ACT Chief Minister Andrew Barr says Yass Valley Council has "nothing to offer" the territory in exchange for water after being accused of bullying and trying to forcefully steal land off over-the-border neighbours.
In December last year, Yass Valley Council formally voted to keep Parkwood, an area of NSW on the border of the ACT that is earmarked for development, within the council area.
In a now deleted media release posted in 2020, the council said it had signed a memorandum of understanding with the NSW and ACT governments "that will ensure the new residential areas will be supported by services and infrastructure on the basis of cross-border agreements".
In a letter dated May 18 this year, Mr Barr told NSW Premier Chris Minns that the ACT supplying water to Yass, Murrumbateman or Bungendore was conditional on acquiring the 1000 hectare parcel. Yass Valley mayor Jasmin Jones was copied into the correspondence.
Mr Barr said water supply from the ACT to Bungendore and Queanbeyan would not be impacted.
In a May 19 council meeting, Greens Yass Valley Councillor Adrian Cameron said Mr Barr wanted to "march across the borders and take" land with force like former Canberra Liberals leader Alistair Coe, who in 2020 proposed that Googong should become part of the ACT.
"This is bullying by our neighbour, and that's really concerning given that a number of our residents do work and [contribute to] Canberra itself and the ACT region," Mr Cameron said.
Mr Barr said on Tuesday that the ACT would not supply water to neighbouring NSW towns without receiving something in return.
"Let's be clear, there's no obligation on the ACT to provide water to NSW. We do so only under an arrangement where there is something in return for us," he said.
Mr Barr said water and land negotiations were between the Commonwealth, state and territory governments, not with the Yass Valley Council.
"The Yass Council is not in a position to negotiate with us on anything because they have nothing to offer," he said.
"I just need to be clear to them: stop spending money on projects and feasibility studies and designs on the assumption you're just going to get ACT water without there being some sort of trade-off."
In April, the NSW government announced a $191,000 grant for Yass Valley Council to do a feasibility study into water transfer from Canberra to Murrumbateman.
Mr Barr said the ACT supplied water to Queanbeyan under an historical agreement that allowed the territory to access water from Googong Dam, in NSW.
"The arrangements with Queanbeyan and any extension of water rights there are that the water is replaced by the NSW government, they will give us water from somewhere else," he said.
"We're not just going to continue to extend ACT water further and further into NSW, and equally we're not going to provide services at a loss to parts of NSW that are effectively suburbs of Canberra.
"Any ACT government that just wrote a blank cheque to say, 'oh develop wherever you want on the other side of the border using our water and our services,' would be mad".
The NSW government and Yass council are jointly funding a $38.5 million upgrade to the water treatment plant, with residents having reported brown and foul-smelling water coming from taps for years.
According to a 2020 federal government report, more Australian regions are increasingly dependent on groundwater and facing water restrictions.
A 2022 Australian National University study found a gap between access to quality drinking water in regional, remote and urban areas. It said 408 regional and remote locations failed good water quality tests. Of those locations, 40 per cent of health-based non-compliances were remote Indigenous communities.
