Question Time

Water Pricing

Mr MARSHALL (Dunstan—Leader of the Opposition) (14:26): My question is to the Premier. In light of Dr Paul Kerin's recent comments, will the Premier now admit that South Australians are paying hundreds of millions of dollars more for water than they should be?

The Hon. A. KOUTSANTONIS (West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy, Minister for Small Business) (14:26): I welcome the opportunity to correct the confused and misleading statements Dr Kerin made to the Budget and Finance Committee last Friday concerning SA Water's—

Mr Whetstone interjecting:

The SPEAKER: The member for Chaffey is called to order.

Mr Tarzia interjecting:

The SPEAKER: The member for Hartley is called to order.

Ms Redmond: He thinks it's funny.

The SPEAKER: The member for Heysen is called to order.

Mr Gardner interjecting:

The SPEAKER: The member for Morialta is called to order.

The Hon. A. KOUTSANTONIS: —profitability and appropriate role for the economic regulator ESCOSA. In considering the issues that have been raised, it is important to understand the framework through which the government makes its decisions. The primary guiding principle for economic regulation is that prices should be set at a level which generates revenue sufficient to cover the efficient operating cost.

Ms Chapman interjecting:

The SPEAKER: The deputy leader is called to order.

The Hon. A. KOUTSANTONIS: It includes a market-based return on the assets that are required to efficiently deliver the services provided. If prices are set below this level, then there is insufficient incentive for the service provider to deliver services to an acceptable standard for the quantity, which would not be in the long-term interests of the consumers. In the case of SA Water, charges faced by customers would be higher if it was not for a range of taxpayer-funded subsidies such as a community service obligation for the additional costs above the metropolitan cost of supplying water and sewerage to country regions worth around, sir, $107.6 million. Your voters, your constituents, your electorates—we subsidise them, and you want to take it away.

The SPEAKER: The Treasurer, much as he believes that he cannot be called to order or warned in the course of his answer, will address the Chair. I presume he was not addressing the Chair. He was not referring to Croydon electors, and so he is called to order. It is not Glendi now.

The Hon. A. KOUTSANTONIS: I'm not sure what the reference means, sir, but I'll take it on the chin anyway—concessions for pensioners worth around $46 million per annum and investments made to secure the state's long-term water security.

An honourable member interjecting:

The Hon. A. KOUTSANTONIS: Hang on a second, desperate man. Water bills in South Australia are higher than those in the Eastern States which reflects the high cost of providing water due to our climatic and geographical circumstances, that is, we are the driest state in the driest country in the world. Rainfall is lower and the natural catchment capacity is limited to around 60 per cent of annual demand. The additional capacity must be piped long distances from the River Murray or produced from the desalination plant, both of which incur additional costs.

What Dr Kerin actually wants is for taxpayer subsidies to be increased so that water prices can be lowered. Critically I need to say right here and now that that is not a decision for an independent regulator but one that can only be made by the elected government and the parliament. Dr Kerin was not, and is certainly not, in a position to reach judgements about difficult budget trade-offs. It is not his role; it is the government's role.

Let's consider those budget trade-offs. What would be needed to achieve the taxpayer subsidies that Dr Kerin is recommending in his remarks to Budget and Finance? To fund the $150 million that he proposes taxpayer subsidies should be increased by will require an increase to payroll tax from 4.95 per cent to 5.6 per cent, a 41 per cent increase in private land tax collections or a reduction in nearly 1,700 FTEs across the public sector.

I again reiterate that these decisions are not for the regulator. Dr Kerin raised the issue of water demand forecast implying that his preferred option—

Members interjecting:

The Hon. A. KOUTSANTONIS: Oh okay, you don't want the answer.

The SPEAKER: Supplementary.