House of Assembly Fifty-Third Parliament, First Session (53-1) 53 1 Parliament of South Australia House of Assembly published Question Time Water Pricing Water Pricing Mr MARSHALL House of Assembly Dunstan Leader of the Opposition Water Pricing Mr MARSHALL (Dunstan—Leader of the Opposition) (14:31): What methodology does the government use to determine the regulated asset base here in South Australia? Ms Chapman interjecting: The Speaker House of Assembly The SPEAKER: The deputy leader is warned. Mr Marshall interjecting: The Speaker House of Assembly The SPEAKER: The leader is called to order for sharing the offence of the deputy leader. The Hon. A. KOUTSANTONIS House of Assembly West Torrens Minister for Finance Minister for State Development Minister for Mineral Resources and Energy Minister for Small Business The Hon. A. KOUTSANTONIS (West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy, Minister for Small Business) (14:32): Dr Kerin raised the issue of water demand forecast implying that his preferred options of 173 gigalitres for 2013 should have been used rather than the 190 gigalitre predictions adopted by the government. Ms Chapman interjecting: The Hon. A. KOUTSANTONIS House of Assembly The Hon. A. KOUTSANTONIS: You'll be asking this next; you are so predictable. The Speaker House of Assembly The SPEAKER: The Treasurer is warned for responding to interjections and not addressing his remarks through the Chair. The Hon. A. KOUTSANTONIS House of Assembly The Hon. A. KOUTSANTONIS: Thank you, sir, so you will be warning the interjector as well? The Speaker House of Assembly The SPEAKER: I already have in the instant before I warned you. The Hon. A. KOUTSANTONIS House of Assembly The Hon. A. KOUTSANTONIS: The experience of the last two years confirms that the projections adopted have been more accurate. Ms Chapman House of Assembly Ms Chapman: The asset base. The Hon. A. KOUTSANTONIS House of Assembly The Hon. A. KOUTSANTONIS: I'm getting to that. The average consumption of the last two years was 188.5 gigalitres— Mr MARSHALL House of Assembly Mr MARSHALL: Point of order: standing order 98, relevance. The Hon. A. KOUTSANTONIS House of Assembly The Hon. A. KOUTSANTONIS: They don't want the answer. Mr MARSHALL House of Assembly Mr MARSHALL: It was about the regulated asset base not about the demand. He is reading off the script, sir, and the script is wrong. This is about the regulated asset base. The Speaker House of Assembly The SPEAKER: That is very close to turning a point of order into an impromptu speech and we all know the consequences of that. I will listen carefully to the Treasurer. The Hon. A. KOUTSANTONIS House of Assembly The Hon. A. KOUTSANTONIS: The experience of the last two years confirms that the projections adopted have been accurate. The average consumption for the last two years— Mr MARSHALL House of Assembly Mr MARSHALL: Point of order, sir: I ask you to rule on relevance, standing order 98. The Speaker House of Assembly The SPEAKER: Would you care to repeat the question? Mr MARSHALL House of Assembly Mr MARSHALL: What methodology does the government use to determine the regulated asset base here in South Australia? The Speaker House of Assembly The SPEAKER: So we have moved on from that carefully constructed first question, 'Will the Premier now admit?' to 'What methodology?' Treasurer—to your text. The Hon. A. KOUTSANTONIS House of Assembly The Hon. A. KOUTSANTONIS: Yes, sir. Under previous governments, South Australia— Ms Chapman interjecting: The Hon. A. KOUTSANTONIS House of Assembly The Hon. A. KOUTSANTONIS: Calm down—suffered from a lack of significant investment in water infrastructure. The asset base at the time was set on accounting values based around replacement cost. These were calculated by SA Water, as they still are. Ironically, given the amount of criticism levelled at the government by the opposition, their method of calculating water asset base for the state was, although not subjected to our regulatory controls, essentially the same as the current method. It is the same method the Liberal Party used when they were in office—exactly the same. You have to ask yourself how little does the opposition know about this process. The previous Liberal government was doing such a fine job of actually setting the prices base and the assets base that, in 2001, the National Competition Council noted that the transparency of the pricing process was an issue of concern. It was this government that undertook to address the issue with the inception of the transparency statement, a process in 2004-05— Mr MARSHALL House of Assembly Mr MARSHALL: Point of order: 98, sir. The Speaker House of Assembly The SPEAKER: No, I think the Treasurer is about the mark. Mr Marshall interjecting: The Hon. A. KOUTSANTONIS House of Assembly The Hon. A. KOUTSANTONIS: I know you're having a bad year. Members interjecting: The Hon. A. KOUTSANTONIS House of Assembly The Hon. A. KOUTSANTONIS: That's alright—you are now the most senior opposition Liberal leader in the country. You can now boss around whoever gets in in Victoria. Ms CHAPMAN House of Assembly Ms CHAPMAN: Point of order. The Speaker House of Assembly The SPEAKER: Point of order. Ms CHAPMAN House of Assembly Ms CHAPMAN: We may want to welcome you into our side of the house, but you are clearly not the most senior Liberal leader in the country. That is what he is addressing you as. The Hon. A. KOUTSANTONIS House of Assembly The Hon. A. KOUTSANTONIS: He's got more seniority than anyone else. The Speaker House of Assembly The SPEAKER: The Treasurer, alas, has to be warned for the second and final time. It would be a real pity if, under the sessional orders, the Treasurer departed the house on only the second question, because I am sure the opposition has a lot of other questions for him. The Hon. A. KOUTSANTONIS House of Assembly The Hon. A. KOUTSANTONIS: It was this government that undertook to address the issue with the inception of a transparency statement process in 2004-05 and commence the transition towards the regulatory practice that we have in place now. Since then, the regulatory asset base for SA Water has been set in accordance with accepted regulatory principles. Furthermore, we are adhering to national competition policy objectives that the government should run its businesses the same way as the private sector does, and that is, to earn a rate of return. And who began that principle? Malcolm Turnbull as water minister—Malcolm Turnbull. At the point of fully transitioning regulatory powers to ESCOSA in 2013-14 when the first pricing determination was underway, the regulatory asset base was reconsidered and set to minimise revenue and pricing impacts on any changing methods. This has been done for a range of industries around Australia. In Victoria, for example, the Minister for Water similarly sets regulatory asset values for water entities at the start of their independent economic regulation, so it is done the same way by the previous Liberal government in Victoria. In the setting of the regulatory asset base, the government sought to ensure the appropriate balance between the prices paid by customers in the future versus the value of the businesses to its shareholders—i.e. the people of South Australia, because we own the assets because you lost the election and did not get a chance to privatise it. The Speaker House of Assembly The SPEAKER: No, no, Treasurer. I didn't lose the election. The Hon. A. KOUTSANTONIS House of Assembly The Hon. A. KOUTSANTONIS: I apologise, sir. Members interjecting: The Hon. A. KOUTSANTONIS House of Assembly The Hon. A. KOUTSANTONIS: Having a bad week? Members interjecting: The Hon. A. KOUTSANTONIS House of Assembly The Hon. A. KOUTSANTONIS: I'm answering the question about the regulatory asset base. The Speaker House of Assembly The SPEAKER: Yes, but would you address your remarks to the Chair, rather than to the opposition? The Hon. A. KOUTSANTONIS House of Assembly The Hon. A. KOUTSANTONIS: Mr Speaker— Mr Whetstone House of Assembly Mr Whetstone: Both hands in his pockets. The Speaker House of Assembly The SPEAKER: The member for Chaffey is warned a first and second time, and should have been chucked for that remark, which is the second time he has made that remark. The Hon. A. KOUTSANTONIS House of Assembly The Hon. A. KOUTSANTONIS: We determined that all legacy assets would be captured in the regulatory asset base and that any new assets would be incorporated to the extent that they compromise the cost of capital to SA Water. It is important to note that there is a requirement of audit to regulatory accounts for SA Water in addition to the corporate accounts, making sure that their practices in accounting for the asset base are properly audited. The initial— Mr MARSHALL House of Assembly Mr MARSHALL: Supplementary, sir. The Speaker House of Assembly The SPEAKER: Supplementary, leader.