Question Time

WATER CHARGES

Mr HAMILTON-SMITH (Waite—Leader of the Opposition) (14:53): My question is to the Treasurer. How much will householders pay for water next financial year to reflect the blow-out in the cost of the desalination plant and revenue lost from what the Treasurer described as the government's water billing 'monumental stuff-up'?

An honourable member interjecting:

Mr HAMILTON-SMITH: You haven't done the costings yet? That's encouraging.

Ms Chapman: It's a worry!

The SPEAKER: Order!

Mr HAMILTON-SMITH: The government revealed this time last year that water prices would increase by an average of 17 per cent in each year over the next four financial years. However, since then the cost estimate for the desalination plant has risen from $1.1 billion to nearly $1.4 billion, and since then the government has also admitted—

Members interjecting:

The SPEAKER: Order!

Mr HAMILTON-SMITH: —that it lost millions in revenue and costs as a result of the SA Water billing blunder.

The Hon. K.O. FOLEY (Port Adelaide—Deputy Premier, Treasurer, Minister for Industry and Trade, Minister for Federal/State Relations) (14:54): One lives in hope that at some point the Leader of the Opposition will be held accountable for both his complete lack of understanding of anything economic and financial and, in many cases, the deliberate deceit that he applies to anything relating to this government's decisions where they concern any financial or economic matter.

Mr HAMILTON-SMITH: I rise on a point of order, Mr Speaker. The Treasurer has accused me of deliberate deceit. I take offence to that and question whether or not the term is unparliamentary. I request that he withdraw it.

The SPEAKER: I think 'deceit' probably is unparliamentary. It would be best if the Treasurer withdrew.

The Hon. K.O. FOLEY: I withdraw and apologise, sir. It is the Leader of the Opposition's deliberate misrepresentation, for base political purposes, of anything to do with any decision of this government, be it financial or economic. There has been no cost blow-out in the desalination plant—

Members interjecting:

The SPEAKER: Order!

The Hon. K.O. FOLEY: There has been no cost blow-out in the desalination plant, and do you know why, sir? We have not received the tenders for the desalination plant. How can there be a cost blow-out when a contract to build a desalination plant has not been signed?

Members interjecting:

The SPEAKER: Order!

Ms Chapman interjecting:

The SPEAKER: Order! The deputy leader will come to order.

The Hon. K.O. FOLEY: I am more than happy to answer this question, but I will not try to speak above the gaggle from members opposite. If members want an answer I suggest they listen; if they do not, I am happy to sit down. In terms of the desalination plant, cost estimates are undertaken, as they are for all projects. We have been scoping the project, we have been looking at the capacity of the project, and we are putting it to tender, but this nonsense that the Leader of the Opposition went out with before question time is that: absolute nonsense. Do you know why? Because he is a tricky Leader of the Opposition. He chooses—

Members interjecting:

The SPEAKER: Order!

The Hon. K.O. FOLEY: He chooses to do a number of things when it comes to attacking this government. First, he is negative on everything, but when he gets tricky is when he knows the answer, he knows the reasons, and he tries to blame others.

Mr Hamilton-Smith interjecting:

The SPEAKER: The Leader of the Opposition!

The Hon. K.O. FOLEY: The reason that we are increasing the price of water is because of the requirement that prime minister John Howard made to the states—

Members interjecting:

The SPEAKER: Order!

The Hon. K.O. FOLEY: —the requirement—

Mr Goldsworthy interjecting:

The SPEAKER: The member for Kavel will come to order!

The Hon. K.O. FOLEY: As I said, sir, I will not attempt to talk above members opposite. They either listen to my answer or I will sit down.

Mr Hamilton-Smith: Come on!

The SPEAKER: Order!

The Hon. K.O. FOLEY: The Council of Australian Governments (COAG), at the insistence of the prime minister, entered into detailed negotiations and agreement on the National Water Initiative back in 2004. All states, except, I think, WA, agreed to the prime minister's request. Essentially, the decision taken in June 2004 was the continued implementation of full cost recovery pricing for water in both urban and rural sectors.

What that required was that state governments agreed to move towards upper revenue bound pricing of water by 2008. What does that mean? It means this: at the insistence of the federal government under both ministers (I think) Kemp, the environment minister from WA who resigned—

Mr Pengilly: Campbell.

The Hon. K.O. FOLEY: —Campbell—and then, with a lot of gusto, minister and now Leader of the Opposition, Malcolm Turnbull, this is full cost recovery plus a risk adjusted rate of return on all assets, that is, operating cost plus depreciation plus cost of capital and a margin above the cost of borrowing, which I am advised is around 6 per cent. The requirement of the National Water Initiative, imposed upon the states by the commonwealth, was that we properly priced water that reflected the cost of delivering that water. And—

Ms Chapman: Cost recovery, not blow-outs.

The SPEAKER: Order!

The Hon. K.O. FOLEY: Well, she's agreed; we signed up to cost recovery. So why are you asking the question? The deputy leader has just admitted that we had to sign up to cost recovery. Well, that is what we are doing. We have signed up to cost recovery, and we are recovering the cost of the desalination plant. That just shows the lack of sincerity in the opposition. They are attacking us—

An honourable member interjecting:

The Hon. K.O. FOLEY: A lack of honesty in the opposition.

Members interjecting:

The SPEAKER: Order!

The Hon. K.O. FOLEY: They are out there before question time saying, 'Shock, horror! The government is doubling the price of water,' but the deputy leader has just admitted that we were required to sign up to cost recovery. The ridiculous positioning that the opposition continually puts itself in has to be exposed. The deputy leader, because she cannot help herself, has agreed that we signed up for cost recovery. Well, sir, that is what we are doing: we are pricing water to recover the cost of the capital. I thank the deputy leader for answering the opposition's own question.