Murrumbidgee irrigation

The buyback would make the state government the de facto owner of 19 farms along the Murrumbidgee river. Photo: Nicolas Walker

THE state government wants to spend up to $148 million on what is thought to be the biggest water buyback in Australian history, making it the de facto owner of 19 farms on the Murrumbidgee River.

The precise cost is being kept secret but the deal would save an average of 173 billion litres of water each year for environmental flows - about 40 per cent more water than that used at Queensland's Cubbie Station.

A confidential business plan, representing a huge payout of public money to a handful of private owners, has been held under parliamentary privilege at the request of the state government.

Murray Valley

Giving back ... water would be returned from giant irrigation ponds to nourish wetlands downstream. Photo: Supplied

A proposal sent to the federal government includes the purchase of water rights, land and infrastructure in the Nimmie-Caira district, near Balranald in south-west NSW, plus payments to local councils. It would allow the state to fulfil much of its water buyback commitments in one hit, and leave other irrigators alone.

''We have not provided this information to the public because it is commercial-in-confidence, and that is no different to the development of any proposal,'' the NSW Water Commissioner, David Harris, said.

''We've said to the Commonwealth government that we're not uncomfortable with putting the business case in the public domain, provided all the commercial information is redacted.''

Under the buyback water would be returned from giant irrigation ponds to nourish wetlands downstream that provide a refuge for migrating birds in time of drought.

''We think this is going to provide good environmental outcomes, without a big impact on the regional economy,'' Mr Harris said. ''If people say 'landowners are going to get a premium', well, they are. That's how it works: people don't sell unless they get a premium.''

Documents obtained by the NSW Greens show government estimates of the cost ranging from $113 million to $148 million. A Greens MP, Jeremy Buckingham, called for details about the proposal to be made public.

''The Greens are in favour of ending the inefficient irrigation methods in Nimmie-Caira, but this massive water buyback proposal should not occur in secret, and I do not have confidence it is value for money and that real water is being returned to our rivers and wetlands,'' he said.

''It may be politically convenient for both state and federal governments to announce a record water buyback but we must make sure this isn't too good to be true by having scrutiny of the real monetary and water figures.''

At budget estimates hearings last week, the Primary Industries Minister, Katrina Hodgkinson, said she had been briefed on the plan and seen a summary but had not read the business proposal.

The Deputy Premier, Andrew Stoner, is named on the proclamation granting the water licences, but he told estimates that he was unaware of the buyback proposal.

Federal Liberal senator Bill Heffernan attacked the plan, claiming it inflated the cost of water. ''This is about the NSW government trying to find a way to fill the water buyback book without affecting irrigators - and good luck to them, but I think this is a fraud,'' he told the Senate .

''The states are almost putting the federal government in a situation of political blackmail by saying, 'If you don't agree to these sorts of deals, we're not going to sign the Murray-Darling Basin Plan.'''

If the Nimmie-Caira proposal is approved by the federal government as part of the plan to revitalise the Murray-Darling river system, it would mean the 19 farms would no longer divert water from the Murrumbidgee River into large holding ponds.

The state government says it wants to convert the farms to dry-land grazing, and involve local indigenous groups in land management.