volume less than 47.5 GL (i.e. less than 25% full): 100% of allocations available for Medium Priority allocations and 0% of allocations available for Low Priority allocations (i.e. supply to Low Priority allocations ceases).
The same diversion configuration assumed for the options assessment phase was adopted for the Reference Project, comprising:
▪ A low flow (pass flow) threshold of 8 m3/s (691 ML/d) at the Flinders River diversion weir (i.e. all inflows to the diversion weir up to 8 m3/s are passed through the weir prior to diversion of stream flow into Saego Dam).
▪ A diversion flow capacity of 250 m3/s (i.e. maximum rate of water diversion out of the Flinders River into Saego Dam).
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Reservoir Surface Area (hectares)
0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 268 Full supply level 266
264
262
260
258
256
254 Reservoir Level (mAHD) Level Reservoir 252
250 Reservoir Storage 248 Reservoir Surface Area 246 0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 200,000 Reservoir Storage (ML)
Figure 10.4 Storage characteristics for Saego Dam
10.5.3 Dam Yield Results
A summary of the dam yield results for the different cropping strategies is provided in Table 10.5.
For the diversified cropping strategy, the proposed scheme is capable of supplying:
▪ 30 GL/year of higher reliability water (Medium Priority allocations) at 94% monthly reliability (86% annual reliability) and 40 GL/year of lower reliability water (Low Priority allocations) at 70% monthly reliability (48% annual reliability).
▪ An equivalent average annual irrigation supply of 57 GL/year.
For the grazier support strategy, the proposed scheme is capable of supplying:
▪ 84 GL/year water at 80% monthly reliability (61% annual reliability).
▪ An equivalent average annual irrigation supply of 70 GL/year.
The simulated reservoir performance of Saego Dam over the historical period (1889 to 20011) for the two different operating/demand scenarios is shown in Figure 10.5 (diversified cropping scenario) and Figure 10.6 (grazier support scenario).
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Table 10.5 Predicted Dam Yields for Reference Project – GoldSim Model
Crop Medium Priority Allocations (horticulture Low Priority Allocations (grazier support Strategy crops) crops)
Target Monthly Annual Average Target Monthly Annual Average Yield Reliability Reliability Annual Yield Reliability Reliability Annual (GL/year) Yield (GL/year) Yield (GL/year) (GL/year)
Diversified 30 94% 86% 28 40 70% 48% 29 cropping
Grazier - - - - 84 80% 61% 70 support
Figure 10.5 Simulated Reservoir Performance for Saego Dam – Diversified Cropping Scenario
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Figure 10.6 Simulated Reservoir Performance for Saego Dam – Grazier Support Scenario
The predicted reservoir time histories for the historical simulation period demonstrate:
▪ Greater number of water supply failures (reservoir empty) for the grazier support scenario as a result of the increased irrigation water use.
▪ Water supply failures can occur over extended periods (multiple years) as a result of prolonged drought. The worst drought sequence in the historical simulation period is a period of 6 years in the first decade of the 1900s.
The predicted annual irrigation supply volumes for the historical simulation period for the two different diversified cropping scenario water products are shown in Figure 10.7 (Medium Priority allocations) and Figure 10.8 (Low Priority allocations).
There are only two years predicted in the 122 year simulation period where there is less than 10 GL/year of Medium Priority irrigation water available for horticulture crops. It is expected that there would some replacement/replanting of older fruit trees in years with low volumes of Medium Priority water available.
There are several occurrences predicted of multiple consecutive years of no Low Priority irrigation water available for grazier support crops under the diversified cropping scenario. Farmers could decide not to plant grain/fodder/hay crops for irrigated production when Saego Dam is at low levels; however, dry-land farming could still occur on the properties.
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Figure 10.7 Predicted Medium Priority Irrigation Supply Volumes – Diversified Cropping Scenario
Figure 10.8 Predicted Low Priority Irrigation Supply Volumes – Diversified Cropping Scenario
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The predicted annual irrigation supply volumes for the historical simulation period for the grazier support scenario is shown in Figure 10.9. The annual volume of water available for irrigation will be less than 40 GL/year (approximately 50% of the total allocation volume) in only 15% of the years in the historical simulation period for the grazier support scenario.
Figure 10.9 Predicted Irrigation Supply Volumes – Grazier Support Scenario
Average annual inflows and outflows for the Reference Project water supply scheme are displayed in Figure 10.10 (diversified cropping scenario) and Figure 10.11 (grazier support scenario). The diversion inflows from the Flinders River are significantly greater (almost four times larger) than the direct inflows from the Saego Dam catchment area.
The average storages losses from Saego Dam (evaporation and seepage) represent a significant loss from the system, at 63% of the average irrigation supply for the grazier support scenario and 90% of the average irrigation supply for the diversified cropping scenario. Opportunities to reduce storage losses will be investigated during subsequent phases of the Project.
The average annual flow diversion out of the river system (irrigation supply and storage losses) for the proposed HIP scheme will be 109 GL/year for the diversified cropping scenario and 114 GL/year for the grazier support scenario. These diversions out of the river system represent approximately 38% of the mean annual flow in the Flinders River system at the scheme location (i.e. confluence of the Flinders River and Stewart Creek), but only 4% of the mean annual flow at the mouth of the Flinders River.
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Figure 10.10 Average Annual Inflows and Outflows – Diversified Cropping Scenario
Figure 10.11 Average Annual Inflows and Outflows – Grazier Support Scenario
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10.5.4 Independent Yield Assessment Using Flinders Source Model
The scheme yield estimated for the HIP Reference Project was independently assessed for the grazier support scenario only (84 GL/year irrigation demand) using the Source model of the Flinders River catchment that was developed to inform the water resource planning aspects of the Water Plan (Gulf) 2017. The Source software was developed by eWater (https://ewater.org.au/products/ewater-source/) and is designed to simulate all aspects of water resource systems to support integrated planning, operations and governance from urban, catchment to river basin scales including human and ecological influences. Source accommodates diverse climatic, geographic, water policy and governance settings for both Australian and international climatic conditions.
The independent yield assessment was undertaken by Hydrology and Risk Consulting (HARC) under the instruction and direction of Engeny. The WRP/ROP Amendment version of the Flinders Source Model developed by the Department of Environment and Science (DES) was used for the assessment. This version of the model assumes full utilisation of all surface water entitlements (including unallocated reserves) and represents a ‘maximum water use’ scenario as allowed under the Gulf Water Plan. The same configuration and operating conditions (i.e. dam size, diversion configuration, seepage rate, irrigation demand, etc.) assumed for the Reference Project in the GoldSim reservoir simulation model were applied in the Source model. Full details of the independent yield assessment are provided in the HIP Dam Yield Study technical report which is included in Appendix F. Key aspects of the assessment are as follows:
▪ The historical simulation period in the Flinders Source Model is identical to that adopted for the GoldSim model (i.e. July 1889 to June 2011).
▪ The stream flow sequence for Saego Dam (Stewart Creek and Back Valley Creek catchments) needed to be added to the Flinders Source Model since these catchments were not explicitly represented in this model (only included in larger residual catchment inflows between the Betts Gorge Creek confluence with the Flinders River and the Dutton River confluence with the Flinders River).
• The stream flow sequence provided in the Flinders Source Model for inflow Node 008 – GS915007A Alstonvale (i.e. Betts Gorge Creek at Alstonvale gauging station) was adopted for the catchment inflow sequence for Saego Dam. The Betts Gorge Creek catchment is immediately adjacent to the Stewart Creek and Back Valley Creek catchments and the catchment areas of these catchments are almost identical (1,077 km2 for Betts Gorge Creek at Alstonvale gauging station compared to 1,084 km2 for the Saego Dam catchment). • The residual catchment inflows in the Flinders Source Model between the Betts Gorge Creek confluence with the Flinders River and the Dutton River confluence with the Flinders River (inflow nodes 009 – Residual Inflow and 904 – Residual Inflow) were reduced by corresponding volumes to the added Saego Dam catchment inflows to prevent double counting of inflows.
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▪ The Flinders Source Model was modified to represent the following assumed changes to the water licensing upstream of the proposed scheme that has the potential to impact the dam yield (further discussion on water licensing is included in Section 10.6):
• Previous sale of 12,000 ML of the general reserve unallocated water (Product 1) within Reach 1 (Flinders River upstream of Richmond gauging station) and the subsequent re-location of these new licences (licence numbers 618703 and 618704) to the lower reaches of the Stawell River (i.e. downstream of HIP scheme). Since the supply node associated with the Reach 1 general reserve in the Flinders Source Model (node GR1_SP) is upstream of the HIP scheme location (in vicinity of Hughenden), this change resulted in a reduction to the water use upstream of the HIP scheme (i.e. GR1_SP demand reduced by 12,000 ML/year). • An additional 6,000 ML of the general reserve unallocated water (Product 1) within Reach 1 was purchased by the owner of the Saego Plains property who subsequently sold 5,000 ML of this entitlement to Flinders Shire Council (licence number 618019), which is assigned to the property associated with the 15 Mile Irrigated Agricultural Development Project. Flinders Shire Council do not plan to utilise this licence for the 15 Mile Irrigated Agricultural Development Project (water planned to be supplied from groundwater extraction licences) and accordingly it was assumed that licence number 618019 will be relinquished (i.e. bought back and cancelled) as part of the HIP Project (i.e. (i.e. GR1_SP demand reduced by 5,000 ML/year). • The remaining 1,000 ML of the 6,000 ML general reserve unallocated water (Product 1) purchase by the owner of the Saego Plains property was retained as a water harvesting licence attached to the Saego Plain property (licence number 616951). This licence was also assumed to be relinquished as part of the HIP scheme (i.e. GR1_SP demand reduced by 1,000 ML/year). • The remaining 7,000 ML of the general reserve unallocated water (Product 1) within Reach 1 was assumed to be allocated to the HIP scheme (i.e. GR1_SP demand reduced by 7,000 ML/year). • The strategic State reserve unallocated water included in the Flinders Source Model at Hughenden (supply node SR1_SP with a demand of 3,000 ML/year) was assumed to be allocated to the HIP scheme (i.e. SR1_SP demand reduced to zero). • Existing surface water licences associated with the Riverside property (licence numbers 43752J, 43864J and 100474 with a combined annual volumetric limit entitlement of 2,120 ML/year) were assumed to be allocated to the HIP scheme (i.e. demand for supply nodes 205, 207 and 211 reduced to zero).
The simulated monthly and annual reliabilities of the annual irrigation supply for the grazier support scenario (84 GL/year demand) in the Flinders Source Model are compared to the GoldSim reservoir simulation model reliabilities in Table 10.6. The two different yield models produce very similar yield estimates, with the Flinders Source Model producing a slightly smaller monthly supply reliability and a corresponding 2 GL/year reduction (i.e. 3% reduction) in the average annual irrigation supply volume. The small differences in the dam yield estimates are attributed to:
▪ Relatively minor differences in the upstream water use assumptions between the two models – the GoldSim model assumed no upstream water use while the Flinders Source
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Model included a relatively small volume of extraction (approximately 1,000 ML/year) out of the Flinders River upstream of the Scheme.
▪ Differences in the direct catchment inflow sequences for Saego Dam between the two models which relate back to the different runoff model calibration for the Betts Gorge Creek catchment adopted by Engeny for the GoldSim model compared to that adopted by DES in the Flinders Source Model.
Further refinement of the dam yield modelling in subsequent stages of the Project will utilise the Flinders Source Model. Table 10.6 Comparison of Grazier Support Scenario Irrigation Supply Reliabilities – Flinders Source Model compared to GoldSim model
Yield Model Target Yield Monthly Reliability Annual Reliability Average Annual (GL/year) Yield (GL/year)
Flinders Source 84 78% 61% 68 Model
GoldSim model 84 80% 61% 70
10.5.5 Climate Change Impact Assessment
An assessment of the potential impacts of future climate change on the dam yield estimates has also been undertaken for the Reference Project. This assessment was performed using the GoldSim reservoir simulation model.
The model climate data inputs were adjusted using the methodologies outlined in “Climate Change in Australia Technical Report” (CSIRO, 2015) to undertake the climate change impact assessment. The CSIRO report provides projections of future climate variables as a result of climate response to a number of greenhouses gas and aerosol emission scenarios (Representative Concentration Pathways).
Climate projections for Hughenden (Monsoonal North region) were obtained using the Projections Builder application provided on the Climate Change Australia website (https://www.climatechangeinaustralia.gov.au/en/climate-projections/climate-futures- tool/projections-builder/). Projections were obtained for the “Best” and “Worst” case scenarios which are based on the following:
▪ Best Case – higher rainfall and lower evaporation, improving dam yield; and
▪ Worst Case – lower rainfall and higher evaporation, reducing dam yield.
Projections are also provided for the “Maximum Consensus” which is the climate future projected by at least 33% of the climate models and which comprises at least 10% more
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models than any other. The “Maximum Consensus” is considered the most representative forecast of all the climate models.
Projected changes to average annual rainfall and evaporation/evapotranspiration were obtained for the following climate change scenario:
▪ 2070 projection year – suitable for a 50-year design life of the HIP
▪ Representative Concentration Pathway 4.5 (RCP4.5) – represents some intervention to reducing greenhouse gas and aerosol emissions, however not the most optimistic outlook.
The climate change sensitivity parameters are provided in Table 10.7.
Table 10.7 Climate Change Impact Assessment Parameters
Scenario Change in Average Change in Average Annual Model and Consensus Annual Rainfall Evaporation / Evapotranspiration
Best Case 7.5% 3.3% Model – NorESM1-M Consensus – Low
Worst Case -13.6% 4.3% Model – HadGEM2-CC
Consensus – Low
Maximum Consensus -0.4% 7.1% Model – CanESM2 Consensus – Medium
The GoldSim reservoir simulation model daily climate data inputs were adjusted using the values in Table 10.7 to assess the impacts of the “best” case, “worst” case and “maximum consensus” climate change scenarios. The climate change impact assessment results for the diversified cropping scenario (target 30 GL/year of Medium Priority water and 40 GL/year of Low Priority water) are shown in Table 10.8.
The simulated monthly reliability of the Medium Priority water allocations (94% for the base case scenario with no climate change) is predicted to vary between 83% (“worst” case climate projection) and 96% (“best” case climate projection) with a “maximum consensus” projection of 91% (i.e. 3% reduction in reliability).
Similarly, the simulated monthly reliability of the Low Priority water allocations (70% for the base case scenario with no climate change) is predicted to vary between 47% (“worst” case climate projection) and 78% (“best” case climate projection) with a “maximum consensus” projection of 65% (i.e. 5% reduction in reliability).
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The average annual irrigation supply volume (total of both water products) is predicted to vary from 46 GL/year (“worst” case climate projection) to 61 GL/year (“best” case climate projection) with a “maximum consensus” projection of 55 GL/year, which represents only a 3.5% reduction compared to the base case scenario with no climate change.
Table 10.8 Climate Change Impact Assessment Results – Diversified Cropping Scenario
Climate Change Monthly Supply Reliability Annual Supply Reliability (%) Average Annual Irrigation Projection (%) Supply (GL/year)
Medium Low Priority Medium Low Priority Medium Low Priority Priority Allocations Priority Allocations Priority Allocations Allocations Allocations Allocations
Base Case (no 94% 70% 86% 48% 28 29 climate change)
“Best” case 96% 78% 91% 57% 29 32 climate projection
“Worst” case 83% 47% 67% 25% 26 20 climate projection
“Maximum 91% 65% 83% 42% 28 27 Consensus” climate projection
The climate change impact assessment results for the grazier support scenario (target 84 GL/year of irrigation water supply) are shown in Table 10.8. The simulated monthly reliability of the scheme (80% for the base case scenario with no climate change) is predicted to vary between 61% (“worst” case climate projection) and 86% (“best” case climate projection) with a “maximum consensus” projection of 77% (i.e. 3% reduction in reliability).
The average annual irrigation supply volume for the grazier support scenario is predicted to vary from 56 GL/year (“worst” case climate projection) to 74 GL/year (“best” case climate projection) with a “maximum consensus” projection of 68 GL/year, which represents only a 3% reduction compared to the base case scenario with no climate change.
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Table 10.9 Climate Change Impact Assessment Results – Grazier Support Scenario
Climate Change Monthly Supply Annual Supply Reliability Average Annual Irrigation Projection Reliability (%) (%) Supply (GL/year)
Base Case (no climate 80% 62% 70 change)
“Best” case climate 86% 71% 74 projection
“Worst” case climate 61% 40% 56 projection
“Maximum Consensus” 77% 57% 68 climate projection
The climate change impact assessment indicates that the potential impacts to the dam yields over a project life of 50 years are likely to be relatively minor (3% reduction to the average annual yield) under a “maximum consensus” climate projection. The predicted yield reductions are approximately 20% under a “worst” case climate projection.
It is noted that the climate change impact assessment has only considered projected changes to average climate conditions. Climate change research currently provides only limited information on changes to climate variability. It is envisaged that a more detailed climate change impact assessment will be undertaken in subsequent stages of the Project, including identification of the need to factor future climate change into the infrastructure design (e.g. spillway capacity).
10.5.6 Reservoir Siltation Assessment
A study on sediment infilling rates for dams in Northern Australia (Tomkins, 2013) was undertaken as part of the CSIRO Flinders and Gilbert Agricultural Resource Assessment (FGARA). This study provided estimates of average annual sediment yields for the Betts Gorge Creek and Flinders River catchments in the vicinity of the HIP of approximately 100 t/km2/year or 70 m3/km2/year with an assumed sediment bulk density of 1.4 t/m3.
The estimated average annual sediment yields for the Saego Dam direct catchment and Flinders River catchment at the diversion weir location is shown in Table 10.10.
Assuming 50% of the sediment yield from the Flinders River catchment is deposited in Saego Dam via the diversion inflows, the average annual sedimentation rate for Saego Dam is estimated at 0.3 GL/year or 0.15% of the storage capacity of the dam per year. This sedimentation rate is very low.
The deposition of sediment from the Flinders River catchment into the diversion weir is a greater concern for the Project. The storage capacity behind the diversion weir is
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approximately 10 GL and so the average annual sediment yield from the Flinders River catchment represents approximately 5% of the storage capacity of the weir per year. Periodic de-silting of the weir impoundment area will be required to ensure the effective operation of the weir low flow outlet, fish ladder and diversion channel. The diversion channel design includes provision for control gates on the Riverside Poseidon Road crossing of the diversion channel which will allow the weir impoundment area to be isolated from Saego Dam to allow de-silting works to occur even when there are high water levels in Saego Dam.
Table 10.10 Estimated Average Annual Sediment Yields for the Saego Dam Catchment and Flinders River Diversion Weir Catchments
Catchment Catchment Area (km2) Average Annual Average Annual Sediment Yield Sediment Yield (ML/year) (m3/km2/year)
Saego Dam 1,084 70 76
Flinders River Diversion 6,568 70 460 Weir
10.6 Licensing of Water Take
10.6.1 Water Plan and Resource Operations Plan Requirements
Surface water entitlements in the Flinders River catchment were described in Section 7.9.3. There are no supplemented surface water entitlements (water entitlements linked to water storage infrastructure) currently within the Flinders River section of the Gulf Water Plan area. All existing surface water extraction entitlements are unsupplemented water harvesting entitlements that are based on run-of-river flows and are typically defined by:
▪ A daily volumetric limit (DVL) representing the maximum daily extraction volume
▪ An annual volumetric limit (AVL) representing the maximum annual extraction volume
▪ Flow conditions under which extraction can occur (typically a flow threshold which must be exceeded before extraction can commence).
The development scenario assumed for the 2015 amendment of the Water Plan (Gulf) 2007 considered all unallocated water reserves in the Flinders River catchment as unsupplemented water harvesting entitlements. This assumption was based on the findings of the CSIRO FGARA study which identified unallocated water associated with water harvesting into on-farm storages as the most viable water development option to take advantage of the potential for agricultural development in the Flinders River catchment.
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The water resource modelling of the development scenarios undertaken as part of the Gulf Water Plan amendment identified flow conditions that were applied to the water harvesting licences representing the unallocated water reserves to minimise the risks to Gulf of Carpentaria fisheries, environmental assets and ecological processes and existing water users.
The Overview Report for the Water Plan amendment (Department of Natural Resources and Mines, 2014) stated that the amendment does not prevent the future development of instream storages; however, any proposed developments will need to ensure that resulting impacts on downstream flow outcomes are no greater than those associated with the proposed water harvesting development scenario.
The process for making available and dealing with unallocated water is specified in Chapter 2 of the Gulf ROP and Chapter 5, Part 1, Division 2 of the Gulf Water Plan. Key conditions relating to the release of unallocated water include:
▪ The process for granting unallocated water is a process stated in the Water Regulation 2016, Part 2, Division 2, Subdivision 2. This allows the release of unallocated water by either public auction, tender, fixed price sale or grant for a particular purpose.
▪ In preparing and implementing the process for granting unallocated water, the chief executive must consider the following:
• The purpose for which the water is required; • The efficiency of existing and proposed water use practices; • The extent to which water in the plan area is being taken under authorisations; • The availability of an alternative water supply for the purpose for which the water is required; • The impact the proposed taking of, or interfering with, the water may have on existing water users in the plan area; • Whether the proposed taking or interfering is likely to have a direct adverse effect on groundwater flows; • The stream flows required to maintain the following: o The longitudinal connectivity of low flow habitats throughout river systems in the plan area; o The wetted habitats at riffles and other streambed features; o The natural seasonality of flows and zero flows; o The replenishment of refuge pools that enable movement of instream biota; o Groundwater flows; o The contributions from aquifers to the flow of water in watercourses; o The lateral connectivity between rivers in the plan area and their adjacent riverine environments, including floodplains. • The impact the taking of, or proposed taking of, or interfering with, water may have on the following: o Water quality; o The natural movement of sediment;
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o The bed and banks of a watercourse or lake; o The inundation of habitats; o The movement of fish and other aquatic animals; o The recreation and aesthetic values of the plan area; o Cultural values including, for example, cultural values of local aboriginal or Torres Strait Islander communities.
▪ Unallocated water volumes granted must be within the annual volumetric limits for the indigenous, strategic and general reserves specified in Schedules 6A, 7 and 8 respectively of the Gulf Water Plan.
▪ Unallocated water held as an indigenous reserve (indigenous unallocated water) may be granted only for helping indigenous communities in the Cape York Peninsula Region area, Flinders River catchment area, Gilbert River catchment area, Morning Inlet catchment area, Settlement Creek catchment area, Staaten River catchment area or the Gregory River subcatchment area to achieve their economic and social aspirations.
▪ Unallocated water held as a strategic reserve (strategic unallocated water) may be granted only if it is to be taken for a State purpose, which is:
• A coordinated project; and/or • A project of regional significance.
▪ Water entitlements granted from the general reserve in the Flinders River and Gilbert River catchment areas must include:
• At least 1 pass flow condition; and • A condition stating the transfer of water under the entitlement must be done in accordance with the group B water transfer rules.
To date, the Queensland Government has provided for the release of the general reserve unallocated water in the Gulf Water Plan area through public tender processes. In the Flinders catchment, the general reserve was offered for sale as two different unsupplemented water entitlements (Product 1 and Product 2) each with different DVLs, AVLs and flow thresholds/conditions. A maximum release of 25,000 ML of general reserve unallocated water was made available in the Flinders River catchment upstream of Richmond (Reach 1). A total of 18,000 ML of this release was sold and converted to water licences.
The current status of the unallocated water reserves in the Flinders River section of the Gulf Water Plan area is summarised in Table 10.11. The total volume (AVL) of unallocated water currently remaining in the Flinders River catchment is 166,000 ML.
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Table 10.11 Current Status of Unallocated Water in Flinders River Catchment
Unallocated Water Type Reserve Volume (ML) – Unallocated Water Remaining Unallocated Water Plan (Gulf) 2007 Granted Since Water Plan Water Volume (ML) (ML)
Indigenous 8,500 0 8,500
Strategic (State Purpose) 17,850 0 17,850
General 239,650 100,000 139,650
Totals 266,000 100,000 166,000
10.6.2 Applicability to the Project
The proposed HIP scheme will involve instream dams and accordingly will be a supplemented water supply scheme. Given that the Gulf Water Plan and ROP have only envisaged unsupplemented water entitlements in the Flinders catchment, the process for the authorisation of the proposed water take associated with the HIP scheme is not well understood at this early stage in the Project. The Department of Natural Resources, Mines and Energy have provided the following general advice regarding the licensing of the proposed HIP water take as part of stakeholder engagement during the PBC study:
▪ The Gulf Water Plan does not specifically prevent the authorisation of the proposed HIP scheme; however, impacts on the Water Plan outcomes must be no greater than those associated with the water harvesting development scenario assessed in the 2015 Water Plan amendment.
▪ The maximum diversion of water from the catchment must not exceed the volumes (AVLs) obtained through either unallocated water release processes or water trading.
Any requirement to authorise the HIP scheme water take based on an annual volumetric limit (and also potentially a daily volumetric limit) will severely limit the ability of the scheme to provide a sufficient volume of higher reliability water allocations to support the development of large-scale irrigated agriculture. The primary objective of a supplemented water supply scheme is to capture sufficient stream flow volumes in storage during higher flow years to provide a reliable water supply during periods of low flows which in most locations in Queensland can persist for multiple wet seasons. This typically requires the capture and storage of at least two years of water required to meet water demands and storage losses to achieve a high yield reliability.
The average annual flow diversion out of the river system (irrigation supply and storage losses) for the proposed HIP scheme will be 109 GL/year for the diversified cropping scenario and 114 GL/year for the grazier support scenario. Limiting the maximum annual water take from the scheme to say 166 GL/year (i.e. total remaining unallocated water reserve volume in the Flinders River catchment) will only support a significantly smaller
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supplemented water supply scheme than that proposed. The modelled maximum water take into the HIP scheme in the historical simulation period (1889 to 2011) is 330 GL/year which is double the unallocated water reserve in the Flinders catchment.
A more practical licensing approach for the proposed HIP scheme water take is to access a sufficient volume of unsupplemented water entitlements (unallocated water reserves and buy-backs of existing unsupplemented water licences) with an equivalent Mean Annual Diversion (MAD) volume to offset the average annual water take from the HIP scheme (i.e. no net increase in mean annual diversions out of the river system). It will also be necessary to demonstrate that the proposed water take will comply with the primary objectives of the Gulf Water Plan in terms of protection of environmental, social and cultural values of water in the Flinders catchment.
Hydrologic modelling of the unallocated water reserves in the Flinders River catchment undertaken by the Queensland Government for the Water Plan (Gulf) 2007 (i.e. Flinders Source Model) indicates that the average volume of water (MAD) that can be taken under the water harvesting entitlements representing the unallocated water reserves varies between 55% and 70% of the AVL, with an average value of approximately 60% of the AVL. This indicates that the remaining unallocated water volume of 166,000 ML (AVL) in the Flinders River catchment corresponds to a MAD of approximately 100,000 ML/year. Additional buy-back of existing water entitlements would be required in addition to the granting of unallocated water reserves to offset the average annual water take from the HIP scheme (approximately 110 GL/year) under this potential licensing approach.
The Project location is within Zone 7 (Flinders River upstream of Richmond gauging station) of the Flinders River Water Management Area defined under the Gulf ROP. The ROP currently limits transfers of existing water harvesting licences from a different Water Management Area zone into Zone 7 to a maximum combined AVL of licences within the Zone of 10,000 ML; however, there are provisions under the ROP for the chief executive to grant a transfer beyond this limit if the transfer will not adversely impact the objectives of the Water Plan.
The potential impacts of the proposed HIP scheme water take on downstream flow regimes and environmental, social and cultural values of water are discussed in Section 10.7 and Section 14. Potential impacts on downstream water users are identified in Section 10.8.
The authorisation of a supplemented water supply scheme will require an amendment to both the Gulf Water Plan and ROP to define the Water Allocation Security Objectives (WASOs), water sharing rules and infrastructure details for the scheme. Under recent changes to Queensland's water resource management framework the Gulf ROP will ultimately be replaced by Resource Operations Licences and Operations Manuals for the individual water supply schemes within the Gulf Water Plan area. The only supplemented water supply schemes currently within the Gulf Water Plan area are the Julius Dam and Lake Moondarra Water Supply Schemes.
Further engagement with the Department of Natural Resources, Mines and Energy will be required in subsequent phases of the Project to develop a clear path forward for the
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licensing aspects of the Project and to understand the nature of any required amendments to the Gulf Water Plan and ROP to authorise a new supplemented water supply scheme within the Flinders River catchment.
10.7 Assessment of Impacts to Downstream Stream Flows
10.7.1 Overview
The potential impact of the proposed HIP scheme on the downstream flow regime of the Flinders River was assessed using the Flinders Source Model. The following stream flow impacts were quantified:
▪ Changes to median and mean annual flow volumes at different locations downstream of the scheme.
▪ Changes to the frequency of daily flows (i.e. flow duration curves) at different locations downstream of the scheme.
▪ Compliance with the Environmental Flow Objectives (EFOs) specified in the Gulf Water Plan.
A preliminary assessment of the potential implications of the changes to the downstream flow regimes on the environmental, social and cultural values of water in the Flinders River catchment is addressed in the Environmental Assessment section (Section 14).
10.7.2 Modelling Approach
The potential impact of the proposed HIP scheme on the downstream flow regime of the Flinders River was assessed using the modified version of the Flinders Source Model (WRP/ROP amendment version) that was used to independently assess the HIP scheme yield (refer Section 10.5.4). The Source modelling for this impact assessment was undertaken by Hydrology and Risk Consulting (HARC) under the instruction and direction of Engeny. The impact assessment was performed for the grazier support scenario only which is the higher scheme water use scenario and will result in slightly greater downstream flow impacts compared to the diversified cropping scenario.
Modifications made to the Flinders Source Model to reflect the HIP scheme water take and water licensing changes upstream of the HIP scheme were summarised in Section 10.5.4. The following modifications were made to the Flinders Source Model downstream of the HIP scheme to reflect unallocated water sales since the Gulf Water Plan amendment and assumptions about water licensing aspects of the proposed water supply scheme (i.e. access to unallocated water reserves):
▪ The remaining 4,500 ML of the Product 1 general reserve unallocated water within Reach 2 (Flinders River between Richmond and Cloncurry River confluence) was
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assumed to be allocated to the HIP scheme (i.e. GR2_SP demand reduced by 4,500 ML/year).
▪ The remaining 127,150 ML of the Product 2 general reserve unallocated water within Reach 4 (Flinders River downstream of Cloncurry River confluence) was assumed to be allocated to the HIP scheme (i.e. NWU10_SP demand reduced by 127,150 ML/year).
▪ The strategic State reserve unallocated water included in the Flinders Source Model at Richmond (supply node SR3_SP with a demand of 3,000 ML/year) was assumed to be allocated to the HIP scheme (i.e. SR3_SP demand reduced to zero).
▪ No access to the indigenous reserve unallocated water was assumed.
▪ Relocation of the 50,000 ML of the Product 2 general reserve unallocated water that was sold within Reach 3 (Cloncurry River catchment) to a new water licence (licence number 616858) located on the Corella River (tributary of the Cloncurry River). The total Product 2 general reserve unallocated water for the entire Flinders River catchment (184,650 ML) was previously modelled as a water harvesting licence at the downstream end of the Flinders River catchment (immediately upstream of Walkers Bend gauging station) in the WRP/ROP version of the Source Model.
The total volume (AVL) of unallocated water reserve assumed to be allocated to the HIP scheme was 145,650 ML, comprising 6,000 ML of the strategic reserve and 139,650 ML of the general reserve. The total volume (AVL) of existing water licences assumed to be allocated to the HIP scheme under a buy-back arrangement was 8,120 ML (i.e. Flinders Shire Council 5,000 ML water licence and existing licences attached to the Riverside and Saego Plains properties).
The predicted stream flow impacts resulting from the proposed HIP scheme (grazier support scenario) were identified at the following locations along the Flinders River system downstream of the HIP scheme:
▪ Richmond gauging station 915008A (total catchment area 17,380 km2)
▪ Etta Plains gauging station 915012A (total catchment area 46,130 km2)
▪ Walkers Bend gauging station 915003A (total catchment area 106,300 km2).
The predicted downstream flows for the HIP scheme were compared against stream flows for the following development scenarios:
▪ Pre-development scenario representing no water use in the Flinders River catchment
▪ WRP/ROP amendment scenario representing the maximum development scenario (i.e. full use of water entitlements) assumed for the 2015 Water Plan amendment (i.e. all unsupplemented water harvesting entitlements).
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10.7.3 Stream Flow Impacts – Annual Flow Volumes
The predicted changes to the median and mean annual stream flows (annual flows are on a water year basis) at the downstream locations are shown in Table 10.12.
Table 10.12 Predicted Annual Stream Flow Volume Changes for the Flinders River Downstream of the HIP
Location Median Annual Flow (GL/year) Mean Annual Flow (GL/year)
Pre-Dev WRP / HIP HIP % Pre-Dev WRP / HIP HIP % ROP Reduction ROP Reduction from from WRP/ROP WRP/ROP
Richmond GS 168 133 43 68.0% 422 399 329 17.7%
Etta Plains GS 599 535 490 8.5% 1,260 1,195 1,123 6.0%
Walkers Bend GS 1,431 1,163 1,167 -0.3% 2,770 2,551 2,565 -0.6%
The HIP will result in significant changes to annual flow volumes at Richmond gauging station (compared to the approved WRP/ROP development scenario), but these impacts will be considerably reduced at Etta Plains and negligible at Walkers Bend. However, the downstream industries appear to be very sensitive to small changes in high and flood flows.
The relocation of large volumes of unallocated reserves previously modelled on the Flinders River to both the smaller Stawell River and Corella River systems (in accordance with the new water licence conditions) is likely to be having a beneficial impact on stream flows as a result of reduced water use from these entitlements at their new locations.
The HIP scheme location (confluence of Stewart Creek and the Flinders River) does not exist in the WRP/ROP version of the Flinders Source Model due to the resolution of the model and residual catchment inflows. The changes to the Source model to specifically include catchment inflows for the Stewart Creek and Back Valley Creek catchments were only made for the version of the Source Model used to represent the proposed HIP scheme. Accordingly, stream flow changes immediately downstream of the HIP scheme are not available from the Source Model at this time. The GoldSim modelling performed for the HIP yield assessment (refer Section 10.5.3) indicated that the HIP water take will result in a 38% reduction in mean annual flow immediately downstream of the scheme.
10.7.4 Stream Flow Impacts – Daily Flow Volumes
The frequency of exceedance of daily flows (flow duration curves) for the HIP scheme are compared to the pre-development and WRP/ROP development scenarios in Figure 10.12 (Richmond GS), Figure 10.13 (Etta Plains GS) and Figure 10.14 Walkers Bend GS).
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The HIP is predicted to cause a material reduction in high flows and increase in low flows at Richmond gauging station compared to the WRP/ROP scenario. The increase in low flows is a result of the changes to the unallocated water reserves and buy-backs of existing water licences that were assumed to occur in lieu of the HIP scheme.
The changes to the flow duration characteristics are considerably reduced at Etta Plains and Walkers Bend gauging stations.
1000000 Pre-development
WRP-ROP
HIP 100000
10000
1000
100
Flinders River at Richmond Richmond River atFlinders(GS915008A) -
10
1 Daily Flow(ML/d)Daily
0.1 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
% of Time Exceeded
Figure 10.12 Daily Flow Duration Curves for Flinders River at Richmond Gauging Station
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1000000 Pre-development
WRP-ROP
100000 HIP
10000
1000
100
Flinders River at Etta River atFlinders(GS915012A) Plains -
10
1 Daily Flow(ML/d)Daily
0.1 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
% of Time Exceeded
Figure 10.13 Daily Flow Duration Curves for Flinders River at Etta Plains Gauging Station
1000000 Pre-development
WRP-ROP
HIP 100000
10000
1000
100 Flinders River at Walkers Bend Bend (GS915003A)Walkers atRiver Flinders
- 10
1 Daily Flow(ML/d)Daily
0.1 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
% of Time Exceeded
Figure 10.14 Daily Flow Duration Curves for Flinders River at Walkers Bend Gauging Station
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10.7.5 Stream Flow Impacts – Environmental Flow Objectives (EFOs)
Environmental Flow Objectives (EFOs) for the Flinders catchment are detailed in Schedule 5 of the Gulf Water Plan and represent key performance objectives that must be achieved to meet the Water Plan outcomes for the sustainable management of surface water.
The EFOs for the Flinders catchment are specified at the Walkers Bend gauging station 915003A location and are summarised as follows:
▪ The proportion of no flow days in the simulation period should be no more than 70%
▪ The mean annual flow as a percentage of pre- development flow should be at least 90%
▪ The median annual flow as a percentage of pre-development flow should be at least 78%
▪ The median wet season (January to March) flow as a percentage of pre-development flow should be at least 75%
▪ The 1.5 year daily flow volume as a percentage of pre-development flow volume should be at least 90%
▪ The 5 year daily flow volume as a percentage of pre-development flow volume should be at least 96.5%
▪ The 20 year daily flow volume as a percentage of pre-development flow volume should be at least 98%.
The Flinders Source Model was used to assess the performance of the proposed HIP scheme (grazier support scenario only) in achieving the EFOs specified for the Flinders River catchment. The EFO performance assessment results for the HIP are summarised in Table 10.13.
Table 10.13 EFO Performance Assessment for HIP
EFO EFO Performance EFO Performance Requirement WRP/ROP HIP Scenario
Proportion of no flow days <70% 68.3% 68.5%
Mean annual flow percentage >90% 92.1% 92.6%
Median annual flow percentage >78% 81.3% 81.5%
Median wet season flow percentage >75% 81.2% 83.7%
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EFO EFO Performance EFO Performance Requirement WRP/ROP HIP Scenario
1.5 year daily flow volume percentage >90% 91.9% 87.4%
5 year daily flow volume percentage >96.5% 98.3% 95.2%
20 year daily flow volume percentage >98% 99.0% 97.8%
Note: EFO performance values in red text do not achieve EFO performance requirement.
The Source modelling of the HIP scheme (grazier support scenario) indicates that the Project will comply with the low flow and medium flow EFOs but not the three high flow EFOs. The performance results for the three high flow EFOs are considered to be relatively minor non-compliances, particularly for the 5 and 20 year daily flow volumes. The EFO compliance performance for the diversified cropping scenario is expected to be generally similar (potentially minor improvement in performance) to the grazier support scenario.
The Source model was used to assess potential mitigation strategies for the HIP scheme to improve the EFO performance outcomes. Mitigation strategies considered included:
▪ Reducing the flow capacity of the diversion from the Flinders River into Saego Dam
▪ Releasing water from Saego Dam as the Flinders River flood peak passes the HIP location
▪ Reducing the storage capacity of Saego Dam.
Reducing the storage capacity of Saego Dam had the most impact on the high flow EFO performance. A 25% reduction in the storage capacity of Saego Dam was sufficient to achieve compliance with the two largest high flow EFOs (5 year and 20 year daily flow volumes), while the smallest high flow EFO (1.5 year daily flow volume) improved to within 1% of the EFO performance target. The EFO performance for the 25% smaller Saego Dam scenario is summarised in Table 10.14. Table 10.14 EFO Performance Assessment for Alternative HIP Scenario with a 25% Reduction in the Saego Dam Storage Capacity
EFO EFO Performance EFO Performance Requirement WRP/ROP HIP Scenario – 25% Smaller Saego Dam
Proportion of no flow days <70% 68.3% 68.5%
Mean annual flow percentage >90% 92.1% 93.1%
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EFO EFO Performance EFO Performance Requirement WRP/ROP HIP Scenario – 25% Smaller Saego Dam
Median annual flow percentage >78% 81.3% 83.2%
Median wet season flow percentage >75% 81.2% 83.8%
1.5 year daily flow volume percentage >90% 91.9% 89.0%
5 year daily flow volume percentage >96.5% 98.3% 97.4%
20 year daily flow volume percentage >98% 99.0% 98.7%
Note: EFO performance values in red text do not achieve EFO performance requirement.
Further reductions to the storage capacity of Saego Dam (beyond the 25% reduction) had no further impact on the 1.5 year daily flow volume EFO (even with the HIP infrastructure and water take completely removed from the Source model). This indicates that it is other changes made to the Source model that don’t relate directly to the HIP water take (e.g. addition of Stewart Creek/Back Valley Creek catchment inflows, relocation of water licences from recent sales of the general reserve unallocated water, etc.) that are causing this minor EFO non-compliance. Further investigation and modelling in subsequent phases of the project will be required to resolve this issue.
A 25% reduction to the Saego Dam storage capacity only results in a 6% reduction to the average annual supply volume from the HIP scheme (i.e. average annual irrigation supply volume reduces from 68 GL/year to 64 GL/year as simulated using the Flinders Source Model). This indicates that a relatively minor adjustment of the proposed HIP Reference Project could be implemented that would achieve practical compliance with the Gulf Water Plan EFOs (assuming resolution of minor modelling discrepancies) and that would not materially detract from the economic outcomes presented for the Reference Project in the PBC study (i.e. small reduction in scheme yield and likely commensurate reduction in scheme cost).
Further engagement with the Department of Natural Resources, Mines and Energy and the Department of Environment and Science will be required in subsequent phases of the Project to investigate the need for minor amendments of the Reference Project to comply with the EFOs specified in the Gulf Water Plan.
10.8 Assessment of Impacts to Existing Water Users
One of the economic outcomes for the sustainable management of water in the Gulf Water Plan area is the provision for the continued use of all water entitlements and other authorisations to take or interfere with water (Section 13(a) of the Water Plan).
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The Flinders Source Model was used to assess the potential impacts of the proposed HIP scheme (grazier support scenario only) on existing water users. This assessment identified the change in the Mean Annual Diversion (MAD) of existing water harvesting entitlements along the Flinders River compared to the approved WRP/ROP development scenario.
The predicted impacts to the MADs of existing water entitlements are summarised in Table 10.15. The assessment indicates that:
▪ There will be a beneficial impact to the water licences upstream of the HIP as a result of the removal of the unallocated water supply nodes assigned upstream of the HIP in the WRP/ROP version of the Source model.
▪ The MAD for the Richmond Shire Council water licence that supplies water to the Richmond Recreational Lake (supply node 110) will reduce by 13%; however, the volume reduction is very small (only 2 ML/year reduction in MAD).
▪ The MAD for the water licence that supplies water to the Silver Hills property downstream of Richmond (supply node 245) will reduce by 7% (608 ML/year reduction in MAD).
▪ Relatively small percentage reductions in MAD (4% or less) are predicted for an additional four water licences downstream of Richmond.
The existing water licences that will be adversely impacted by the Project are too far downstream of the Project to economically provide a compensatory water supply from the scheme. Compensation arrangements would need to be made with affected water users as part of the HIP development and could comprise monetary compensation payments, buy- back of existing entitlements or transfer of additional water entitlements to the affected parties.
Engagement with impacted landholders/water users will occur as part of stakeholder engagement activities planned for future stages of the Project.
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Table 10.15 Predicted Impacts of HIP on Existing Water Users
WRP/ROP HIP Water Entitlement MAD % Change AVL (ML/year) MAD (ML/year) AVL (ML/year) MAD (ML/year) (HIP to WRP/ROP) Water users upstream of HIP Newalloc_51432J 360 77 360 78 0% 101- Flinders Shire TWS- 778km 182 109 182 182 67% SR1_SP (UAW Strategic Reserves) 3,000 1,799 - - - GR1_SP (UAW- General Reserve Product 1) 30,000 20,435 - - - Newalloc_93216J 12 4.0 12 4.9 21% 215- Unreg Irr AMTD 772km 34 3.2 34 4.5 40% Newalloc_93798J 20 3.2 20 4.1 30% Newalloc_175287 400 93 400 100 8% 216 Stock Water AMTD 760km 2 0.6 2 0.7 11% 211- BS Irr AMTD 730km 399 384 - - - 205- WH Irr 720MLa AMTD 730km 720 454 - - - 207- WH Irr 1000 Mla ATMD 730km 1,000 706 - - - 236- Modelled demand 720 ML/a 734 684 - - - Water users between HIP and Richmond (GS915008A) 113- Recreation Richmond 624 km 38 37 38 37 1% SR3_SP (UAW Strategic Reserves) 3,000 1,620 - - - 110- WH-Recreation AMTD 624 km 199 18 199 16 -13% Water users between Richmond (GS915008A) and Etta Plains (GS915012A) GR2_SP (UAW- General Reserve Product 1) 10,000 6,829 4,500 3,083 - 245 - Irr Demand 14,000 Mla 14,321 8,708 14,321 8,100 -7% 025 - WH AMTD 575km 3200 Mla 3,200 2,648 3,200 2,581 -3% 119 - WH AMTD 540 km 1600 Mla 1,600 908 1,600 905 0% 132 - WH Newalloc_608017 AMTD 360 km 32,000 21,166 32,000 20,233 -4% Water users downstream of Etta Plains (GS915012A) NWU10_P1 (UAW- General Reserve Product 1) 12,500 8,602 12,500 8,488 -1% NWU_10 (UAW- General Reserve Product 2) 185,000 103,049 7,500 4,463 - 159- Unreg Irr AMTD 109.4 km 972 571 972 570 0% Newalloc_608014 28,800 17,721 28,800 16,970 -4% Notes: Yellow shaded cells indicate reduced AVLs to offset the HIP water take Green shaded cells indicate an increase in MAD caused by the HIP Orange shaded cells indicate a decrease in MAD caused by the HIP
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11. LEGAL AND REGULATORY CONSIDERATIONS
11.1 Key Points
▪ The proposed Reference Project will require amendment to the Gulf Water Plan to authorise a new supplemented water supply scheme within the Flinders River catchment, with the potential need for changes to the Environmental Flow Objectives depending on the final configuration of the scheme.
▪ The proposed Reference Project will trigger requirements under the Water Supply Act including referable dam conditions, a Resource Operations Licence and Operations Manual.
▪ The proposed Project will require planning and environmental, native title and aboriginal heritage approvals in the next phase.
▪ The proposed Project will require the acquisition of land and may require land access or compensation agreements for construction and temporary use.
▪ Work Health and Safety and General Liabilities will be relevant to the Project proponent.
All legal risks and regulatory considerations will require further investigation and refinement in the next phase of the Project.
11.2 Purpose and Approach
A high-level legal review has been conducted as part of the PBC development. This chapter addresses the primary matters identified as legal and regulatory interactions for the Project, including:
▪ Legislative considerations pertaining to water planning, planning and environmental, native title and aboriginal heritage;
▪ Dam safety;
▪ Land access and acquisition; and
▪ General liability and health and safety.
11.3 Legal Considerations
This section provides a description of relevant legal considerations that may be triggered by the Project. It is noted that this is not considered a complete certified legal review and may require further refinement or definition in the next phase of the Project.
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11.4 Water Planning and Infrastructure
11.4.1 Water Act
In Queensland, water resource management is primarily regulated by the Water Act 2000 (Water Act) and Water Regulation 2016 (Qld) (Water Regulation). The Water Act establishes a hierarchy of water instruments. Relevant to the Project, these include:
▪ Water Plan (Gulf) 2007 (Gulf Water Plan) (Queensland Government, 2017)
▪ Gulf Resource Operations Plan (Department of Natural Resources and Mines, 2015).
11.4.2 Water Allocation and Flow Objectives (Water Act)
The current Gulf Water Plan does not provide for the Reference Project as currently defined in the PBC. It should be noted, however, the Gulf Water Plan does not preclude the development of large-scale water supply schemes such as proposed in the Reference Project. Accordingly, engagement with Government Agencies, particularly DNRME, has been conducted during completion of the PBC on the potential for amendments to the Plan. It is noted and acknowledged that amendments of some form would be required to the Gulf Water Plan should the project proceed to construction. The nature of these amendments will be outlined and defined in more detail during the DBC to ensure the recommended changes are scientifically justified, remain in the public interest and make consideration of downstream social, environmental or economic outcomes.
The potential for the Project to impact availability of water to existing entitlements shall also be further quantified during the next phase, including the Environment Impact Assessment process, for the Project. During preliminary work, modelling of the Reference Project has been undertaken to quantify impact to flow downstream of the proposed scheme against the objectives of the current Plan. Modelling has also been undertaken of the modified version of the Reference Project indicating a scheme is viable with mitigated impacts on downstream flows against the objectives of the current Plan.
11.5 Saego Dam and Associated Infrastructure (Water Act, Water Supply Act)
With the proposed development of the Project, the introduction of the scheme may require the following legislative approvals. This does not include the planning and environment related approvals which are further discussed in Section 14.2.
11.5.1 Water Act:
▪ As above, amendment of the Gulf Water Plan to contemplate the proposed Saego Dam within the Water Plan area. Public consultation will be necessary for these proposed amendments.
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▪ An application for a new Resource Operations License (ROL) for operation of the scheme. The application will need to include evidence of the expected impact of the Project on Flinders River flows, and operating arrangements for the dam, diversion and irrigation infrastructure.
▪ An application for a new Operations Manual for the scheme.
11.5.2 Water Supply (Safety and Reliability) Act:
▪ The proposed Saego Dam will trigger the dam safety regulations as a referrable dam under the Water Supply (Safety and Reliability) Act 2008 (Qld) (Water Supply Act).
▪ The proponent must acquire a service provider registration under the Water Supply Act.
▪ The proponent must acquire a certified failure impact assessment after construction and given to the Chief Executive.
11.5.3 Other Infrastructure
Development of the Project will involve interaction with existing public utilities and third- party infrastructure. The Reference Project option will require consideration of the impact to such infrastructure and the extent of any removal or relocation of infrastructure if required to implement the detailed design in the next phase.
As highlighted in the Environmental Assessment section (Section 14) negotiations may be required with stakeholders for:
▪ Electricity supply over privately owned land to homesteads;
▪ Relocation of any existing infrastructure within the Project Area, including homestead dwellings and homestead access roads; and
▪ Temporary access to areas, for example, for borrow pits for the dam embankment construction.
Legal and regulatory compliance shall be managed by the environmental and planning approvals processes, early engagement and consultation with the relevant Government Agencies, local councils and public utility providers, as well as controls in the next phase of the Project.
11.6 Planning, Environment, Native Title and Aboriginal Herit age
A desktop environmental assessment and legislative review has been completed covering all Planning, Environmental, Native Title and Aboriginal Heritage approvals and legal risks associated with the proposed Project. The Environmental Assessment section (Section 14) includes an approvals register addressing all State and Federal Planning and
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Environmental approvals requirements likely to be triggered by the proposed Project. A summary of all relevant legislation is also included in the Section 14.
11.7 Land Acquisition and Access
11.7.1 Acquisition
Land will need to be acquired for the construction and operation of the Project, either by purchasing the land, resumption or compensation. Ideally the Project proponent will acquire and own all land subject to the Project area. For further information on Land Tenure, refer to the Environmental Assessment section (Section 14).
The Acquisition of Land Act 1967 (Qld) (ALA Act) authorises constructing authorities to take land for public purposes, either by agreement or by compulsory acquisition.
Under this Act, the Chief Executive of DNRME has power to acquire land by resumption for purposes relating to water, including for dams and dam-associated development. The Coordinator-General also has power to acquire land under the State Development and Public Works Organisation Act 1971 (Qld). The power to acquire land includes the power to acquire property for the facilitation of the Project.
Taking land under the ALA Act creates rights to compensation for people or entities with an estate or interest in the land at the time of taking. The issue of compensation can be dealt with after the relevant land is taken. Development of an acquisition strategy during the next phase of the Project will assist in managing risk of negotiations with impacted landholders.
11.7.2 Access
During the next phase of the Project access agreements with landowners may be required, in the absence of land acquisition, to enable construction activities within the Project area and/or to temporarily occupy and use the land.
11.8 General Liabilities – Statutory Duty
For the proposed Project, the proponent will face potential claims from persons who suffer any loss or damage (e.g. to themselves personally or their property) in connection with the Project (Injured Persons). The ability of Injured Persons to recover against the proponent will depend on whether those persons have a right of action against the operating entity, and the likelihood they can establish legal liability under that right of action.
These risks have been considered in a generic manner, given each claim if brought by an Injured Person, would be determined on its particular facts and circumstance. In a Project of this scope and scale, it is not possible to classify every potential claim that could be brought by an Injured Person during the construction and operational management of the Project.
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Based on the current Project scope numerous risk areas exist, many of which may be the subject of loss or damage to an Injured Person. This would need to be further defined the next phase of the Project. These may include:
▪ General liability including:
• Flood caused by, or impacts caused by, the Project during construction and/or operation; and • Physical injury or death of persons (workers and non-workers).
11.8.1 Health and Safety
Work Health and Safety legislative and regulatory requirements will apply to the Project during execution and operation and the proponent shall have duties to discharge under WHS legislation, which includes:
▪ Work Health and Safety Act 2011 (Qld)
▪ Work Health and Safety Regulation 2011 (Qld)
▪ WHS Codes of Practice and Guidelines.
The relevant activities subject to these requirements shall be further defined in the next phase of the Project. The extent to which activities are in part delegated to others (e.g. construction contractors) under WHS legislation will also continue to be a relevant consideration should the Project proceed. During the next phase of the Project policies and procedures shall be developed to implement the appropriate risk mitigation.
11.8.2 Legal Change
In consideration of the timeframe associated with the progression of the Project through its phases, it is reasonable to assume legislative and related policy changes will occur and may impact the Project in some way. The potential for any introduced or legislative amendments to negatively impact the success of the Project is considered low risk. To manage this risk, dedicated National and State Government engagement will continue through into the next phase of the Project. Additionally, the legislative interactions shall be further defined in the next phase of the Project to identify any legal changes.
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12. MARKET CONSIDERATIONS
12.1 Key Points
▪ The market was investigated through benchmarking and preliminary discussions with potential growers and agronomy experts.
▪ The market analysis, undertaken as part of the agronomy studies, identified market opportunities for products, pricing, seasonality and market segmentation.
▪ The market analysis for water pricing was completed as part of the financial and economic analysis to assess an assumed bulk water price. The assumed price was benchmarked from comparable schemes.
▪ Limited engagement has been undertaken so far about willingness to pay and is therefore scoped and included in the next phase.
▪ Feedback from the market indicates reliability and affordability of water is key to success of the Project.
▪ Benchmarking of previous Business Case studies shows water allocation purchase prices from $500 to $6000 per ML.
▪ A conservative willingness to pay for water pricing of $1000/ML for low security water and $2,000/ML for medium security water has been assumed for analysis with recommendations to thoroughly assess these as part of the next phase.
▪ There is high demand for new water allocations at the correct price. It has been assumed that all allocations will be purchased at the right price and level of security.
12.2 Purpose
The purpose of this chapter is to summarise the market assessment undertaken to date to quantify the Service Need and scenario assessments. A separate market sounding activity is yet to be undertaken although the assumptions and approach are outlined.
12.3 Approach
The grower issues and financial impacts have been explored in detail in Chapters 17 and 18. The most important variables for prospective irrigators are demand for water, price and reliability, farm returns and market size, availability and on-going costs.
▪ Demand for water was assumed at 100% purchase of the upfront allocations from stakeholder feedback
▪ Reliability was assessed via hydrological modelling (Section 10.5)
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▪ Bulk water charges were assessed from benchmarking
▪ Farm returns, access and size were assessed in the agronomical investigation (Appendix J)
▪ Capital and on-going costs were assessed as part of the concept engineering design (Appendix H)
The only remaining variable not described in previous sections is the benchmarking exercise for bulk water prices. The list below primarily references the Nullingah Dam studies as the most relevant and contemporary, as an independent process was used to assess willingness to pay. However, these were used as ‘ballpark’ upper bound costs for the current estimation.
1. Nullingah Dam undertaken by MJA and referenced from the Nullingah Dam PBC (Building Queensland, 2017a). Costs are per ML of allocation:
i. $2,700/ML for permanent transfers
ii. $1,500/ML for lower security allocations for sugar cane, etc.
iii. $2000 to $3000/ML for medium security allocations for sugar cane
iv. High value crop growers may be willing to pay $2,500 to $2,700/ML
v. High value crop growers may be willing to pay $3000 to $4000/ML for highly productive soils/areas
vi. System loss conversion for water security up to $3,500/ML
2. Granite Belt Irrigation Project DBC (Jacobs Australia, 2019):
i. Extensive consultation revealed a willingness to pay of $6,000/ML for water allocations and $400/ML usage (part B)
3. Lower Fitzroy River Infrastructure Project DBC (Building Queensland, 2017b) – quoted figures in adjacent schemes:
i. $60 to $2000/ML for medium priority allocations
ii. $1800 to $3000/ML for high priority allocations.
12.4 Summary
The initial market sounding has indicated a demand for water. The willingness to pay has not been thoroughly tested and where other studies have been used as benchmarks there are differences that may mean these numbers are unrealistically high. Therefore, a more conservative set of numbers were assumed for analysis with the recommendation that a
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thorough market sounding and willingness to pay exercise is undertaken as a priority component of the DBC or early works phase if a staged delivery mechanism is adopted.
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13. PUBLIC INTEREST CONSIDERATIONS
13.1 Key Points
▪ Initial public interest criteria are met by conforming to the documents, policies and strategic objectives outlined in Section 8 Strategic Considerations.
▪ The Reference Project will have limited negative impacts on the local community and many positive impacts.
▪ Local stakeholders have been updated through Council and open community sessions however extensive stakeholder engagement has not yet occurred apart from with governments and regulatory bodies.
▪ There is almost universal social licence in the community for a project like the Reference Project to go ahead. This assertion is yet untested in downstream communities although the Proponent has been actively engaged in promoting the scheme.
▪ Inundation of local landholding will occur however there is no apparent opposition to the proposal.
▪ The planned irrigation areas will overtake current grazier blocks but once again there is a single owner/grazier who has been kept informed through the stakeholder engagement process.
▪ An Indigenous Land Use Agreement (ILUA) has been identified with the local Indigenous group (Yirendali People) but the environmental mapping has found no high- risk cultural sites.
▪ Equity issues will be mapped as part of the DBC stakeholder engagement process to ensure contemporary processes are followed for all sectors of the community including for those who are potentially disadvantaged and unable to provide feedback by conventional mechanisms.
13.2 Purpose
The purpose of this chapter is to assess the extent to which the Hughenden Irrigation Project is in the public interest. As discussed earlier in this report, the project involves building a rockfill embankment with clay core to create a water storage facility adjacent to the Flinders River with 190GL storage capacity and other associated bulk and distribution infrastructure. Upon completion of, or during construction, water allocations would be sold to customers, who would subsequently be provided with bulk and distribution water services under some form of ownership model yet to be decided.
Accordingly, the scope of potential public interest issues is enough to warrant consideration in this PBC.
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13.3 Defining Public Interest
The Queensland Office of the Information Commissioner defines Public Interest considerations as those affecting the good order and functioning of the community and government affairs, for the well-being of citizens.
Public interest considerations are generally common to all members of, or a substantial segment of, the community, as distinct from matters that concern private or personal interests. However, some public interest considerations can apply for the benefit of an individual.
This chapter describes the main public interest considerations, along with opportunities for any potential negative impacts of the project to be managed and, where possible, mitigated or adjusted to realise opportunities and benefits. However, for the great majority this project provides many positives and aligns with government interests to provide water security for irrigated agriculture that will boost the economy and provide sustainable jobs, all of which will promote “the good order and functioning of the community and government affairs, for the well-being of the citizens’’.
13.4 Stakeholders
Engeny and HIPCo have engaged with a range of stakeholders and community members during the preparation of the PBC as noted in Section 4. Epic Environmental provided the overarching stakeholder engagement framework which is outlined in the Communications Plan (Appendix A).
13.5 Impact on Stakeholders
The impact of the project on the stakeholders outlined in Section 4 are described below.
13.5.1 Government
The public perception of the project is in the interest of all three levels of government, in terms of the effectiveness of the strategy implemented and use of potentially large amounts of taxpayers’ money.
13.5.2 Traditional Landowners
The traditional owners of the land may feel a sense of loss if there was to be development of man-made infrastructure and an ILUA is currently in place.
13.5.3 Environmental Advocates
Impacts to the environment and surrounds of the area is in the interest of environmentalists. Possible endangering and/or extinction of several species of flora and fauna is a risk to the state of the natural ecosystem.
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13.5.4 Property Owners Surrounding the Area
Property owners residing within the vicinity of the desired construction area may lose and/or have their property damaged, which would result in a form of compensation for the landowner. Subsequently, property owners may also incur a temporary and/or permanent reduction in access to public services and facilities.
13.5.5 Broader Community
The project will likely create employment opportunities in the region. With increased workers assigned to the project, this is anticipated to result in an indirect injection into the local economy, boosting local businesses.
13.5.6 Media
Increased media attention might occur depending on the course of action implemented and the level of controversy associated with these decisions.
13.6 Public Access and Equity
Public access is related primarily to agricultural users, irrigators and property owners in the region. In order to construct and facilitate the infrastructure, dam impoundment area and irrigated cropping areas, acquisition of private property is required. This must be done in such a manner that current landholders are adequately, but not excessively, compensated.
There are also potential issues with regards to the water allocation process. Ideally, water allocations would be allocated to prospective customers via a transparent and equitable public process – namely a request-for-offer process. This ensures fairness in the allocation of the water.
13.7 Safety and Security
Safety and security considerations include corruption, crime, public health risk, quality and security of supply. Dam safety represents a potentially major concern with regards to the Project. As there are population at risk downstream of the dam then dam failure assessment is required. This has been undertaken with the results included in the Flood Assessment Report provided in Appendix G. All relevant dam safety regulatory requirements will be met, both during the design and construction of the infrastructure and once the assets are operational. This will be in accordance with the statutory framework Water Supply (Safety and Reliability) Act 2008.
13.8 Future Stakeholder Engagement
Should the project progress beyond the PBC, the following recommendations aim to manage the expectations of key stakeholders, impacted landowners and the broader community:
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▪ Update key stakeholders and the community on whether the project will proceed, the outcome of the DBC and the subsequent decision-making process.
▪ Provide regular updates to impacted landowners on how the project is progressing and corresponding course of action (especially with regards to land acquisition timeframes).
▪ Engage with downstream landowners to communicate impacts and mitigation strategies.
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14. ENVIRONMENTAL ASSESSMENT
14.1 Approach
A desktop environmental assessment has been undertaken to identify environmental and planning constraints relevant to the Project. The desktop environmental assessment comprised was of:
▪ A review of environmental and planning legislation that may be triggered by the Project (Section 14.2);
▪ A desktop information gathering exercise to understand the existing environment (Section 14.3). Desktop information sources included:
• Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act) Protected Matters Search Tool (PMST); • WildNet (Wildlife Online) database maintained by the Department of Environment and Science (DES); • Aerial imagery; • Queensland Globe; • Regional Ecosystem (RE) mapping; • Regional Ecosystem Description Database (REDD); • Essential Habitat mapping; • Biomaps; • Atlas of Australian Soils (Northcote et al, 1960-68); • Queensland Government’s registered groundwater bore database; • Directory of Important Wetlands; • Queensland Aboriginal and Torres Strait Islander Cultural Heritage Database and Register maintained by the Department of Aboriginal and Torres Strait Islander Partnerships (DATSIP); • National Native Title Register maintained by the National Native Title Tribunal (NNTT); • Register of Indigenous Land Use Agreements maintained by the NNTT; • Queensland Heritage Register maintained by the DES; and
▪ A review of environmental and planning constraints applicable to the Project (Section 14.4);
▪ An approvals strategy for the Project (Section 14.5).
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14.2 Legislative Review
This section provides a brief description of environmental and planning legislation that may be triggered by the Project.
14.2.1 Commonwealth Legislation
Environment Protection and Biodiversity Conservation Act 1999
The Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act) is administered by the Commonwealth Department of the Environment and Energy (DEE). It provides a legal framework for protecting and managing nationally and internationally important aspects of the Australian environment including biodiversity and heritage places. The EPBC Act has been established to:
▪ Provide for the protection of the environment, especially Matters of National Environmental Significance (MNES);
▪ Promote ecologically sustainable development through the conservation and ecologically sustainable use of natural resources;
▪ Promote the conservation of biodiversity;
▪ Provide for the protection and conservation of heritage;
▪ Promote a cooperative approach to the protection and management of the environment involving governments, the community, landholders and Indigenous peoples;
▪ Assist in the cooperative implementation of Australia's international environmental responsibilities;
▪ Recognise the role of Indigenous people in the conservation and ecologically sustainable use of Australia’s biodiversity; and
▪ Promote the use of Indigenous peoples' knowledge of biodiversity with the involvement of, and in cooperation with, the owners of the knowledge.
A Project can be classed as an action that has, will have or is likely to have a significant impact on an MNES. In such cases a referral to the DEE is required. Upon receipt of the referral DEE is responsible for making a ‘Controlled Action or assessment approach’ decision within 20 business days. If the Project is determined to be a Controlled Action by DEE an approval process will be prescribed under the EPBC Act.
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14.2.2 Queensland Legislation
State Development and Public Works Organisat ion Act 1971
The State Development and Public Works Organisation Act 1971 (SDPWO Act) is administered by the Queensland Department of State Development, Manufacturing, Infrastructure and Planning (DSDMIP). The SDPWO Act facilitates timely, coordinated and environmentally responsible infrastructure planning and development to support Queensland's economic and social progress. The SDPWO Act gives the Queensland Coordinator-General (CG) the following significant powers to (among other things) manage major infrastructure projects:
▪ Declare a project to be a 'coordinated project' and coordinate the environmental impact assessment of the project;
▪ Coordinate and regulate programs of works;
▪ Enter and authorise entry onto land to undertake works;
▪ Compulsorily acquire land; and
▪ Implement and manage state development areas.
To enact the powers under the SDPWO Act a proponent must lodge an Initial Advice Statement (IAS) with the CG. The IAS helps the CG to determine whether the project in question should be declared a coordinated project and the level of assessment required (i.e. Environmental Impact Statement (EIS) or Impact Assessment Report).
Environmental Protection Act 1994
The Environmental Protection Act 1994 (EP Act) is administered by DES. The EP Act provides the key legislative framework for environmental management and protection in Queensland. The objective of the EP Act is to: “Protect Queensland’s environment while allowing for development that improves the total quality of life, both now and in the future, in a way that maintains ecological processes on which life depends” (section 3 of the EP Act). Under the EP Act, all organisations must comply with the general environmental duty not to undertake an: “Activity that causes, or is likely to cause, environmental harm unless all reasonable and practicable measures to prevent or minimise the harm are taken” (section 319 of the EP Act).
Activities which cause or are likely to cause environmental harm are offences under the EP Act unless authorised through an Environmental Authority (EA). An EA is an approval to undertake an Environmentally Relevant Activity (ERA) in accordance with the imposed conditions. These environmental requirements generally address planning, financial assurance, construction, operation and rehabilitation aspects of the activity, to ensure the impacts and risk to the environment are avoided, minimised or managed at a level permitted in the approval.
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Planning Act 2016
The Planning Act 2016 (Planning Act) is administered by the DSDMIP. The purpose of the Planning Act is to establish an efficient, transparent and accountable system of land-use planning and development assessment that will lead to ecological sustainability. The Planning Act comprises three main elements; plan making, development assessment and dispute resolution.
Under the Planning Act, development may be categorised as accepted development, assessable development (code and impact) and prohibited development. Development approval may be required for matters identified in the relevant planning scheme as well as matters of state significance.
Environmental Offsets Act 2014
The Environmental Offsets Act 2014 (EO Act) provides the flexibility to approve development in one place on the basis that an equivalent environmental gain will be made in another place where there is not the same value to industry. An environmental offset may be required as a condition of approval where a project is likely to result in a significant residual impact on prescribed environmental matters as identified through the following guidelines:
▪ The State guideline that provides guidance on what constitutes a significant residual impact for Matters of State Environmental Significance (MSES);
▪ The Commonwealth Significant Impact Guidelines for what constitutes a significant residual impact on Matters of National Environmental Significance (MNES); and
▪ Any relevant local government significant impact guideline for Matters of Local Environmental Significance (MLES).
Offsets may be delivered through a variety of manners, including financial settlement offsets, proponent driven offsets and a combination of these approaches. To avoid duplication of offset conditions between jurisdictions, State and local governments can only impose an offset condition in relation to a prescribed activity, if the same, or substantially the same impact and the same, or substantially the same matter has not been subject to assessment under the EPBC Act.
Water Act 2000
The Water Act 2000 (Water Act) is administered by the Queensland Department of Natural Resources, Mines and Energy (DNRME). The Water Act provides a structured and sustainable system for the planning, protection, allocation and use of Queensland’s surface water and groundwater. The Water Act regulates:
▪ The taking of and interference with water, excavation or placing of fill in a watercourse, and removal of vegetation in a watercourse for waters recognised as watercourses under the Water Act; and
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▪ The sustainable allocation of water for environmental purposes (i.e. environmental flows to protect ecological functions in rivers).
Interfering with water, excavating or placing fill within a watercourse, removing vegetation from a watercourse, and water allocations are assessed under the Water Act.
Biosecurity Act 2014
The Queensland Department of Agriculture and Fisheries (DAF) is responsible for administering the Biosecurity Act 2014 (Biosecurity Act). The purpose of the Biosecurity Act is to provide a framework for minimising and managing biosecurity risks in Queensland, ensuring the safety of agricultural inputs, and aligning responses to biosecurity events to national and international obligations.
The Biosecurity Act establishes a General Biosecurity Obligation (GBO) that requires all persons in Queensland to be responsible for managing biosecurity risks that are under their control and that they know about or should reasonably be expected to know about. The Biosecurity Act also establishes prohibited and restricted biosecurity matter and places.
Aboriginal and Cultural Heritage Act 2003
The Aboriginal and Cultural Heritage Act 2003 (ACH Act) is administered by the Department of Aboriginal and Torres Strait Islander Partnerships (DATSIP). The ACH Act binds all persons to provide recognition, protection and conservation of Aboriginal cultural heritage. The Cultural Heritage Duty of Care (section 23 of the ACH Act) states that: “a person who carries out an activity must take all reasonable and practical measures to ensure the activity does not harm Aboriginal cultural heritage”.
The ACH Act requires that a Cultural Heritage Management Plan (CHMP) or Native Title Agreement be developed in accordance with Part 7 of the ACH Act when an EIS is required.
Native Title (Queensland) Act 1993
The provisions of the Native Title (Queensland) Act 1993 (NT Act) are administered by the National Native Title Tribunal (NNTT). The NT Act recognises the land rights and interests of Indigenous peoples where they have historically resided and regulates the conduct of “future acts”, including development. The legislation provides for the determination of native title claims, the treatment of “future acts” that may impact on native title rights and requires consultation and/or notification to relevant claimants.
The Tribunal is established to work with people to understand Native Title and reach outcomes that recognise everyone’s rights and interests in land and waters.
Queensland Heritage Act 1992
DES is responsible for administering the Queensland Heritage Act 1992 (QH Act). The QH Act outlines the framework for the conservation of Queensland’s non-indigenous heritage. To achieve this the QH Act provides for the establishment and maintenance of the
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Queensland Heritage Register (the register). The QH Act regulates development of registered places within the register.
Land Act 1994
The Land Act 1994 (Land Act) is administered by DNRME. The purpose of the Land Act is to administer and manage non-freehold land and deeds of grant in trust and the creation of freehold land, and for related purposes. Applications that may be required under the Land Act include application for a temporary road, permit to occupy State Land, or stock route closures.
Nature Conservation Act 1992
The Nature Conservation Act 1992 (NC Act) is administered by DES. In broad terms, the objective of the NC Act is the conservation of nature (plants and animals) within Queensland. Specifically, the NC Act seeks to gather relevant information, identify critical habitat areas, manage protected areas, protect wildlife and promote ecologically sustainable development. The NC Act has ten subordinate regulatory instruments in the form of regulations, conservation plans and notices. This includes the Nature Conservation (Wildlife) Regulation 2006 which lists the protected flora and fauna species (extinct in the wild, endangered, vulnerable, near threatened) and also international wildlife and prohibited wildlife.
Under the NC Act it is an offence to “take” protected wildlife without a license, permit or other authority (section 320 of the NC Act). It is also an offence for a person, without a reasonable excuse, to tamper with an animal breeding place that is being used by a protected animal to incubate or rear the animal’s offspring (section 332 of the Nature Conservation (Wildlife Management) Regulation 2006).
Under the NC Act, permits for the movement of protected animals and the clearing of protected plants are required and a Species Management Program (SMP) must be approved when interfering with protected native fauna habitat and breeding places. The Act also provides legislative guidance in relation to offsetting significant residual impacts to flora and fauna deemed to be of State significance.
Vegetation Management Act 1999
The DNRME is responsible for administering the Vegetation Management Act 1999 (VM Act). Overall, the VM Act regulates the clearing of remnant vegetation in Queensland.
The VM Act incorporates the regional ecosystem (RE) classification scheme. REs are remnant vegetation communities in a bioregion that are consistently associated with a particular combination of geology, landform and soil. RE maps describe the extent and conservation status of remnant vegetation as REs.
The VM Act allows many routine clearing activities to be undertaken as exempt clearing work, under an accepted development clearing code or using an area management plan. Non-routine clearing activities to which the VM Act applies must be ‘assessable
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development’ under the Planning Act. These activities will require a development approval in accordance with that Act.
Fisheries Act 1994
The Fisheries Act 1994 (Fisheries Act) is administered by the Department of Agriculture and Fisheries (DAF). The purpose of the Fisheries Act is to provide for the management and protection of fisheries resources, including regulating development that might impact declared fish habitat areas and fish passage. It regulates the taking and possession of specific fish, removal of marine vegetation, the control of development in areas of fish habitat and listed noxious fish species.
The Fisheries Act establishes a risk hierarchy for waterway barrier works across Queensland and guides the design and assessment process for the implementation of new waterway crossings. Development potentially impacting fish passage within a waterway can be classified as accepted development or assessable development.
Accepted development works must be undertaken in accordance with a published accepted development code. Culverts, bridges, dams and other temporary or permanent waterway barrier works that cannot comply with accepted development requirements will result in waterway barrier works designs requiring approval from the DAF under the provisions of the Planning Act.
14.2.3 Local Planning Schemes
Flinders Shire Council Planning Scheme
The Flinders Shire Council Planning Scheme is administered by the Flinders Shire Council and is implemented in conjunction with the Planning Act. The Planning Scheme sets out what development can occur in the Shire and applications that can be made against the Scheme. The Planning Scheme’s purpose is to facilitate the Shire’s vision with an emphasis on providing an environment to promote economic development while also preserving the Shire’s liveability and sense of place.
The Flinders Shire Council Vision includes:
▪ “To grow, sustainably, and not become too big – to retain the close-knit community that exists currently, while also becoming a vibrant and diverse town with a sustainable local economy and plenty of employment opportunities.
▪ To continue to improve the liveability of the Shire and establish a healthy community.
▪ To provide more opportunities for young people to work and recreate within the Shire and encourage them to stay.
▪ For all residents to think We are better off here”.
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In accordance with the Planning Act, three categories of development are defined under the Finders Shire Council Planning Scheme: accepted development; assessable development and prohibited development. A development approval is required for assessable development.
14.3 Existing Environment
This section is based on a desktop environmental assessment of available Local, State and Commonwealth databases and mapping to define known environmental features in the vicinity of the Reference Project. Environmental constraints mapping of these features has been prepared and is provided in Appendix K. Field investigations will be required in later stages of the project to ground truth the findings of the desktop assessment.
The Project area for the purpose of the desktop environmental assessment is mapped in Appendix K – Overview Map. The Project area includes the Saego Dam embankment, diversion channel, diversion weir, the full supply volume inundation area of Saego Dam and the Flinders River diversion weir, the irrigation areas and associated irrigation channels, and potential rockfill borrow areas. It should be noted that some irrigation areas are only potential expansion areas and the Appendix K mapping represents a conservative Project area. Environmental features and constraints downstream of the Project area have been considered where relevant.
14.3.1 Climate
The Project area is located approximately 45 km west of Hughenden, in central Queensland. The Hughenden region has a hot, semi-arid climate. Mean temperatures range from 22⁰C (minimum) to 37⁰C (maximum) in summer and 9⁰C (minimum) to 27⁰C (maximum) in winter. The mean annual rainfall is 492 mm with most of the annual rainfall typically occurring between December and March (Bureau of Meteorology, 2019).
14.3.2 Topography
The topography of the Project area is undulating. A variety of geomorphic features exist within the Project area, including Betts Gorge, Stewart Creek, Back Valley Creek and Jones Valley Creek. Several basalt plateaus surround the proposed Saego Dam.
The elevation of the Project area ranges from 250 m AHD at the confluence of Stewart Creek and the Flinders River to 260 m AHD at the proposed weir on the Flinders River (refer to Appendix K – Topography Map). The Full Supply Level of the Saego Dam is 266 m AHD. This is less than the elevation of the surrounding basalt plateaus, which range from 320 m AHD to 360 m AHD.
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14.3.3 Geology and Soils
Geology
Through the Queensland Government’s geological map, accessed through Queensland Globe, the geological formations in Table 14.1 and Appendix K – Geology and Water Bores Map have been identified within the Project area.
Table 14.1 Geological Formations Identified Within the Project Area
Project Area Type Formation Lithology
Saego Dam Dominant Formation Quaternary alluvium and Sand, silt, mud and gravel Inundation Areas, lacustrine deposits Embankment, Diversion Channel Sub-Dominant Wallumbilla Mudstone and siltstone with and Weir calcareous concretions
Sub-Dominant Tertiary-Quaternary Mostly olivine basalt flows and some Basalts, N Queensland plugs; some nephelinite
Potential Rockfill Dominant Formation Tertiary-Quaternary Mostly olivine basalt flows and some Borrow Pits Basalts, N Queensland plugs; some nephelinite
Irrigation Area and Dominant Formation Wallumbilla Mudstone and siltstone with Associated Irrigation calcareous concretions Channels Sub-Dominant Allaru Mudstone Mudstone, calcareous siltstone
Sub-Dominant Toolebuc Formation Calcareous bituminous shale, limestone
Soils
Through the Atlas of Australian Soils (Northcote et al, 1960-68), the soil types described in Table 14.2 and mapped in Appendix K - Soils Map have been identified within the Project area.
Table 14.2 Soil Types Identified Within the Project Area
Project Area Soil Soil Type Description Code
Diversion Channel MM5 Uniform fine cracking, smooth faced Gently undulating clay plains with a peds, brown clay horizon underlain by slight gilgai microrelief carbonate pan before 1.5m
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Project Area Soil Soil Type Description Code
Si9 Duplex yellow-grey, hard setting A Alluvial plains with slightly elevated old horizon, A2 horizon sporad bleached, levees & shallow prior stream channels alk pedal whole col B horizon
Kb23 Very stony-surfaced (boulders up to 2 Very gently undulating extensive basalt or 3 ft) dark clays tablelands
Flinders River Si9 Duplex yellow-grey, hard setting A Alluvial plains with slightly elevated old Diversion Weir horizon, A2 horizon sporad bleached, levees & shallow prior stream channels alk pedal whole col B horizon
Potential Rockfill Kb23 Very stony-surfaced (boulders up to 2 Very gently undulating extensive basalt Borrow Pits or 3 ft) dark clays tablelands
Saego Dam MM5 Uniform fine cracking, smooth faced Gently undulating clay plains with a Embankment and peds, brown clay horizon underlain by slight gilgai microrelief Inundation Area carbonate pan before 1.5m
Irrigation Area and Si9 Duplex yellow-grey, hard setting A Alluvial plains with slightly elevated old Associated Irrigation horizon, A2 horizon sporad bleached, levees & shallow prior stream channels Channels alk pedal whole col B horizon
MM5 Uniform fine cracking, smooth faced Gently undulating clay plains with a peds, brown clay horizon underlain by slight gilgai microrelief carbonate pan before 1.5m
MM33 Uniform fine cracking, smooth faced Level alluvial plains with many braided peds, brown clay horizon redder than distributary channels 1.5m deep
14.3.4 Surface Water
The Project is situated in the upper fresh waters of the Flinders River catchment, within the Gulf Water Plan area. A number of named ephemeral tributaries of the Flinders River are located within the Project area, including:
▪ Stewart Creek;
▪ Jones Valley Creek (tributary of Stewart Creek);
▪ Betts Gorge Creek;
▪ Back Valley Creek; and
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▪ L-Tree Creek.
Waterways within the Project area that have been determined as watercourses or drainage features under the Water Act have been mapped in Appendix K – Watercourse Identification Map. The Flinders River and the downstream reach of L-Tree Creek are determined watercourses, while the upstream reaches of L-Tree Creek are determined drainage features. There are several areas within L-Tree Creek’s drainage features that are classified as Lakes under the Water Act. No other waterways within the Project area have had a watercourse determination performed under the Water Act. Several water bodies in the vicinity of the irrigation area have been defined as lakes under the Water Act.
Waterholes
The closest known waterhole to the Project has been described in a 2013 study (Waltham et al., 2013) as a permanent waterhole and is located on Betts Gorge Creek, within the potential dam inundation area, just upstream of the confluence with the Flinders River. It should be noted however, local landholders have advised that they have not observed a permanent waterhole at this location. Further investigation and ground truthing will be required in the next stage of the Project to identify the existence of waterholes downstream of the Project area.
Waterholes have high ecological importance in the Flinders River because they can provide critical dry season refugia for many species, including fisheries species. More information on the studies conducted on waterholes within the Project area can be found in the Environmental Flow Review Report prepared for the Project (Appendix L).
Stream Flow and Downstream Environments
Waterways in the vicinity of the Project area are highly ephemeral. Environmental features and characteristics downstream of the Project area are summarised in the Environmental Flow Review Report prepared for the Project (Appendix L). Downstream of the Project area, the Flinders River is subject to prolonged dry periods – there is no flow for more than half of the year at the Richmond gauging station (approximately 110 km downstream of the Project area). The ephemeral flow regime plays a key role in defining and supporting riverine habitats along the Flinders River, including wetlands, waterholes and fisheries.
Downstream of the Project area, the Flinders River is bordered by floodplains, with anabranching channels extending across the floodplain. The Flinders River floodplain is subject to regular inundation in the wet season. As a result, numerous riverine and palustrine floodplain wetlands occur on the Flinders River floodplain, transitioning to extensive estuarine wetlands near the Gulf of Carpentaria. The floodplains and wetlands provide habitat for many flora and fauna species.
Studies of the persistence or permanency of waterholes downstream of the Project have produced varying results. The closest identified waterhole with greater than 50% persistence may be located just downstream of the proposed diversion weir, but its exact location is not documented, and further investigations would be required to confirm its
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existence. The numerous studies tend to align in that there are no further permanent or persistent waterholes along the Flinders River until the confluence of the Stawell and Flinders Rivers downstream of Richmond which is approximately 130 km downstream of the Project.
Commercial, recreational and indigenous fishing occurs within the Flinders River catchment, downstream of the Project Area. Commercial fisheries occur in the estuarine reaches of the Flinders River and Gulf of Carpentaria. Target species include Barramundi, Threadfin, Mackerel, Emperor, Mangrove Jack, Snapper, tropical sharks, mud crabs and prawns. Inflows from the Flinders River system support the recruitment of juvenile prawn in the estuaries. High flows cause the migration of prawns from the estuaries into the Gulf of Carpentaria where they become available to commercial fisheries.
Recreational and indigenous fishing occurs in the fresh water and estuarine reaches of the Flinders River. Indigenous fishing practices are reported to involve line fishing, crabbing, hunting dugong and collecting molluscs and crustaceans.
14.3.5 Groundwater
The Project area is located within the Water Plan (Great Artesian Basin and Other Regional Aquifers) 2017 (GAB Water Plan) area. According to schedule 2 of the GAB Water Plan, the Project area may interact with following groundwater units:
▪ Betts Creek beds North;
▪ Galilee Clematis;
▪ Eromanga North Hooray;
▪ Eromanga Hutton;
▪ Eromanga Precipice;
▪ Eromanga Wallumbilla Rolling Downs;
▪ Adori Injune Creek Springbok Walloon; and
▪ Winton Mackunda.
There is also a relatively shallow groundwater system associated with the Flinders River alluvium within the Project area. The Queensland Government’s registered groundwater bore database (accessed through Queensland Globe) was used to identify registered groundwater bores within or adjacent to the Project area (refer to Appendix K – Geology and Water Bores Map). The database indicates that there are 4 registered groundwater bores within the impoundment area of Saego Dam and several additional registered bores in close proximity to the perimeter of the Saego Dam reservoir area.
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14.3.6 Biodiversity
Protected Areas
No protected areas that are Matters of State Environmental Significance (MSES) are mapped as occurring within or adjacent to the Project area (refer to Appendix K – MSES Map). The nearest protected area is Porcupine Gorge National Park, which is located approximately 65 km north-east and upstream of the Project area.
The EPBC Act PMST Report (included in Appendix K) shows that there are no protected areas that are Matters of National Environmental Significance (MNES) (i.e. World Heritage Properties, National Heritage Places, Wetlands of International Importance, Marine Parks or Marine Areas) within or adjacent to the Project area. The nearest MNES protected area is also Porcupine Gorge National Park, approximately 65 km north-east and upstream of the Project area.
Downstream of the Project area, the nearest protected area does not occur until the Gulf of Carpentaria some 700 km from the Project area.
Wetlands
As shown in Appendix K – MSES Map, the Project area contains High Ecological Significance (HES) wetlands which are associated with Jones Valley Creek and the upper reaches of Stewart Creek. These HES wetlands are within the Full Supply Level inundation area for Saego Dam. It should be noted however, local landholders have advised that they have not observed wetlands within the proposed Project area. Further investigation and ground truthing will be required in the next stage of the Project to confirm the existence of and ecological value of wetlands in the Project area.
There is also MSES Regulated Vegetation (100m from wetland) within the proposed irrigation area extent which may correlate with non-MSES Riverine, Palustrine and Lacustrine wetlands.
Downstream of the Project area, there are no HES wetlands or wetlands of High Ecological Value (HEV) within 300 km of the Project area.
The nearest MNES Wetland of International Importance downstream of the Project area on the Flinders River is the Southern Gulf Aggregation, located in the Gulf of Carpentaria. The Southern Gulf Aggregation is a large wetland subject to regular inundation by marine and estuarine tidal waters, and wet season flooding from rivers and streams from the inland catchment.
Ecological Communities
According to the PMST Report (2019) (included in Appendix K) there are no listed Threatened Ecological Communities (TECs) within or adjacent to the Project area. The Endangered TEC ‘native species dependent on natural discharge of groundwater from the
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Great Artesian Basin’ is the closest downstream TEC but not mapped within 50 km of the Project Area.
Much of the Project area overlaps with areas of mapped known or potential Groundwater Dependent Ecosystems (GDEs) (refer to Appendix K – GDE Map).
Flora
Regulated Vegetation (Category B and Category X), Regulated Vegetation Intersecting a Watercourse and 100 m from Wetland Areas, and Least Concern Regional Ecosystems are mapped as occurring within the Project area (refer to Appendix K – MSES Map, Regional Ecosystems Map and Regulated Vegetation Map). Downstream of the Project area, the Flinders River and its riparian zone has been identified as a ‘riparian corridor’ of ‘State significance’. Flow-dependent ‘of concern’ Regional Ecosystems (REs) (classified under the Vegetation Management Act) occur within the Flinders River riparian corridor.
No areas of Essential Habitat have been identified within or immediately downstream of the Project area. Similarly, Protected Plants Flora Survey Trigger map does not apply to the Project area or areas immediately downstream.
The PMST (included in Appendix K) identified the following Listed Threatened Species as potentially occurring, or potentially having habitat occurring, within 50 km of the Project area:
▪ Pink Gidgee (Vulnerable)
▪ Bluegrass (Vulnerable)
▪ King Blue-grass (Endangered)
The Wildlife Online Report (2019) (included in Appendix K) provides the complete list of flora species that have been recorded within 50 km of the Project area. The list includes the Pink Gidgee (Acacia crombiei), which is listed as Vulnerable under the NC Act.
The PMST (included in Appendix K) also lists the following invasive plant species, and/or habitat for these species, as likely to occur within 50 km of the Project area: Prickly Acacia, Rubber Vine, Prickly Pears, Cotton-leaved Physic-Nut, African Boxthorn, Parkinsonia, Parthenium Weed, Athel Pine and Mesquite.
Fauna
There are no areas of Wildlife Habitat (for threatened and/or special least concern animals) mapped as occurring within or immediately downstream of the Project area. However the PMST (included in Appendix K) identified the following Listed Threatened Species of fauna as potentially occurring, or potentially having habit occurring, within 50 km of the Project area:
▪ Birds:
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• Critically Endangered – Curlew Sandpiper • Endangered – Star Finch (eastern), Star Finch (southern), Southern Black-throated Finch, Gouldian Finch and Australian Painted Snipe • Vulnerable - Red Goshawk, Squatter Pigeon (southern), Painted Honeyeater and Masked Owl (northern)
▪ Mammals:
• Endangered - Northern Quoll • Vulnerable - Ghost Bat, Greater Bilby and Koala, Large-eared Horseshoe Bat and Julia Creek Dunnart
▪ Reptiles:
• Vulnerable – Plains Death Adder and Yakka Skink
The Wildlife Online Report (included in Appendix K) shows that the following Special Least Concern and Vulnerable species have been recorded within 50 km of the Project area: Fork- tailed Swift (Special Least Concern), Oriental Plover (Special Least Concern), Oriental Pratincole (Special Least Concern), Common Sandpiper (Special Least Concern), Short- beaked Echidna (Special Least Concern), Squatter Pigeon (southern subspecies) (Vulnerable) and the Painted Honeyeater (Vulnerable). The full list of fauna species recorded within 50 km of the Project Area can be found in Appendix K.
The PMST (included in Appendix K) lists ten Listed Migratory Species and 17 Listed Marine Species (including the critically endangered Curlew Sandpiper) as ‘likely to’ or ‘may’ occur within the Project area.
The PMST identified the following invasive animal species as potentially occurring, or potentially having habit occurring, within 50 km of the Project area: Domestic Pigeon, House Sparrow, Domestic Dog, Domestic Cat, Domestic Cattle, House Mouse, Rabbit, Pig, Red Fox and the Asian House Gecko. The Cane Toad species or species habitat is known to occur within the area.
Fish Passage
Waterway barrier works have the potential to impede fish passage along Queensland’s network of rivers and streams. Barrier works include constructing, raising, replacement and some maintenance works on structures such as culvert crossings, bed level and low level crossings, weirs and dams, both permanent and temporary.
The Queensland waterways for waterway barrier works mapping layer colour-codes waterways along their length to show the risk of adverse impact from instream barriers on fish movements. The colours indicate whether waterway barrier works can potentially proceed under the relevant Fisheries Queensland self-assessable code or whether the works will require a development approval.
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Within the Project area, the Flinders River, and L-Tree Creek and its upstream drainage have been defined as major (purple) risk Queensland waterways for waterway barrier works. All other waterways within the Project area have been defined as low (green), moderate (amber) or high (red) risk waterways (refer to Appendix K – Queensland Waterway Zoning Map).
Downstream of the Project area, the Flinders River retains a high degree of natural connectivity which facilitates fish passage. There are no major dams or weirs to significantly impede sediment transport or fish habitat. Riffle or glide habitat within the Flinders River plays an important part in maintaining connectivity along the Flinders River for fish passage when flows occur.
14.3.7 Land Use and Tenure
Under the FSC Planning Scheme, the Project area is zoned as Rural Land except for the Flinders River corridor itself which is zoned as Recreation and Open Space. The purpose of the Rural Land zone is to:
▪ Provide for rural uses and activities;
▪ Provide for other uses and activities that are compatible with:
• Existing and future rural uses and activities; • The character and environmental features of the zone.
▪ Maintain the capacity of land for rural uses and activities by protecting and managing significant natural resources and processes.
This Planning Scheme zoning is consistent with the Good Quality Agricultural Land (GQAL) mapping which has the Project area mapped as GQAL land (refer to Appendix K – GQAL Map). Specifically:
▪ The Saego Dam inundation area, embankment, diversion channel and diversion weir will be located predominantly within Class C2 (Pasture Land – Native Pastures) with a portion of Class B (Limited Cropping Land).
▪ Potential rockfill borrow areas will be in Class B areas.
• Note that quarrying activities will be required within the rockfill borrow areas to obtain rock material for embankment construction. These borrow source locations are indicative based on the underlying geology. Quarrying activities are an Environmentally Relevant Activity (Extractive and Screening Activities) under the EP Act.
▪ The diversion channels for irrigation and the irrigation areas themselves will be located across mostly Class C1 (Pasture Land – Sown pastures, and native pastures on high fertility soils) with minor areas of Class C2.
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Most of the Saego Dam embankment, its inundation area and diversion channel will be located on leased land (refer to Appendix K – Land Tenure Map). Freehold land impacted by the Project includes the irrigation areas and associated irrigation channels, a section of the diversion channel and embankment and the eastern extent of the Saego Dam impoundment area. A Major Infrastructure Stock Route also passes through the proposed irrigation areas.
14.3.8 Noise, Vibration, Light, Odour and Air Quality
The main sources of existing noise, vibration, light, odour and particulate emissions in the vicinity of the Project area include farming activities on rural properties and local traffic travelling on local roads.
14.3.9 Sensitive Receptors
Hughenden is the closest major community to the Project area (approximately 45 km east of the Project area). Homesteads that currently overlay with the Project area were identified using aerial imagery. This information is summarised in Table 14.3. It should be noted that all stakeholders related to homesteads located within the Project area are already aware of the Project and are being consulted as part of the Preliminary Business Case assessments. Any displacement and/or road access impacts from the Project on these homesteads, where relevant, do not present a risk to Project development.
Table 14.3 Proximity of Sensitive Receptors to the Project Area
Distance to Hughenden Nearest Identified Homesteads
~ 45 km • 4 homesteads located within the Project area • 2 homesteads located within 1 km of the Project area • ~6 homesteads located within 10 km of the Project area
Traffic and Transport
In terms of transport infrastructure, only local roads have the potential to be impacted by the Project:
▪ Dalkeith Road intersects the diversion weir;
▪ Expressman Downs Road intersects the diversion channel and dam inundation area;
▪ Saego Plains Road intersects the dam inundation area; and
▪ Riverside Road intersects the diversion channel, dam inundation area and embankment.
Any impacts to local roads will be addressed as part of the Project design and as a result, do not present a risk to Project development.
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14.3.10 Cultural Heritage and Native Title
Indigenous Heritage
A search of the DATSIP Aboriginal and Torres Strait Islander Cultural Heritage Database and Register and associated Queensland Government mapping indicates there are no known features of Indigenous cultural heritage within the Project area (refer to Appendix K – Cultural Heritage Map).
Non-Indigenous Heritage
A search of the DES Queensland Heritage Register indicates that there are no known features of non-Indigenous State or Local heritage within the Project area.
Native Title
The National Native Title Tribunal register provides the following information regarding Native Title and an Indigenous Land Use Agreement (applicable to the entire the Project area):
▪ Tribunal File no. QCD2017/002:
• Name: Yirendali People Core Country Claim • Determination date: 20 March 2017 • Determination outcome: Native Title does not exist
▪ Tribunal File no. QI2016/039:
• Name: Yirendali People Claim Resolution ILUA • ILUA type: Area Agreement • Determination date: 2 December 2016 • Subject matter: Access (Government)
14.4 Environmental and Planning Constraints Assessmen t
An environmental and planning constraints assessment has been undertaken for the Project (refer to Table 14.4). A rating has been applied to potential environmental and planning constraints:
▪ Low - Unlikely that the constraint will trigger any legislative approvals, or the works are classified as exempt or accepted development.
▪ Medium – The constraint will trigger a legislative approval, however the constraint is unlikely to alter the design or operation of the Project.
▪ High – The constraint will trigger a legislative approval and will alter the design or operation of the Project.
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Table 14.4 Environmental and Planning Constraints Assessment
Aspect of the Potential Impacts Environmental and Planning Mitigation and Management Measures Constraint Existing Constraints Rating Environment
• Triggers an application for operational • Lodge an IAS with the CG to have the Surface Water • The Flinders River and part of L-Tree Low Creek are defined watercourses under work that involves taking or interfering project declared a coordinated project. the Water Act. with water. To allow assessment of impacts on • The upstream reaches of L-Tree Creek • Any excavation or filling within a watercourse to be included as part of a are defined drainage features under the mapped watercourse will require coordinated project. Water Act. assessment against riverine protection • There are several areas classified as permit (RPP). requirements. lakes under the Water Act. • Buy back of existing surface water • The impacted sections of Stewart Creek, licences that will be affected by the Betts Gorge Creek, Back Valley Creek Project is likely to be required. and Jones Valley Creek are not yet assessed/determined under the Water Act. • Water extraction from the Project will impact stream flows along downstream reaches of the Flinders River (see below). The Saego Dam embankment is located close to the confluence of Stewart Creek and the Flinders River to minimise stream flow impacts to Stewart Creek.
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Aspect of the Potential Impacts Environmental and Planning Mitigation and Management Measures Constraint Existing Constraints Rating Environment
• Modelling suggests that the Project • Lodge an IAS with the CG to have the Stream Flow & • Hydrological modelling suggests that the High would not meet 3 of the 7 project declared a coordinated project. Downstream Project would reduce medium and high Environmental Flow Objectives (EFOs) Potential impacts on streamflow and Environments flows downstream of the Project (Appendix L). The impact on high flows for the Flinders River, as set out in the downstream environments would be would persist until Richmond current Gulf Water Plan. investigated in more detail as part of (approximately 150 km downstream of • An alternative scheme with a 25% the coordinated project assessment the Project). Further downstream, near reduction in the storage capacity of process. the Gulf of Carpentaria, the impact on Saego Dam (nominal number) was • Design refinements and environmental high flows would be offset by inflows from modelled to test sensitivity and flow modelling to be undertaken to other parts of the catchment. The Project compliance with the EFOs. This inform compliance with the Gulf Water would have a lesser impact on low flows scenario is fully compliant with 6 of the Plan EFOs, environmental downstream of the Project. 7 EFOs and is marginally non- management riles, water storage • The reduction in medium and high flows compliant with the 7th EFO. The design and mitigation measures. may impact on channel maintenance alternative scheme suggests that it processes, riparian zone communities would be feasible to refine the design of and connectivity with anabranch and Saego Dam to achieve compliance with floodplain habitat. all 7 EFOs. • Downstream of Richmond, the Project • Amendments to the Gulf Water Plan may reduce the ability of passing flows to and Resource Operations Plan may be maintain instream, riparian and floodplain required to license the proposed water habitat, waterholes, riffles/glides and take if compliance with all 7 EFOs longitudinal connectivity. cannot be achieved. Amendments may also be required to convert unallocated water reserves to water allocations.
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Aspect of the Potential Impacts Environmental and Planning Mitigation and Management Measures Constraint Existing Constraints Rating Environment
• Any agreement with landholders will • Prepare a referral to the DEE to decide Groundwater • The Project area will remove the function Low of a small number of water bores. require a ‘make good’ agreement for if a Controlled Action. • The Project inundation area and impacted water bores. • Secure make good agreements with infrastructure may impact on GDEs. • A referral to DEE will be required. impacted landholders. • Field survey will be required to • The irrigation area may reduce the depth to groundwater in this area. determine if GDEs exist within the Project area. • A referral to DEE will be required. • Prepare a referral to the DEE to decide Ecosystems • No mapped MSES protected areas within Medium or adjacent to the Project area. • Field surveys will be required to if a Controlled Action. • No mapped MNES protected areas undertake a significant impact identified within 50 km of the Project assessment. area. • An aquatic ecological survey will be • No mapped MNES Listed Threatened required to support the development. Ecological Communities identified within • It is possible State environmental offset 50 km of the Project. will be required for impacts to the HES • HES wetlands associated with Jones wetlands and regulated vegetation. Valley Creek and the upper reaches of Stewart Creek which are within the inundation area.
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Aspect of the Potential Impacts Environmental and Planning Mitigation and Management Measures Constraint Existing Constraints Rating Environment
• Clearing of regulated vegetation can Flora • Mapped regulated vegetation (Category • Lodge an IAS with the CG to have the Medium B and Category X), MSES Regulated only be for a relevant purpose, be project declared a coordinated project. Vegetation Intersecting a Watercourse exempt clearing or accepted To allow assessment of impacts on and 100m from Wetland Areas and Least development code. regulated vegetation and essential Concern Regional Ecosystems (classified • Field surveys will be required to habitat to be included as part of a under the Vegetation Management Act) undertake a significant impact coordinated project. are located across the Project Area. assessment. • Prepare a referral to the DEE to decide • No areas of Regulated Vegetation • A referral to DEE may be required. if a Controlled Action. Essential Habitat or Protected Plants • It is possible State environmental offset • Potential for an invasive species Flora Survey Trigger areas are located will be required for impacts to the assessment and consequence within or directly downstream of the regulated vegetation. management plan. Project area. • Development application for native • Species with conservation status have vegetation clearing (VM Act 1999). been identified within 50 km of the site. • The Project area may impact MNES Listed Threatened Species of plants as their species or species habitat are known to occur or likely to occur within 50 km of the Project area. • The Project area is likely to contain invasive plant species.
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Aspect of the Potential Impacts Environmental and Planning Mitigation and Management Measures Constraint Existing Constraints Rating Environment
• An ecological field survey will be • Prepare a referral to the DEE to decide Fauna • Species with conservation status have Medium been identified within 50 km of the site. required to identify the species and if a Controlled Action. • EPBC Listed Threatened and Migratory species habitat that occur within Project • Prepare a species management species are identified with 50 km of the area and the significance of impact. program. Project area. • An application for a damage mitigation • The Project area is likely to contain permit may be required under the NC invasive animal species. Act. • A species management program will be required under the NC Act. • A referral to DEE will be required. • An aquatic ecological survey will be • Lodge an IAS with the CG to have the Aquatic • The Project Area will impact on natural Medium required to support the development. project declared a coordinated project. Ecology fish passage of Betts Gorge, Stewart, Jones Valley, L-Tree and Back Valley • A development application for To allow assessment of impacts on Creek as well as the Flinders River. assessable development that is waterways to be included as part of a • Betts Gorge, Stewart and Jones Valley operational work that is constructing or coordinated project application. Creeks are mapped as high-risk raising waterway barrier (Planning Act • Prepare application for waterway waterways for waterway barrier works. and Fisheries Act) will be required. barrier works. • The Flinders River, L-Tree Creek and its • Design of diversion channel allows for upstream drainage features are mapped fish passage between Saego Dam and as major-risk waterways for waterway Flinders River. barrier works. • Design for Flinders River weir allows • Back Valley Creek is mapped as a low- for fish passage across weir. impact waterway.
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Aspect of the Potential Impacts Environmental and Planning Mitigation and Management Measures Constraint Existing Constraints Rating Environment
• Lodge an IAS with the CG to have the Land Use and • Saego Dam will inundate free hold and • Landholder compensation for loss of Medium project declared a coordinated project. Tenure lease hold land. useable land. • The dam embankment and diversion • Change the purpose of existing tenure. Allowing powers related to compulsory channel will be constructed across lease • Planning application to the Local land acquisition and planning land and one free hold tenure. Government. applications to be assessed as part of • The irrigation area and associated • Development applications would require a coordinated project (superseding irrigation infrastructure will be constructed a land suitability assessment. local planning applications). on mostly free hold land and constructed • Permit to close and realign a Major • Permit to close and realign a Major across a Major Stock Route. Stock Route. Stock Route. • Operation of the dam is a material • Environmental Relevant Activity • Potential for Environmental Authority change of use. (Extractive and Screening Activities) application for Environmental Relevant • Construction of the dam embankment, triggered for quarrying activity where Activity (Extractive and Screening weir and diversion channel is operational more than 5000 tonnes is extracted or Activities) for quarrying activity. works. screened in one year. • Quarrying and extractive activity for the rockfill borrow pits. • Class B, C1 & C2 GQAL land will be impacted by the Project area. • Native title does not exist within the Project area.
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Aspect of the Potential Impacts Environmental and Planning Mitigation and Management Measures Constraint Existing Constraints Rating Environment
• Approval required from Council to • Lodge an IAS with the CG to have the Built • The inundation area will impact on local Low realign the local roads. project declared a coordinated project. Environment roads. • Access to the site will be via both local • A traffic and transport assessment will To ensure assessment of impacts on and state-controlled roads. be required for the construction phase. sensitive receptors and roads included • Some homesteads will be displaced or • Impacts on sensitive receptors to be as part of the approval process. otherwise impacted by construction and considered as part the lead approval operation of the Project however all (IAR or EIS). stakeholders related to homesteads • Landholder compensation for direct located within the Project area are impacts to sensitive receptors. already aware of and being consulted as • Field survey will be required to clarify part of the preliminary business case infrastructure impacts to any existing assessments. Any displacement and/or infrastructure in the area. road access impacts from the project on these homesteads does not present a risk to the project development.
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Aspect of the Potential Impacts Environmental and Planning Mitigation and Management Measures Constraint Existing Constraints Rating Environment
• Development works have a duty of care • Undertake a cultural heritage risk Cultural • There no known features of indigenous Medium to ensure the Project does not impact assessment. Heritage and or non-indigenous cultural heritage within on matters of cultural heritage • Prepare a Cultural Heritage Native Title the Project area. • A current ILUA for the Yirendali People significance. Management Plan if required. exists which encompasses the entire • Duty of care to not harm cultural Project area. heritage sites or items of significance. • Field survey will be required to determine if any indigenous or non- indigenous heritage occurs within the Project area. • Development will require assessment against the Aboriginal Cultural Heritage Act Duty of Care Guidelines.
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14.5 Regulatory Processes and Approvals
Table 14.5 is a summary of legislative approvals that may be triggered by the design or operation of the Project. This is based on information gathered as part of the desktop assessment, therefore Table 14.5 should not be construed as an exhaustive list of approvals. Additional approvals may be identified during future phases of the Project.
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Table 14.5 Approvals Register
Assessment Preparation Assessment Item Applies To Approval Legislation Trigger Earliest State Time Agency Time Time
1. Commonwealth Approvals
Environment Protection A Project that has, will Department of 20 business EPBC Act and Biodiversity have or is likely to have a As soon as 1.1 Entire Project Environment & 2-6 months days for Referral Conservation Act 1999 significant impact on an possible. Energy (DEE) determination1 (EPBC Act) MNES.
Where the Minister decides that the Project is a Controlled Action EPBC Act Formal EPBC Act and is subject to 2 1.2 Entire Project assessment and DEE Following item 1.1. 6-12 months 9-12 months Assessment approval under the EPBC Act.
Where significant residual impacts to EPBC Act MNES are identified. Concurrent with 1.3 Entire Project Offset Strategy DEE - - item 1.2.
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Assessment Preparation Assessment Item Applies To Approval Legislation Trigger Earliest State Time Agency Time Time
2. State Approvals
Where the proponent is Department of As soon as possible seeking a coordinated State following completion State Development and project determination and Development, of Preliminary Initial Advice Public Works 2.1 Entire Project seeking the Coordinator- Manufacturing, Business Case and 1-3 months 1.5 Months2 Statement Organisation Act 1971 General to facilitate the Infrastructure decision to proceed (SDPWO Act) planning and delivery of and Planning to the Detailed the infrastructure. (DSDMIP). Business Case.
Where the Project is Environmental declared a Coordinated Following 2.1 (allow Impact Statement Project by the DSDMIP and for an additional 2 2.2 Entire Project (EIS) or Impact SDPWO Act Coordinator-General and multiple referral months for draft 6-9 months 6–12 months2 Assessment the EIS or IAR agencies3 Terms of Report (IAR) assessment process is Reference). determined.
Placing fill or excavation Department of in a mapped watercourse Natural Riverine after DNRME 2.3 Entire Project Water Act 2000 Resources, Following Item 2.2 < 1 months4 < 1 months5 Protection Permit classification of Mines & Energy watercourses is (DNRME) undertaken.
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Assessment Preparation Assessment Item Applies To Approval Legislation Trigger Earliest State Time Agency Time Time
Operational work Project potentially that is Department of impacting fish passage 2.4 Entire Project constructing or Fisheries Act 1994 Agriculture and Following Item 2.2 < 1 months4 < 1 months5 within a mapped raising waterway Fisheries waterway. barrier works
If protected species are Department of Permit for the identified during the Nature Conservation Environment 2.5 Entire Project movement of environmental Following Item 2.2 < 1 months4 < 1 months5 Act 1992 (NC Act) and Science protected animals assessment or pre- (DES) clearing survey.
If protected plants are Protected plant found in areas to be clearing permit or 2.6 Entire Project NC Act cleared or if no protected DES Following Item 2.2 < 1 months4 < 1 months5 exempt clearing plants found in areas to notification be cleared.
If interfering with Species protected native fauna 2.7 Entire Project Management NC Act DES Following Item 2.2 < 1 months4 < 1 months5 habitat and breeding Plan places.
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Assessment Preparation Assessment Item Applies To Approval Legislation Trigger Earliest State Time Agency Time Time
Water licence to take unallocated water from the General and Strategic Reserves in the Water licence to Flinders River catchment 2.8 Entire Project take unallocated Water Act 2000 area. Will also require DNRME Following Item 2.2 < 1 months4 < 1 months5 water amendment to Gulf Water Plan and Resource Operations Plan by DNRME (not an approval).
Taking or Interfering with Operational work a watercourse after for taking or DNRME classification of 4 5 2.9 Entire Project interfering with Water Act 2000 watercourses is DNRME Following Item 2.2 < 1 months < 1 months water in a water undertaken. course
Occupy any state land DNRME (State Only on lease Permit to occupy including lease land, 2.10 Land Act 1994 Land Asset Following Item 2.2 < 1 months4 < 1 months5 land state land unallocated state land Management) and/or road reserves.
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Assessment Preparation Assessment Item Applies To Approval Legislation Trigger Earliest State Time Agency Time Time
DNRME (State Irrigation Permit to close 2.11 Land Act 1994 Realign stock route. Land Asset Following Item 2.2 < 1 months4 < 1 months5 Areas stock route Management)
Operational work Where the works require Vegetation 2.12 Entire Project to clear native the clearing of regulated DNRME Following Item 2.2 < 1 months4 < 1 months5 Management Act 1999 vegetation vegetation.
If there is a significant residual impact on a Environmental Offsets 2.13 Entire Project Offset Strategy prescribed environmental DES Following Item 2.2 < 1 months4 < 1 months5 Act 2014 matter.
Cultural Heritage To demonstrate Cultural Aboriginal Cultural Concurrently with 2.14 Entire Project Management Heritage Duty of Care. DATSIP - - Heritage Act 2003 item 2.2 Plan
Extractive and/or Environmental screening activities more Rockfill Environmental Concurrently with 2.15 Protection Regulation than 5,000 tonnes per DES < 1 months4 1-3 months5 Borrow Pits Authority item 2.2 2019 year.
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Assessment Preparation Assessment Item Applies To Approval Legislation Trigger Earliest State Time Agency Time Time
3. Local Approvals
Material Change Shire of Flinders Material change of use Flinders Shire 3.1 Entire Project of Use - Utility Following Item 2.2 < 1 months4 < 1 months5 Planning Scheme V1.1 for “other use”. Council construction
Operational work involving excavation and Operational work filling in the Rural zone Shire of Flinders Flinders Shire 3.2 Entire Project that is excavation for urban purposes that Following Item 2.2 < 1 months4 < 1 months5 Planning Scheme V1.1 Council or filling involve disturbing more than 2500 square metres of land.
Alteration or improvement to Alteration to the local Local Law No. 1 Flinders Shire 3.3 Entire Project local government government-controlled Following Item 2.2 1 month4 1 month5 (Administration) 2015 Council controlled areas road. and roads
1 Statutory timeframe. 2 Non-statutory timeframe and based on recent experience. 3 Other agencies will be determined by the CG and may include: Department of Agriculture and Fisheries, Department of Environment and Science, Department of Natural Resources, Mines & Energy, Department of Transport and Main Roads, Department of Aboriginal and Torres Strait Islander Partnerships, National Native Title Tribunal and Flinders Shire Council. 4 Application information would be developed through the EIS or IAR process. 5 It is assumed the assessment timeframes will be reduced due to undertaking the coordinated project process.
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15. SUSTAINABILITY ASSESSMENT
15.1 Key Points
▪ The Reference Project was assessed against the thirteen sustainability goals in the Building Queensland Business Case Development Framework, BCDF (Building Queensland, 2016)
▪ Both scenarios were assessed against the 13 criteria
▪ Option 1 Diversified Cropping rated higher in many categories due to its greater impact on more criteria.
15.2 Purpose
The purpose of this chapter is to identify sustainability issues considered relevant to the Reference Project and scenarios.
15.3 Overview
Utilising a sustainability assessment assists with comparison and contrast analysis, especially the economic, social and environmental impacts of the Project. This chapter outlines the process and results although noting this is very early in the process and the ratings have not been subject to community consultation or third-party reviews.
15.4 Approach
A well- recognised and suitable process was adopted to consider the relevant material. The BQ Business Case Development Framework (Building Queensland, 2016) was selected as it had been used recently on contemporary projects.
The information gathered for the development of the PBC was used for this assessment. No further information collection exercises or studies were undertaken as the information previously captured was considered as comprehensive enough for this stage of the Project.
Chapters 14, 16 and 17 and relevant Appendices were used as the prime data input sources.
Options were assessed against each goal and criteria as defined in Table 15.1.
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Table 15.1 Options Assessed by Goal and Criteria
Impact Contribution Description
Uncertain Current data leads to uncertainty defining impact
No impact Assessed option makes no impact on the sustainability goal
Minor Positive Option assessed as having a Minor Positive impact on the sustainability goal
Medium Positive Option assessed as having a Medium Positive impact on the sustainability goal
Major Positive Option assessed as having a Major Positive impact on the sustainability goal
Minor Negative Option assessed as having a Minor Negative impact on the sustainability goal
Medium Negative Option assessed as having a Medium Negative impact on the sustainability goal
Major Negative Option assessed as having a Major Negative impact on the sustainability goal
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Table 15.2 Sustainability Assessment for Diversified Cropping Scenario (Scenario 1) and Grazier Support Scenario (Scenario 2)
No Sustainability Goal Scenario 1 Diversified Cropping Scenario 2 Grazier Support Comments
1 Diverse and resilient economy Major Positive Medium positive By its nature most data indicates Scenario 1 provides materially higher improvements
2 Higher levels of productivity and economic Major Positive Medium Positive efficiency
3 Increased trade or exports Major Positive Medium Positive Each scenario will fundamentally improve trade but exports more likely for Scenario 1
4 More competitive industries Medium Positive Medium Positive Competition per sector will likely be enhanced with more products available in the regional markets
5 Fairer distribution of income Uncertain Uncertain Both options will provide income to the local community however no assessment has yet been made about the impacts of fairness and holistic income distribution
6 Improved public safety Moderate positive Moderate positive Road and river crossing upgrades will likely be required. Mental health issues will also likely be improved with injection of cash and more positive outlook. Investment will also likely attract more services and specialist medical providers
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No Sustainability Goal Scenario 1 Diversified Cropping Scenario 2 Grazier Support Comments
7 Social cohesion and inclusion Minor positive Minor positive Unable to quantify however a more prosperous community adds to community well being and sense of place and ability to enhance community identity
8 Equity Medium positive Minor positive Difference in the application of the water available will likely open up equity injections across market sectors. As more sectors are involved in Scenario 1 there is likely more equity opportunities
9 Preserving healthy landscapes Minor Positive Minor Positive Few if any immediate local issues. Both projects could actually enhance if sustainable practices used for construction and operations including wildlife corridors /road fencing/erosion controls
10 Reducing loss of habitat and biodiversity Minor negative Minor Negative If Reference Project is adopted then some EFOs may be impacted however water will be held in the landscape longer and will create habitat and attract transient or ephemeral species
11 Increasing the efficient use of energy and Major Positive Medium positive The potential to use sustainable amounts of water resources water from the Flinders River as it passes Hughenden is currently unrealised. It can be transformational for the region. Pumps will be
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No Sustainability Goal Scenario 1 Diversified Cropping Scenario 2 Grazier Support Comments
used only as required since the scheme is predominantly a gravity system
12 Protecting sites with heritage, indigenous No impact No impact Initial mapping indicates no issues of concern and cultural value however a more detailed investigation will provide more information
13 Enhancing the liveability and amenity of Major Positive Medium positive As this project injects economic stimulus into urban centres the economy the propensity for businesses and local government to provide more social infrastructure and places of connection will be enhanced
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15.5 Summary of Assessment
Although unquantified and preliminary in nature the assessment shows the project has predominantly major or medium positives with few negatives. Further quantification of the analysis will be required as part of the next phase of the project however at this preliminary stage no major sustainability issues have been identified.
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16. ECONOMIC ANALYSIS
16.1 Overview
The Hughenden Irrigation Project is a potential game-changer for the Hughenden region. Without intervention, the Hughenden and wider Flinders region is forecast to see declines in population and employment. The reduction in employment opportunities has had a significant impact on the town, with the number of businesses in the region declining. This Project has the potential to not only inject employment into the local community but also provide a significant regional economic improvement well into the future.
Economic and financial/affordability assessments have been undertaken for the Reference Project by the specialist economic consulting company NineSquared Pty Ltd (NineSquared).
The economic analysis considers the broader costs and benefits that might flow to the community through an economic contribution analysis and the direct impacts of the Project through the cost-benefit analysis. The financial analysis considers the project as a stand- alone investment, rather than assessing broader costs and benefits that might flow to the community. This analysis is also important to assess how affordable the project might be to the potential funders of the project, notably the customers (irrigators) and the Government.
Technical Reports on the economic and financial/affordability assessments are included in Appendices M and N respectively. These assessments also relied on outputs from the agronomic studies for which Technical Reports are included in Appendix J.
This section provides a summary of the outcomes of the economic assessment. The main findings are:
▪ The benefits associated with increased agricultural production do not outweigh the Project’s capital and ongoing expenditure. As a result, the benefit-cost ratio (BCR) for the Project is estimated under the Diversified Cropping scenario at 0.72, indicating that for each dollar invested in the Project, 72 cents are returned in direct Project benefits.
▪ While higher value cropping requires more water for production, the gross margins are larger, and the capital cost requirements are lower which results in a higher BCR when compared to a Grazier Support scenario (which has a BCR of 0.47). However, this Diversified Cropping scenario attracts more risk, particularly the willingness for farmers to produce intensive horticulture in a region where this cropping has a very limited track record to date.
▪ Despite the BCR being below 1 under either of the scenarios tested, the Project has the potential to lead to significant positive economic shifts in the region. This is primarily driven by the ongoing employment impacts in the agricultural sector.
▪ Without intervention, the outlook for Hughenden and the wider Flinders region is for declining population and employment. Investment in the water and agricultural sectors
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has the potential to not only slow the decline, but to spark additional investment in the region, leading to increased opportunity and economic growth.
▪ In addition to the local economy impacts quantified in this assessment, there is the potential for additional job opportunities to be generated in the longer term if the Project proceeds. This includes the attraction of new support industries or the expansion of existing industries due to the improved opportunity.
16.2 The Regional Economy
The most recent 2016 Australian Census counted the population of the town of Hughenden at around 1,100. The Flinders Shire, in which it is located, had an estimated population of around 1,500 in 2017. The Shire’s population peaked at over 3,000 residents during the 1960s and has declined significantly in the decades since.
In fact, over the last two decades the Flinders Shire has experienced the fourth highest rate of population decline across Queensland with a total decline of almost 30% over the period. Further, over the last five years, the Shire has exhibited an average rate of population decline of 3.0% per year, compared to the State-wide average increase of 1.6% per year.
Continuation of this decline, in the absence of regional economic growth initiatives, has the Shire population projected to decline to around 1,260 by 2031, a further decrease of approximately 17% from the most recent population estimate. Figure 16.1 illustrates the historical decline in population along with the forecast continued decline.
Population (Historical) Population (Forecast)
2,500
2,000
1,500
1,000 POPUALTION
500
0 2000 2005 2010 2015 2020 2025 2030
Figure 16.1 Population in Flinders Shire (Source: Australian Bureau of Statistics)
Similarly, the total number of people employed in the Flinders Shire has declined and across all sections of the local economy. The number of businesses, including farming enterprises, has also declined.
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The Flinders Shire economy is mostly comprised of:
▪ Primary production (farming and to a much lesser extent mining) of which agriculture and beef production is dominant.
▪ Transport-related services.
▪ Tourism-related services.
▪ Support services to primary producers and mines and the broader community, including local government administration, health, education, and hospitality.
Table 16.1 demonstrates the industry shift in employment for the region. Since this time, the transport, postal and warehousing share has further declined due to the reduction in Aurizon jobs during 2017.
Table 16.1 Share of Employment in Flinders Shire, by Industry (Source: Australian Bureau of Statistics)
Industry 2011 (% Share) 2016 (% Share)
Agriculture, Forestry and Fishing 35.3 35.2
Public administration and safety 11.4 12.7
Transport, Postal and Warehousing 11.9 8.2
Retail trade 8 7
Education and training 5.8 5.5
Accommodation and food services 5 4.9
Health care and social assistance 4.1 4.7
Construction 5.9 4.3
Administrative and support services 1.3 2
Electricity, Gas, Water and Waste Services 0.9 1.5
Manufacturing 2.7 1.4
Wholesale trade 0.8 1
Mining 1 0.9
Professional Scientific and Technical Services 0.7 0.9
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Industry 2011 (% Share) 2016 (% Share)
Financial and insurance services 1 0.6
Rental, Hiring, and Real Estate Services 0.9 0.4
Arts and recreation services 0.3 0.4
Other services 2.1 2.5
Total persons employed (no.) 898 (total no.) 795 (total no.)
Based on the Australian Bureau of Statistics Socio-Economic Indexes for Areas index – which measures socio-economic disadvantage – the Flinders Shire exhibits higher level of disadvantage than more than half of the local government areas in Australia.
While the unemployment rate in the Shire is below the State average, this is driven by population decline, rather than being representative of a high level of employment opportunities in the region. Accordingly, the number of people in employment declined by around 12% between 2011 and 2016.
While estimates of the Gross Regional Product (GRP) for the Flinders Shire specifically are not available, the Queensland Government Statistician’s Office published data over the period from 2000-01 to 2010-11, showing that the GRP for the North West region of Queensland (which Flinders Shire is a part of) grew at 0.1 per year, well below the State average.
The conclusion is that without significant regional development it is likely that Flinders Shire will experience further decline. This provides an important backdrop to the need for a large- scale regional infrastructure project such as the Hughenden Irrigation Project.
16.3 The Project
Following an options analysis exercise, the project was defined as comprising a suite of bulk water infrastructure (dam, diversion channel and in-stream weir) and distribution infrastructure (pumps and channels) to provide irrigation water to new farming enterprises. Two cropping scenarios are assessed for the project and are the subject of this economic analysis:
▪ Scenario 1 (Diversified Cropping): a mix of medium and low priority water for diversified cropping, comprising horticulture (avocados, mangoes, lemons and mandarins), grains and hay (sorghum, wheat, corn and rhodes grass hay).
▪ Scenario 2 (Grazier Support): low priority water for grains and hay production.
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Based on the availability of water, the associated reliability of the allocations, considerations of lot sizes and the conditions of the proposed site, two agricultural scenarios were provided by PeritusAg (refer Appendix J). These are summarised in Table 16.2.
Table 16.2 Volume of Production by Scenario
Crop Type Scenario 1 Scenario 2 (ha) (ha)
Avocado 900 0
Mango 600 0
Lemon 300 0
Mandarin 300 0
Rhodes Grass Hay 3,780 7,980
Sorghum 810 1,710
Corn 810 1,710
Wheat 270 570
Total production (ha) 7,505 11,351
Total water required (ML/year) 70,000 84,000
An important consideration when reviewing the chosen crop types is the volume of water and the associated priority of water required for production. While the horticulture crops are more profitable, more water is required for production. Further, the horticulture crops, being perennial fruit trees, require a higher priority water. While the agronomic assessment found that the reliability would be sufficient for production, it is recommended that this is further market-tested as part of the Detailed Business Case. The individual crop water requirements are displayed in Table 16.3.
Table 16.3 Annual Water Requirements by Crop
Crop Type Water Required Water Priority (ML/ha/year)
Avocado 16.0 Medium to High
Mango 10.0 Medium to High
Lemon 16.0 Medium to High
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Crop Type Water Required Water Priority (ML/ha/year)
Mandarin 16.0 Medium to High
Rhodes Grass Hay 8.0 Low to Medium
Sorghum 7.0 Low to Medium
Corn 7.0 Low to Medium
Wheat 6.0 Low to Medium
Market assessments were undertaken on the identified crops to determine the expected gross margins. The inputs to the gross margin analysis include the variable costs, unit outputs and farm gate returns. When combined, total costs per hectare and total revenue per hectare was determined specifically for the climate and production timing associated with the Hughenden region. Table 16.4 summaries the total cost per hectare, total revenue per hectare and the resulting gross margin by crop type. Adjustments are then made to the gross margin to account for the price of water.
Table 16.4 Gross Margin Analysis
Crop Type Total Cost ($/ha) Total Revenue ($/ha) Total Gross Margin ($/ha)
Avocado $29,848.00 $44,899.92 $15,051.92
Mango $44,148.40 $50,194.20 $6,045.80
Lemon $66,600.00 $122,655.00 $56,055.00
Mandarin $51,000.00 $71,730.00 $20,730.00
Sorghum $897.00 $2,600.00 $1,703.00
Wheat $856.00 $2,275.00 $1,419.00
Corn $1,443.00 $4,200.00 $2,757.00
Rhodes Grass $3,537.00 $5,920.00 $2,383.00 Hay
While improved economic results would be generated by assuming all the production is high-value horticulture, it would be unrealistic to assume the region could immediately go from no high-value horticulture to an entire scheme of horticulture. Instead, for the first
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scenario it has been assumed that that there is a mix of broad-acre field crops which are less intensive and would not require the same level of experience and expertise.
The primary economic benefit associated with the project is the increase in agricultural production associated with improved availability of water supply. Development of agriculture in the region has previously been constrained due to the variability of water supply.
Total cost of the project is estimated to be around $500 million (varying between the two scenarios), with construction costs mostly incurred between 2022 and 2024, with the project’s first year of operation in 2025. Table 16.5 summarises the economic costs that are included in the CBA calculation, noting that Scenario 2 costs are higher because the area of irrigated land is larger. This requires additional distribution infrastructure which attracts a higher capital cost. The other cost components, namely the dam structure, the diversion channel and the in-stream weir, require the same level of capital expenditure between each scenario.
Table 16.5 Capital Costs (discounted, undiscounted) – Scenarios 1 and 2
Cost types Undiscounted ($M) Discounted ($M)
Scenario 1 (Diversified Cropping) $498.3 $380.7
Scenario 2 (Grazier Support) $512.8 $391.8
16.4 The Economic Analysis
The project is assessed using two types of economic modelling:
▪ Cost-Benefit Analysis (CBA), which assesses the costs and benefits to the community as a whole.
▪ Economic Contribution Analysis, which also assesses the wider impacts to the community as a result of the project, but through an Input-Output model estimating the impact of the project on Gross Regional Product and employment.
16.4.1 CBA Results
Scenario 1 (Diversified Cropping) generates higher economic benefits compared to Scenario 2 (Grazier Support), due to the higher returns from the horticultural production. Capital and ongoing costs are marginally higher for Scenario 2 due to a larger cropping area able to be irrigated. Headline CBA results are a BCR of 0.72 for Scenario 1, compared to 0.47 for Scenario 2.
The details of the costs and benefits identified in the CBA for Scenario 1 are summarised in Table 16.6. The Project is assumed to commence operation in 2025 and the benefits will
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accrue for a 50-year period of operations to 2074. This scenario generates higher economic benefits when compared to Scenario 2 due to the higher gross margin of the horticulture. As the results show, the additional water requirements for the high-value cropping is overcome by the higher gross margin.
Table 16.6 Disaggregated CBA Results, Undiscounted and 7% Discount Rate – Scenario 1 (Diversified Cropping)
CBA Results Undiscounted ($M) Discounted % ($M)
Capital costs $498.3 $380.7 87.2%
Ongoing costs $224.0 $55.7 12.8% (including on-farm costs, sustaining capital and maintenance)
Total costs $722.3 $436.3
Agricultural Production $1,993.1 $303.7 96.3%
Leisure Visits $35.5 $7.0 2.2%
Residual Value $186.9 $4.5 1.4%
Total benefits $2,215.5 $315.2
BCR 0.72
NPV ($M) -$121.2
The details of the costs and benefits identified in the CBA for Scenario 2 are summarised in Table 16.7. This scenario generates lower economic benefits when compared to Scenario 1 due to the reliance on lower gross-margin production.
Table 16.7 Disaggregated CBA Results, Undiscounted and 7% Discount Rate – Scenario 2 (Grazier Support)
CBA Results Undiscounted ($M) Discounted % ($M)
Capital costs $512.8 $391.8 89.0%
Ongoing costs (incremental) $248.5 $48.7 11.0%
Total costs $761.3 $440.4
Agricultural Production $1,052.3 $192.7 93.6%
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CBA Results Undiscounted ($M) Discounted % ($M)
Leisure Visits $42.6 $8.4 4.1%
Residual Value $196.3 $4.8 2.3%
Total benefits $1,291.2 $205.9
BCR 0.47
NPV ($M) -$234.5
16.4.2 Economic Contribution Analysis Results
The impacts of the project on both employment and Gross Regional Product are summarised below, as estimated on an annual basis over the 50-years of the economic analysis.
Table 16.8 Economic Contribution Results
Employment GRP ($M) (FTEs)
Scenario 1 – Diversified Cropping
Construction and Ongoing 61 $8.0 Maintenance
Agriculture 429 $64.9
Total 490 $72.8
Scenario 2 – Grazier Support
Construction and Ongoing 66 $8.8 Maintenance
Agriculture 211 $20.9
Total 277 $29.7
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16.5 Future Refinement of Modelling Assumptions
The economic analysis concludes that both the benefit and cost estimates will require further refinements, specifically in the following areas:
▪ Construction costs, including contingencies.
▪ Agricultural scenarios, namely whether higher value cropping is likely to be implemented by the market.
▪ Demand risk, in the form of the market’s willingness or ability to produce in the Hughenden region.
▪ Potential for increases in tourism, potentially where additional infrastructure is delivered.
▪ The potential for the local economy to evolve over time due to the increase in the agricultural sector.
However, such further refinements of this analysis are unlikely to change the current conclusion that the gap between the economic costs and benefits of the project are of such that a positive net present value will be a challenging result. However, the impacts to the local economy and the wider region have the potential to justify investment in the water and agricultural sectors in this region, particularly where the risks associated with construction and demand are able to be minimised in the next stages of work.
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17. FINANCIAL AND COMMERCIAL ANALYSIS
17.1 Findings and Conclusions
The Hughenden Irrigation Project is a potential game-changer for the Hughenden region. This has been discussed in Section 16. However, to generate the regional benefits described in the economic assessment, a large capital investment will be required. There will also be ongoing costs associated with operating the bulk infrastructure (dam, in-stream weir and diversion channel) and distribution infrastructure (pumps and channels).
This financial analysis has been undertaken to complement the economic assessment. It considers the project as a stand-alone investment, rather than assessing broader costs and benefits that might flow to the community. This analysis is also important to assess how affordable the project might be to the potential funders of the project, notably the customers (irrigators) and the Government.
This section provides a summary of the outcomes of the financial assessment for the Reference Project (the Financial Assessment Technical Report is included in Appendix N). The main findings are:
▪ The capital costs of the Project are estimated at $498 million under Scenario 1 (Diversified Cropping) and $513 million under Scenario 2 (Grazier Support), where the latter includes additional water distribution infrastructure to deliver water to a larger irrigation area.
▪ The funding gap for the project is estimated to be of the order of $398 million for Scenario 1 (Diversified Cropping) to $429 million for Scenario 2 (Grazier Support), as expressed in 2019 dollars. This assumes that the customers (irrigators) collectively have a willingness-to-pay $100 million for Scenario 1 and $84 million for Scenario 2 to purchase their water allocations.
▪ When account is taken of cost escalations between now and when construction and operational costs are incurred, this funding gap rises to between $435 million for Scenario 1 and $470 million for Scenario 2.
▪ There are three key revenue streams: government capital grant funding; the sale of water allocations (at the commencement of water sales); and ongoing revenues from water sales to customers. It is highly improbable that customer (irrigator) willingness-to- pay for water allocations would be anywhere near enough to negate the need for significant government funding of the Project’s capital costs.
▪ A sensitivity analysis of the impact of changes in cost and revenue assumptions to the financial results concluded that it makes little difference to this headline conclusion in most cases since the gap between capital costs and indicative water allocation charges remains large.
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▪ The assessment therefore concludes that the Project is only affordable if significant government capital grant funding is committed.
▪ The financial analysis concludes that both the costs and revenue estimates will require further refinements, including in the following areas: construction costs; irrigation customer willingness-to-pay; and pricing analysis. Ongoing funding negotiations with the Australian Government will be a central plank of these further refinements.
17.2 Approach
The financial analysis was undertaken through a conventional Financial Net Present Value approach, where all capital and ongoing operational costs and revenues are assessed over a 50-year period and then discounted back into present-day dollar terms. Table 17.1 summaries the approach taken in the financial analysis.
Table 17.1 Summary of Approach
Consideration Details
Approach Considers the monetary costs and revenues accruing to the proponent to determine whether the Project is affordable
Key Inputs Water prices
Capital costs
Ongoing costs Demand
Impacts Measured Present value of costs to construct and maintain the dam
Present value of revenues from the sale of water
Key Outputs Financial net present value (FNPV)
17.3 Project Description and Assumptions
Two cropping scenarios have been modelled as part of the financial analysis. Table 17.2 summarises the relevant details of the proposed Project and the two scenarios modelled based on the two water allocation scenarios included as part of the assessment.
Table 17.2 Key Project Details
Project Details
Reference Project The Project involves the construction of a rockfill embankment with clay core adjacent to the Flinders River on Saego station which makes use of the natural
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Project Details
topography of surrounding basalt plateau to create a suitable “off-stream” water storage facility.
Scenario 1 Scenario 1 assumes a split in production between horticulture and grazier cropping. Horticulture will require medium priority water with 30GL available, and Diversified Cropping grazier cropping will require low priority water with 40GL/year available, with a total of 70GL/year available.
Scenario 2 Scenario 2 assumes all water is allocated to grazier cropping. In this scenario a total of 84GL/year is available. Grazier Support
Table 17.3 details some of the key assumptions and the respective position adopted in the financial analysis.
Table 17.3 Key Assumptions
Key Assumption Position Adopted
Evaluation period 50 years based on IA guidance, not including the construction period. Scenario results presented using 30 years to align to the relevant Building Queensland guidelines.
Financial evaluation discount Pre-tax WACC of 7.4% adopted for FNPV. Discount rate based on the most rate recent publicly available SunWater WACC, noting a 2018 version of this discount rate was adopted in the Nullinga Dam Detailed Business Case undertaken by Building Queensland. In the absence of an established HIP construction entity with its own unique WACC, using SunWater’s as a proxy is considered appropriate due to its role as Queensland’s largest regional bulk water provider.
Base price year 2019/20
Pricing policy for fixed and Fixed and volumetric charges to be based on National Water Initiative (NWI) variable charges pricing principles, namely cost-reflective pricing for both capital expenditure and operations and maintenance expenditure.
Fixed tariffs for bulk and Options will be developed assuming government grant funding (which will not distribution schemes (Parts A be recovered from users) and one-off customer payments for water allocations and C) will off-set some of the capital cost and reduce the ongoing fixed tariffs charged to users.
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Key Assumption Position Adopted
Volumetric tariffs for bulk and Charges were developed on the assumption that only the ongoing cost distribution schemes (Parts B component is fully recovered from users, while government funding would be and D) required to support the capital component.
One-off water allocation sales Water allocation sales will be based on willingness-to-pay. The agricultural price assessment also informed the considerations for the willingness-to-pay of producers for a water allocation.
Asset Lifespans (Accounting) Asset lifespans were not available for each asset type. Without specific information on each asset class, an assumption was made that the project will have a useful life of 80 years based on advice from Engeny.
Design Yield for Reference Central case assumptions for design yields have been advised by Engeny as Projects follows:
Scenario 1 (Diversified Cropping): 30GL/year of medium priority allocation and 40GL/year of low priority allocation Scenario 2 (Grazier Support): 84 GL/year of low priority allocation
Proportion of allocations Engeny provided inputs regarding the expected availability of water annually. assumed for calculating This was used to determine the proportion of allocations able to be sold for the volumetric charges purposes of volumetric charges. The values used for each scenario are as follows:
Scenario 1 (Diversified Cropping): Medium Priority – 90%
Scenario 1 (Diversified Cropping): Low Priority – 70% Scenario 2 (Grazier Support): Low Priority – 80%
Cost - Risk Adjustments Provided by Engeny. A formal risk adjustment process was not undertaken as (Planned and Unplanned Risk) part of this analysis. In place of a probabilistic risk assessment, a deterministic contingency was applied of 35% to capital items. In terms of total capital cost, contingency is approximately 26% of total capital.
Escalation Using project phases was considered the best approach for inflation estimates to reflect the long implementation lead times before the construction and operational phases. The following escalation rates have been used, based on relevant cost indices. 2.50% has been adopted for the implementation phase prior to construction and the operations phase after construction in line with long-term forecasts of inflation. The escalation rate during the construction phase is based on the Queensland Non-Residential Construction Producer Price Index from the ABS.
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Key Assumption Position Adopted
RBA Inflation Real Project Phase Nominal (p.a.) Estimate (p.a.)
Implementation costs 2.50% 2.00% 0.50%
Capital costs (during 3.07% 2.50% 0.57% construction period)
Operations & Maintenance 2.50% 2.50% 0.00% costs
17.4 Headline Financial Modelling Results
A key challenge for this Project – which is common among large regional bulk water infrastructure projects – is the magnitude of the capital costs and the size of the gap between this and the likely revenues, based on the capacity-to-pay of irrigation customers.
On the cost side, the main findings are:
▪ The capital costs are high relative to the volume of water stored, irrespective of the project scenario (e.g. medium and low priority water mix, or low priority water only).
▪ Most of the costs are those incurred during construction, which is assumed to be during the period 2022 to 2024.
▪ The dam is the most expensive component of the Project, accounting for around two- thirds of the total capital costs.
▪ The contingencies attached to each of the sub-projects account for around one-quarter of the overall capital cost estimate, which is not unreasonable at this stage of the assessment process. It would be expected to reduce as further project design and other risk-mitigation work provides greater confidence in the final capital cost estimates.
▪ The capital costs need to be considered after cost escalations are applied, as this is the best representation of the cost required to deliver the Project.
On the revenue side, the main findings are:
▪ There are three key revenue streams: government capital grant funding (timed to match the construction costs incurred); the sale of water allocations (at the commencement of water sales); and ongoing revenues from water sales to customers.
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▪ It is highly improbable that customer (irrigator) willingness-to-pay for water allocations would be anywhere near enough to negate the need for significant government funding of the Project’s capital costs.
▪ Revenues from customers – both upfront water allocation charges and ongoing charges once water sales commence – also need to be escalated, as these revenue payments in future years will be more than the current estimates.
An analysis of the impact of changes in cost and revenue assumptions to the financial results concluded that it makes little difference to the headline conclusions in most cases since the gap between capital costs and indicative water allocation charges is so large.
17.5 Water Prices
Water prices in most Queensland irrigation schemes have two categories of charges, in addition to the customer paying the upfront purchase price for the water allocation:
▪ Fixed tariffs — often referred to as Part A tariffs (in bulk water supply schemes) and Part C tariffs (in distribution systems) — are paid according to the amount of water allocation held by irrigators. These tariffs are ‘fixed’ in the sense they are set based on the size of the water allocation held by the customer, regardless of the actual water used in the year.
▪ Volumetric tariffs — also known as Part B tariffs (in bulk water supply schemes) and Part D tariffs (in distribution systems) — are charges paid per megalitre of actual water used by the customer.
Water prices to customers in Queensland irrigation schemes where there is a distribution system (i.e. taking water from the river downstream of the dam through irrigation pumps, channels, pipes, etc. to farms) can therefore have up to four tariffs, as summarised below. This is in addition to any one-off price paid to buy the water allocation.
Table 17.4 Water Tariff Structure
Tariff Bulk System Distribution System (Weir, Diversion Channel, (Pumping, Channels) Dam)
Fixed tariff (per ML of allocation) Part A Part C
Volumetric tariff (per ML of water sales) Part B Part D
The financial analysis undertaken simplifies this approach to pricing as shown in Figure 17.1, which is based on:
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▪ it is assumed that all capital-related charges (with the exception of “capital refresh” costs1) are included in the water allocation charge, which is paid upfront by the customer (the amount of which will be impacted by the level of any government grant funding as discussed later); i.e. the ongoing A and C tariffs are included in the upfront water allocation charge.
▪ once water deliveries are made to customers when the Project becomes operational, all ongoing costs of storing and distributing the water are paid on a volumetric basis by customers via the B and D tariffs.
▪ in existing Queensland irrigation schemes, there are additional A and C tariffs that customers are charged every year, but these are not likely to be anywhere near as significant a cost as the capital costs of constructing the infrastructure.
▪ this simplification of the pricing arrangements is considered appropriate for a Preliminary Business Case assessment and can be further refined once costs are subject to further refinement in any subsequent feasibility assessments of the Project.
Capital Expenditure Ongoing Charges
A B Bulk Bulk
C D Distribution Distribution
A + C Capital Refresh
Water Allocation Charge Ongoing Cost
Figure 17.1 Water Pricing Approach
17.6 Future Refinement of Modelling Assumptions
The financial analysis concludes that both the costs and revenue estimates will require further refinements, specifically in the following areas:
1 Capital refresh costs are those costs that are incurred once the project is operational which are necessary to maintain the service delivery capacity of the infrastructure. Specifically, capital refresh costs relate to capital cost items which reach the end of their useful life prior to the end of the evaluation period. For this project it includes the replacement of pump components after 25 years of operation.
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▪ Construction costs, including contingencies;
▪ Irrigation customer willingness-to-pay, including taking into account the water reliability estimates;
▪ Pricing analysis, including the apportionment of capital costs across different classes of water users (i.e. where those with more reliable water allocations pay proportionately more in their ongoing water charges);
▪ Government funding capacity.
However, such further refinements of this analysis are unlikely to change the current conclusion that the gap between the financial costs and benefits (revenues) of the Project are of such a magnitude that significant government capital funding grant will be required. The other studies undertaken for this Business Case, particularly the Economic Analysis Report (Appendix M), provide justification for public investment of this nature.
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18. AFFORDABILITY ANALYSIS
18.1 Key Points
1. The assessment is limited to the assumptions and uncertainties made for major inputs such as government contributions, available water, construction costs and revenue inputs, particularly farm revenues and the ability and interest to pay for water.
2. Given these assumptions affordability is considered as medium given the high capital costs balanced by the indicative revenues and improvements to the base case forecasts.
3. Operational expenditure is expected to be funded annually from water tariffs (Part B and/or Part D) depending on the ownership model adopted.
4. The Project shows low affordability if all funds are required from the customers.
5. The Project is affordable if there is a material government injection of funds and agreement on cost apportionment and water allocations can be achieved.
18.2 Purpose
This section outlines the main considerations and assumptions made for the purposes of the preliminary Affordability Analysis. Further details on the Affordability Analysis are included in the Financial Assessment Technical Report in Appendix N.
18.3 Method
As the options included the two different cropping scenarios (Diversified Cropping and Grazier Support), both were assessed against current estimates of costs, modelled and assumed water volumes and water pricing benchmarks.
No scenarios involved the provision of water for town supply and drinking water therefore all water was modelled for agricultural purposes.
Step 1 calculated the required payment from potential clients. The analysis reviewed the up-front allocation charge farmers would need to pay in order fully fund the capital costs (i.e. negate the need for government funding). To undertake this analysis, the capital costs of the Project were compared to the water allocation in each scenario. Where a higher cost per megalitre results, farmers would be required to pay a higher initial allocation cost. Table 18.1 shows the discounted and undiscounted costs for both scenarios.
Loan funding or concessional funds have not been incorporated into the analysis at this time as these will require higher costs as interest payments and return on risk will be required.
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Step 2 assessed the ‘gap’ between the capital available from a benchmarked water sale price and the capital required as a grant to the project.
Table 18.1 Required Payment from Farmers (if project was fully funded)
Discounted Undiscounted
Unescalated Escalated Unescalated Escalated
Scenario 1 – Diversified Cropping
Capital Costs $375,091,787 $418,260,839 $498,300,000 $556,370,015
Yield (GL, or ‘000 ML) 70 70 70 70
Cost per ML $5,358 $5,975 $7,119 $7,948
Scenario 2 – Grazier Support
Capital Costs $386,006,559 $430,431,785 $512,800,000 $572,559,790
Yield (GL, or ‘000 ML) 84 84 84 84
Cost per ML $4,595 $5,124 $6,105 $6,816
Results are presented as both discounted and undiscounted and considered with and without escalation. The discounted figures represent the cost of the Project with considerations for the time value of money. Broadly, this captures peoples’ preference to spend money in the future rather than today. Conversely, the undiscounted results may be looked at as a total with no consideration for when expenditure is incurred.
Escalated figures are adjusted for the expected inflationary impacts over the evaluation period. Unescalated figures are unadjusted. For the purposes of funding allocations, the undiscounted escalated figures in Table 18.1 are the most relevant as this an estimate of the cash cost of the Project at the time of construction.
Step 2 of the affordability process estimated the required government contribution if a benchmarked water price was assumed. In this analysis a price of $2,000/ML for medium priority water and $1,000/ML for low priority water was assumed. The results of this analysis are detailed in Table 18.2.
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Table 18.2 Government Contribution Required
Discounted Undiscounted
Unescalated Escalated Unescalated Escalated
Scenario 1 – Diversified Cropping
Capital Costs $375,091,787 $418,260,839 $498,300,000 $556,370,015
Up-Front Payment $52,597,060 $65,686,520 $100,000,000 $121,840,290
Government $322,494,727 $352,574,319 $398,300,000 $434,529,725 Contribution
Scenario 2 – Grazier Support
Capital Costs $386,006,559 $430,431,785 $512,800,000 $572,559,790
Up-Front Payment $44,181,530 $55,176,677 $84,000,000 $102,345,843
Government $341,825,029 $375,255,108 $428,800,000 $470,213,947 Contribution
Based on the assumptions outlined, including the amount of customer contributions towards the capital costs through the purchase of water allocations, the funding gap for the Project is of the order of $398 million to $429 million, expressed in 2019 dollars.
The difference in these estimates relates to which of the two modelled cropping scenarios is adopted, as there are differing distribution infrastructure requirements and water allocations between the two scenarios.
When account is taken of cost escalations between now and when construction and operational costs are incurred, this rises to between $435 million and $470 million. This is a matter that will require further negotiations between the proponent and the Australian Government.
18.4 Conclusion
The assessment concludes, again not unlike other contemporary regional bulk water infrastructure assessments, that the Project is only affordable if significant government capital grant funding is committed. Other sources of non-customer funding sources, such as loan funding, are not considered practical, as funding sources such as these require the capital contributions to be repaid along with interest. Likewise, equity injections from government or, for that matter, private sector investors, also seem impractical at this stage, as this would require prices also covering a return to the investors.
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It is not considered feasible, based on customer willingness-to-pay for water allocations, that prices could be set which would be sufficient to cover either loan repayments with interest or a return to investors.
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19. CONCLUSIONS
The augmented desktop investigation as presented in the PBC suggests a strategic water infrastructure intervention project to meet the identified service need of improved economic outcomes within the Finders Shire region. The implementation of high value agriculture to the region is not only consistent with the Service Need but also aligns to the region’s key capabilities and utilises the natural geological and topographic advantages.
The PBC makes a strong case for further investment to refine the Reference Project and to further de-risk the project before a construction commitment is made. This can be done either through a committed and complete DBC or a staged and gated approach with commensurate funding.
The PBC shows that significant and sustainable local and regional economic growth is certain, and the lack of a reliable water supply is the key limiting factor.
The Project aligns with the key Australian and Queensland government strategies and policies relevant to this part of Australia for economic development, water and food security and drought and flood resilience.
The Project has no fatal flaws identified at the time of completion of the PBC noting the importance of resolving the water licencing and willingness to pay risks.
In overall terms the Project requires only 4% of the Mean Annual Flow from the Flinders River and utilises only 7% of the Flinders catchment area upstream of diversion and capture points.
Unallocated water and buyback or trading of existing water licences is available in the Gulf Water Plan although the product type, reliability and accessibility are still being addressed and resolved with the DNRME.
The Project will manifestly improve regional and local economic conditions and will substantially alleviate the relative disadvantage evident in the Flinders Shire.
The Project has a headline BCR for Scenario 1 (Diversified Cropping scenario) of 0.72 and Scenario 2 (Grazier Support scenario) of 0.47 and will support from 277 to 490 jobs and will have a positive impact on the GRP of up to $72.8M per year.
The potential impact to downstream flow conditions is the most significant risk for the Project and warrants further investigation in subsequent Project phases. Other risks have been assessed as medium to low and can be mitigated.
The Project requires substantial government support by way of upfront capital contribution to the value of approximately $400M which is considered highly unaffordable due to magnitude of costs however this is relative and contextualised as the Project addresses the Service Need.
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The Project has local, regional and Federal support, strategic goals and initiatives to productively use water in the northern parts of Australia and has a very good chance of success as it utilises the current skills and depth in the region and sustainably utilises an unrealised potential. It has limited downsides therefore warranting further refinement and funding commitments.
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20. RECOMMENDATIONS
As a result of the investigation and conclusion and the compelling evidence to enable a viable agricultural water supply scheme near Hughenden, it is recommended the HIPCo Board:
1. Approach the Australian Government, potentially through the North Queensland Water Infrastructure Authority (NQWIA), to progress to the next phase of the Project to refine the Reference Project, analysis and design including probabilistic risk adjusted cost assessments. 2. Consider a staged and gated approach to the DBC thereby de-risking funding exposure. 3. Commence the preparation of the scope for the full DBC or gated components. 4. If the gated component approach is adopted, seek interim funding to address remaining higher interest items while the PBC is undergoing review and critique. 5. Negotiate a new deed with the Australian Government for the development of the DBC with appropriate legal and probity advice and suitable public interest tests. 6. Engage with the State Government (through DNRME) for review of the PBC and any suggestions or advice for inclusion in the scope for DBC. 7. Engage with Infrastructure Australia to provide opinion and recommendations on the scope of the next phase of work. This will likely entail a review of the PBC and appendices and a ‘gap analysis’ with a focus on DBC specification. 8. Engage with SunWater to provide opinion and recommendations on the scope of work for DBC and make comment and provide strategic advice. 9. Establish a governance and review structure to deliver the DBC (with appropriately qualified individuals or expert advisors/panels) and engage the market as required for prudent and efficient delivery of DBC or in defined stages as suitable. 10. Continue the stakeholder engagement process with DNRME for allocation of water and include the required studies in the next phase of work to quantify risk of changes to downstream flows and EFO compliance and amendments to the Gulf Water Plan. 11. Continue de-risking activities including geotechnical investigation for critical infrastructure design work. 12. Engage the market as soon as funding allows to establish ‘willingness to pay’ parameters. 13. Develop ownership and operational models consistent within Government requirements for public funding, allocation of risk, efficient and contemporary operational use, realistic and economic returns and market opportunities, and contemporary asset management approaches. 14. Continue with stakeholder engagement to ensure both public interest, sustainability, and cultural and indigenous issues are managed and reflective of contemporary expectations. 15. Explore efficiency options in the scope of works of the DBC to minimise evaporation and other environmental losses, use of protected agriculture and technology to maximise water use efficiency.
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16. Commit further resources to investigate land suitability and land preparation to enable the proposed cropping strategy, or include sensible modifications, to be successful. 17. Refine pricing, financial and economic models based on updated costs and projected revenues including willingness to pay surveys.
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21. QUALIFICATIONS
a. In preparing this document, including all relevant calculation and modelling, Engeny Water Management (Engeny) has exercised the degree of skill, care and diligence normally exercised by members of the engineering profession and has acted in accordance with accepted practices of engineering principles.
b. Engeny has used reasonable endeavours to inform itself of the parameters and requirements of the project and has taken reasonable steps to ensure that the works and document is as accurate and comprehensive as possible given the information upon which it has been based including information that may have been provided or obtained by any third party or external sources which has not been independently verified.
c. Engeny reserves the right to review and amend any aspect of the works performed including any opinions and recommendations from the works included or referred to in the works if:
(i) Additional sources of information not presently available (for whatever reason) are provided or become known to Engeny; or
(ii) Engeny considers it prudent to revise any aspect of the works in light of any information which becomes known to it after the date of submission.
d. Engeny does not give any warranty nor accept any liability in relation to the completeness or accuracy of the works, which may be inherently reliant upon the completeness and accuracy of the input data and the agreed scope of works. All limitations of liability shall apply for the benefit of the employees, agents and representatives of Engeny to the same extent that they apply for the benefit of Engeny.
e. This report does not provide legal advice.
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