Mr Oliver fears Castlemaine’s water security has been overlooked and the local community needs to be really careful.

“It is worth remembering that in February last year, the Labor government was warning that Castlemaine had enough water to last only until the end of 2010 if the rains continued to fail,” he said.

“Coliban Water’s own contingency strategy paper, issued last year, ranked Castlemaine’s water security as low.

“In fact it had the lowest level of water security of any population centre in the region.

“One reason why it was officially ranked as low was that it was not connected to any other sources and its sole supply reservoirs had an 87 per cent reduction in water availability.”

Mr Oliver said Castlemaine had been deserted for more than a decade by the state government.

“Its whole statewide water policy was based on two ideas. One: it might rain soon, and two: panic if it doesn’t,” he said.

“It was short-term thinking which left Castlemaine exposed in the first place and it is short-term thinking to scrap this important connection to the Sandhurst reservoir.”

Coliban Water has not completely scrapped its pipeline plans.

Managing director Gavin Hanlon said the pipeline funding could be diverted to more urgent projects.

“It is important that we are ready to proceed with this project.

“Inflows into storages this coming winter-spring will be important in our decision,” he said.