Question Time

WATER PRICING

The Hon. D.W. RIDGWAY (Leader of the Opposition) (14:26): I seek leave to make a brief explanation before asking the Minister for Water and the River Murray a question about water prices.

Leave granted.

The Hon. D.W. RIDGWAY: South Australians are paying more for their water than at any other time in history. In part this is because the Labor government built a large desalination plant that the state cannot afford and now does not need. Today the Essential Services Commission recommended a 3 per cent reduction in the price of water. The commission's draft determination of SA Water's water and sewerage revenues, released today, says that the commission expects a significant overall reduction in the value of the regulated asset base, that is, the value of SA Water's assets will be required to implement its revenue caps.

Yesterday in another place the Premier and Treasurer told the parliament that the government had no plans to write down the value of those regulated assets. My questions to the minister are:

1. How can the price of water be reduced without reducing the value of those assets?

2. Will SA Water be instructed to reduce operating costs or to cut staff?

3. Given that Kevin Rudd last night told people, asking about his possible challenge to Julia Gillard, to take a cold shower, and given that an average shower takes 150 litres of water, does the minister expect people not to take Kevin Rudd's advice?

The Hon. I.K. HUNTER (Minister for Sustainability, Environment and Conservation, Minister for Water and the River Murray, Minister for Aboriginal Affairs and Reconciliation) (14:28): I thank the leader for his most important question. In his preface to the question he talked about having a desalination plant that we cannot afford. The fact is that we cannot afford not to have the desalination plant. Where is his memory? A few short years ago we were under the most stringent of water restrictions that we have experienced here for many years.

The Hon. D.W. Ridgway interjecting:

The Hon. I.K. HUNTER: It was even your policy to have a desalination plant. When we maximised the investment and got federal government contributions for the other additional aspect of the desalination plant, you should have been standing up on your feet applauding us. We will come, in the not too distant future, to be very appreciative of this government's decision to have that desalination plant online. The honourable member asked questions about the assets.

The Hon. J.S.L. Dawkins: It's offline.

The Hon. I.K. HUNTER: It is not offline at all. If the honourable member who interjected knew anything about the desal plant he would know that he had been drinking desal water for the last several months.

The Hon. G.E. Gago: They haven't got a clue, Ian. They just make it up.

The Hon. I.K. HUNTER: Presumably he drinks water elsewhere. They do; they just make it up. With any question they ask you have to check the facts because they just do not know. The honourable member in his preface to the question talked about assets. I can appreciate that he does not understand how the situation works because in the last 15 days it took me a little bit to get across the difference between the asset base, owned by SA Water, and the regulated asset base, which is another beast entirely.

The regulated asset base is a construct which you create when you are taking a property into a certain deregulated market. It has nothing to do, essentially, with the asset base of SA Water: it is how you construct the transition process through to the pricing mechanism. The regulated process, and it is exactly the same process, I am advised—it was undertaken in other states—to establish a regulated asset base for the regulation process—not for the valuation of SA Water but for the regulation process. I suggest that the honourable member might go away for the next week, read up on that and come back and ask an intelligent question in a fortnight's time.

Members interjecting:

The PRESIDENT: Finished? Just relax; we have 55 minutes of this to go. The Hon. Ms Lensink.