Joe Ross, a prominent indigenous leader appointed by Mr Rudd in 2008 to oversee a wide-ranging study into the future of economic development in the north, said the Ord River Irrigation scheme had become one of the world's largest sandalwood producers.
But the region has a history of failed food crops in rice, sugar and cotton.
Mr Ross noted Mr Rudd's northern Australia election promise on Thursday did not mention the $20 million review which found governments should invest more money in researching water resources, groundwater and salinity risks, particularly where new intensive agriculture projects were planned. "The question that has to be asked is whether the Ord has been productive in food." He said the Carnarvon agricultural region of Western Australia "dwarfed" the Ord's food output "pound for pound".
Indian sandalwood is estimated to account for about 60 per cent of the total farming area around Kununurra, about 3500 hectares, and has replaced food crops such as melons, pumpkins, legumes, chick peas and bananas.
Labor promises $10m to expand scheme
Labor has promised to spend $10 million toward the expansion of the Ord Irrigation Scheme, from 29,000 hectares to 43,000 hectares.
"This would unleash an enormous amount of agricultural land for the future, and the economists tell us $150 million worth of agricultural production from sugar-based crops and elsewhere," Mr Rudd said on Thursday. "This is about investing in a huge new project for Australia, the future of agribusiness and on top of that, you are looking at the expansion of the Ord irrigation area by one-thirdover its current size."
Mr Ross was also critical of the Coalition's plans to create a series of dams across northern Australia to capture ground water.
He said damming the water system would have a major impact on northern Australia's successful fishing industry, which is worth billions of dollars.
"The truth is, in northern Australia there are great opportunities in tourism and fisheries, let alone existing projects," Mr Ross said. "Dams would totally destroy the river systems."
High salinity, pests, diseases, transport issues and world agriculture commodity prices have taken their toll on many projects in the Ord Irrigation Scheme since the early 1960s.
Wilderness society calls scheme white elephant
This has led some critics, such as the Wilderness Society and other environmental and agriculture groups, to label the scheme a "white elephant".
Cotton crops were abandoned in 1974 after the massive use of fertilisers to combat insects rendered the industry unviable. Agriculture economist Dr David McKinna said a sugar mill built near the Ord River was closed down after stage one of the scheme because volumes were too low to be viable.
He said stages 2 and 3 of the scheme may build enough production volume to make some industries workable.
A Chinese company, Kimberley Agriculture Investments, will invest $700 million in irrigated farmland and infrastructure to re-establish a sugar industry and sugar mill. But the company now looks set to focus on sorghum as an interim or even long-term crop.
Previous attempts at sugar processing were stymied by rising salinity – five or six times sea salinity in some areas of the scheme. The high levels of salt in the sugar cane led to glazing of equipment in the now-mothballed sugar mills.
Mosaic irrigation more suitable
Agriculture experts say the complex system of seasonal groundwater and underground aquifers means small-scale, or mosaic irrigation, is more suitable for the region than broadacre irrigation.
The Wilderness Society estimates more than $1.3 billion has already been spent on the Ord River scheme. "It is perplexing the Rudd government would place more stress on the federal budget by throwing yet more money at the failed Ord scheme to seduce Chinese investment into sugar cane," said Gavan McFadzean.
"All attempts at large-scale cropping have failed, including sugar, rice and cotton. Ord Stage 2 alone has already received $517 million of taxpayer funds.
"Taxpayer support for food bowl development would be better spent assisting the existing agricultural sector with research and development, improving supply chains, finding new markets and attracting skilled labour and new capital investment.