It was envisaged as an Afghan utopia for returned asylum seekers – a purposebuilt housing estate with running water, jobs, schools and small businesses on the outskirts of the capital, Kabul.

Funded by Australian taxpayers for about $8 million, the AliceGhan project was to provide 1400 homes for more than 10,000 refugees, some of whom were expected to have returned voluntarily from Australia.

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Residents were to be trained in construction techniques and paid as they built their homes.

Women would have access to trade and vocational training to develop income-generating life skills and would even have a childcare centre as part of the project, for which the United Nations would be the delivery agent.

But when the Australian officials planning the project couldn’t even visit the country because of security problems, warning bells probably should have started ringing.

Last year, the Immigration Minister, Chris Bowen, described the six-year-old project, conceived under the Howard government, as a ”substantial and a successful one”.

He said it was being considered for more funding as part of an agreement with Afghanistan to accept refugees returning involuntarily.

But from interviews conducted last week at AliceGhan, about 50 kilometres north of Kabul, and documents released under freedom of information laws, the Herald has found the project was handicapped by problems from the start and key objectives have not been achieved, despite the expenditure of millions of dollars.

Asked last week about extra funding planned for the project, the Immigration Department said no more would be spent until water supply issues had been resolved.

The decision to halt further funding comes as the Australian government is spending $165 million on aid projects in Afghanistan in 2011-12, according to figures from the Department of Foreign Affairs and Trade.

When the Herald visited the snow-covered site, it found most of the programs and their trainees and potential jobs were non-existent and more than 600 of the 1025 houses were still vacant and falling into disrepair.

Money spent installing a permanent water supply and pipeline appeared to have been wasted, with freezing residents queuing with buckets in the snow and ice to get their supplies from a water tanker.

‘People don’t come here to live because of no electricity, water, clinic or work,” said Fazel Mohammad Attaee, the headmaster at the only school.

Immigration Department and UN documents released under FOI reveal officials had ample warning of the problems.

From the start, the planning meetings involving immigration officials and Afghan politicians had to be held as far away as India.

”Since signing of the [record of understanding, immigration] officers have made numerous attempts to travel to Kabul to progress the housing project, but because of the deterioration in security conditions, have been prevented from travelling,” said the information brief to the then immigration minister, Amanda Vanstone.

But the meeting issue was nothing compared with some of the others that soon emerged.

During the project’s development, there was an attempt to bomb aid workers as well as problems with land claims from neighbouring communities, fake refugees, squatters, a row over water rights and corrupt police seeking bribes from contractors.

In 2007, the water supply issue was signalled after the location was changed and Australian officials started warning of problems on the landmine-infested site.

”Progress has been made in implementing the allocation project but new and potentially problematic challenges continue to emerge,” Australian embassy officials cabled Canberra on June 19, 2007.

By late July the cables warned that the project was ”running behind schedule” and by August, a cable titled ”Mounting concern at delays” was sent to Australia.

Four months later the then ambassador Brett Hackett wrote that the project was proceeding at a ”frustratingly slow pace” and tough decisions were needed ”concerning aspects of the project which will not proceed”.

By 2008, a UN quarterly project report admitted that significant problems in selecting the right beneficiaries had allowed ”many families who did not meet the eligibility criteria to gain assistance through the project”.

Of 674 candidates, 101 applicants were found to be ineligible while 41 of the interlopers had started building homes on the site, the report said.

Many of the ineligible beneficiaries refused to leave and at least twice threatened project staff with violence if they were forced out, the report said.

Residents or squatters also proved a problem by claiming ownership of some of the land and authorities said five residents had built structures. ”Attempts to remove these ineligible beneficiaries from the site have been met with resistance,” said the UN report.

Officials later conceded that some who had already built structures could stay.

In September 2008, in a sign of increasing tensions, a landmine was placed near the AliceGhan site on an unsealed road used regularly by a non-government organisation for water transport.

Another flaw was the proposed requirement for potential residents to learn construction skills by building their homes.

Officials found nearly all the beneficiaries hired contract labourers to build their houses, which undermined the objective.

Corruption was also a problem. In mid-2008 a UN quarterly progress report revealed local police were stopping contractors and demanding large sums of money.

In 2009 a neighbouring community laid claim to the project’s water supply, which was to have been piped 6 kilometres from deep wells at an estimated cost of more than $2 million.

About 250 families live at the project and residents said some classes were being held for training but they had not led to jobs. Other promised facilities had not materialised.

The AliceGhan council secretary, Amir Mohammad Amiri, said the Australian ambassador had visited last year.

‘People of the area really warmly welcomed her. She checked the water storage and the town. She promised to help but nothing was helped.”

A resident, Hazrat Mir, who is a mason, said: ‘People have no other option but to live here. They are poor and there is no other place to go and live.

”If they leave this area, they can’t come back. They have already spent time and money on houses here.’

The Immigration Department spokesman said extra funding would be considered only when a suitable water supply had been established by the UN Development Program and the Afghan government.

He said the water supply was delayed by a land dispute between the government and the community that owns the water resources and the Afghan government was working to resolve the issue.

A spokesman for Mr Bowen said the project had been planned and started by the previous government.

The spokesman said the Gillard government remained committed to the project despite the difficulties.

The government was working ‘hard with the UNDP and the government of Afghanistan to overcome existing hurdles and bring the project to its potential, and continues to monitor its progress carefully,” he said.

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