A Labor senator has accused a major waste company of being "petulant" for withdrawing its grant for Goulburn's performing arts centre.
Senator Deb O'Neill has also affirmed the party's opposition to Veolia Environmental Services' $600 million waste to energy proposal for Tarago.
However the company has rejected the claims and defended the technology's safety.
Speaking in federal parliament last week, Senator O'Neill said the community did not want the "toxic" project approved. Goulburn Mulwaree Council had backed them in this stance.
"In a petulant reaction to a council motion opposing the incinerator, Veolia decided to withdraw its previously promised $2.5 million grant for the local performing arts centre, currently under construction and which the council had already borrowed against," Ms O'Neill said.
"They're absolutely not dealing in good faith with the community, not only imposing their will without adequate protection for the health of the community but using their power to destabilise the local economy and walking away from a commitment to benefit those who are interested in the performing arts.
"This is an appalling type of corporate citizenship, and a sign of just how little this company regards that local community."
She branded the project, designed to process up to 380,000 tonnes of Sydney's non-recyclable waste annually, as a "disaster for the community."
It would be just 5km from Tarago Public School which had already dealt with lead contamination from the rail siding, she said. Moreover, the town did not have reticulated water.
"Can you imagine...the effects on water of a waste incinerator belching fumes into the air in the drinking water of that particular community?" Senator O'Neill asked.
She said she was "proud" to stand next to Goulburn Mulwaree Council Labor candidates Jason Shepherd and Anna Wurth-Crawford in opposing the project.
But a Veolia spokesperson said the allegations were untrue.
"Veolia is, and always has been on the community's side," they said in a statement.
"Since 2004 Veolia has generously contributed over $18 million to the community, through its operational host fees and the Veolia Mulwaree Trust. We're proud of this positive impact, and as good corporate citizens, are committed to providing ongoing support to community initiatives.
"Veolia has agreed to allocate $9m of its host fees to the Performing Arts Centre, which we think is a marvellous project, to pay for the council's borrowings."
The company also spruiked its Advanced Energy Recovery Centre as being "globally proven as safe" and "significantly more sustainable than landfilling for non-recyclable waste.
"This proposed project is completely unrelated to the Performing Arts Centre and is subject to the highest legal, regulatory and planning scrutiny," the spokesperson said.
However the council has still not received an explanation as to why the $2.5m grant was withdrawn.
The company's former CEO and managing director Doug Dean had given in-principle approval for a $2m grant in 2017 but the council understood from later conversations that this would increase to $2.5m, with $500,000 to be paid upfront and the rest in $150,000 installments.
Council general manager Warwick Bennett said the Trust approved the grant in August but the company formally withdrew it in September. This was despite the fact the two entities were supposed to be separate. Veolia CEO Richard Kirkman also told The Post in August that Trust decisions were made independent of the company.
Mr Bennett said he had established that Veolia did not have veto power over the Trust but it had a majority of members in senior managers, Henry Gundry and Justin Houghton.
"We've agreed to disagree in regard to whether the grant was approved," the GM said earlier this month.
"They (the company) won't give us a reason why it was withdrawn and we've agreed to move on."
Mr Bennett said there was never any doubt over the grant's eligibility. This was despite members of the Tarago community questioning this and why $2.5m would be given to one project when smaller ones in their area had missed out.
Mayor Bob Kirk said earlier this month that Veolia's decision was "questionable." He pointed out that in between the approval and withdrawal, the council had opposed waste to energy infrastructure in this region.
"I can't say whether this is the reason (for the grant's refusal) because the Trust is independent of Veolia's management," he said.
"...I just don't find it very rational and without explanation, it is very questionable."
Cr Kirk is a Trust director. However he said he absented himself during discussions about the PAC grant.
Veolia declined to respond to questions on why the grant was withdrawn, if it was ever guaranteed and whether it was related to the council's stance. It also did not respond to requests for a copy of the Trust's minutes from the meeting at which the grant was decided.
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