THE Victorian Government is withholding Commonwealth funding for stage two of the Northern Victoria Irrigation Renewal Project.
The move is being used to boost the State Budget bottom line.
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Treasurer Kim Wells last week released the 2011-12 Budget update, which showed the State Government would spend just $36.1 million of the $150 million it had already received from the Federal Government for NVIRP stage two.
The Federal Government handed the $150 million to the Victorian Treasury on October 18 this year as part of a $1 billion deal to fund NVIRP stage two in return for 200 gigalitres of water savings.
Mr Wells' update shows the Victorian Government will deliver a Budget surplus of $148 million this financial year.
By July 1 next year, the Federal Government will have handed Victoria $175 million in return for less than six gigalitres of water savings.
Yet the Budget update shows Treasury will only dribble out $36.1 million of the federal funding this financial year and another $36.1 million in 2012-13.
An NVIRP source said the project had been on track to spend about $75 million of the stage two federal funding this financial year alone, in addition to stage one funding.
But the source said the Victorian Treasury had not handed over one cent of the federal funding since October 18.
"The longer the delay, the less opportunities we've had to plan our spending this financial year, and the greater the costs," the source said.
Opposition water spokesman John Lenders said it was tragic the Government appeared to be withholding funding from a project of national significance.
"It's truly a sad day when the State Government siphons off money to prop up its Budget bottom line," Mr Lenders said.
Victorian Water Minister Peter Walsh said every cent received from the Commonwealth would be spent on delivering the second stage of the project.
"In the first few years we negotiated additional money to allow us to balance out expense and revenue over the life of the project," Mr Walsh said.
Victorian Farmers Federation water council chairman Richard Anderson said irrigators could not afford to see a slowdown in NVIRP works.
"This isn't the Victorian Government's money, it's the Commonwealth's," Mr Anderson said.
