THE replacement Dungowan Dam project being dead in the water will cause "real problems", New England MP Barnaby Joyce said.
The Labor government called time on the project in its federal budget, taking off the table $595 million previously committed by the former government in a split bill with the state, "as the business case did not provide sufficient support for construction of the project".
"All the work that's been put in by the people in the city of Tamworth, and the Peel Valley has been lost after so many years of work to try and get this dam," Mr Joyce told the Leader.
"This means that in the city of Tamworth, we now have the prospect of a growing city, further water restrictions.
"People who come to our city to set up businesses for their manufacturing, how are they going to do it if we can't offer them water security?"
"Dungowan Dam is gone," he said.
"That is an incredibly bad outcome for the city of Tamworth and for the Peel Valley.
"That means the amount of water we've got for the city of Tamworth goes down, not up. And so this has real ramifications, and it's so disappointing."
The decision to stop the spending should come as no surprise, according to Tamworth Water Security Alliance member Graham Carter.
"We're very happy that it's happened, but also have a sense that this needed to happen, it took so long for it to happen, how can you be happy about something that wasted 10 years of opportunity for Tamworth?" he said.
The replacement dam project has been a decade-long "distraction" for the community, he said.
The federal government's decision to stop funding was "logical", he said, because the project was "uneconomic, it was unneeded, and there were other cheaper alternatives available".
The solution is recycling, Mr Carter said, and is calling for the state government to invest in water recycling for Tamworth.
New England MP Mr Joyce said alternative water methods are "fanciful green ideas".
"It's like saying do you have an alternative to eating? I suppose you could have lots of milk. It's not as good as having chops and eggs," he said.
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