The NSW government's approach to water management over the last decade has unduly favoured the irrigation industry and undermined the governing legislation, an investigation has concluded.
But the NSW Independent Commission Against Corruption did not find evidence of corruption in its report published on Friday.
ICAC started twin investigations called Operations Mezzo and Avon in 2017 after the ABC's Four Corners aired a program on the Murray-Darling river. Over two and a half years, the watchdog looked into allegations of corruption stretching back to 2003.
The investigation found that government departments with responsibility for water management have made decisions and taken approaches that are inconsistent with the Water Management Act, ICAC concluded.
The development and implementation of the 2012 Barwon-Darling Water Sharing Plan represented a failure to adhere to the priorities set out in the Act, ICAC found.
By repeatedly focusing on the interests of the irrigation industry, the Department of Primary Industries and predecessor agencies have undermined the water-sharing principles in the legislation.
The department shut out environmental agencies when doing stakeholder consultation because of its focus on irrigators.
The result was that environmental perspectives were sidelined from policy discussions, which were vulnerable to "improper favouritism", the report states.
In many cases, government decisions weighing economic, environmental and social concerns gave "clear precedence" to economic interests, with practical effects that were "often prejudicial" to the environment particularly in the Barwon-Darling, the report concludes.
Chronic underfunding, organisational dysfunction and a lack of commitment to compliance created an atmosphere that was overly favourable to irrigators.
But there was not enough evidence that the favouritism towards irrigators was motivated by a corrupt purpose, ICAC says.
But it has made 15 recommendations to prevent corruption in the future, including an independent review of the department's stakeholder engagement policy.
