Federal Water Minister David Littleproud has announced the formation of the panel, which he said would also look at the underlying causes of socio-economic conditions, facing communities.

"Farmers and rural communities across the Murray-Darling Basin are facing drought at the same time as the effects of Australia's biggest ever water reform occur," Mr Littleproud said.

"It makes sense to set up an independent panel and find out exactly what's happening across the whole Basin. There's a lot of debate and conflicting opinions out there - let's have an independent expert analysis of the facts."

Sussan Ley defends her fight for water in the Murray Darling Basin

1000 rally in Albury and turn fight for water into election war on Sussan Ley

Sussan Ley back and firing at Murray Darling Basin Authority over water issues for irrigators

But Southern Riverina Irrigators chairman Chris Brooks said that he had no faith in the work of the panel.

"No, absolutely not - we know the Basin is stuffed," Mr Brooks said.

"The thing the MDBA was supposed to do, and it's part of its charter, is to carry out socio-economic tests for all regions, to make sure we were all getting the benefits of the so-called triple bottom line."

He said the only test that was done was on the northern basin, which was least affected.

"They never did one for the Murray, the Murrumbidgee, or the Goulburn," Mr Brooks said.

"Now, out of the blue, Littleproud has decided he may have to do some testing, to confirm things are OK. It's just a joke - it's a waste of time."

Barooga farmer John Bruce asked what would happen if the study showed the Basin Plan and water buybacks were destroying communities.

"Do they change the plan, even pause it?," Mr Bruce said.

"Or do they just soldier on, and the communities are collateral damage?"

He said there was no point setting up the panel if nothing came of it, and communities were already pushing to "pause the plan". He said the panel needed to look at the impact on towns such as Berrigan, Finley and Deniliquin, where there were significant job losses.