Water Industry (Third Party Access) Amendment Bill

Second Reading

Adjourned debate on second reading.

(Continued from 24 March 2015.)

The Hon. T.A. FRANKS (15:52): I rise on behalf of the Greens today to speak to this second reading debate of this bill and want to particularly emphasise the need for better consumer protection and environmental outcomes through water reform in our contribution.

My colleague the Hon. Mark Parnell has held this portfolio for many years and the Greens have argued that water is most appropriately managed in public hands by public authorities who act in the public interest. Water is a natural monopoly and yet what we have seen in this place and in other jurisdictions is the determination of governments to artificially break down those monopolies to increase competition.

Despite what some might like you to believe, the Greens are not against competition, but ultimately what the Greens are concerned about is that the cost of breaking down this monopoly will be borne by consumers, and when private interests are involved, such as in this bill, the consumers pay not only for the cost of the services, but the cost of the profit component to the private sector operators as well.

The Water Industry Act 2012 compels the Minister for Water and the River Murray to introduce a third-party access regime to water infrastructure and sewage infrastructure services. The bill before us today amends this act by introducing a new part 9A which seeks to establish a third-party access arrangement to SA Water's bulk water pipelines. The main aim of this bill is to open up existing SA Water infrastructure to third parties. The bill does not relate to retail services or bulk water resources because South Australia's water industry is still in its infancy and therefore full retail competition cannot be established.

I presume, then, that what we will see is full retail competition in years to come, once the third-party access arrangements are well established. Therefore, it is envisaged that a third party seeking access to transport water would have access to water either through a desalination plant, a waste water recycling plant, or through the purchase of bulk water entitlements to River Murray water. The current public health environmental and safety standards are met by the bill.

The Greens believe that it is important to allow publicly owned third parties access to publicly owned water infrastructure and for third parties to play an overall role in our state's water distribution system.

We have previously spoken about how the City of Salisbury is a great example of how third party involvement can be successful and established. The City of Salisbury has been a water supplier through its innovative and award winning projects to capture stormwater and inject it into the aquifers. However, the Greens remain very cautious about how commercial third party involvement will be managed, given the experience of commercial third party access to natural monopolies and public infrastructure in the past.

We saw what can happen when we outsourced infrastructure in 2012, when maintenance of our water infrastructure was outsourced to United Water International. United Water, a French-owned company, lost its contract with SA Water because it become evident that South Australian water users paid more for water, adding tens of millions of dollars. This case was, of course, disputed in the courts, with SA Water successfully suing United Water for some roughly $6 million in claims.

I would like to put on the record some of the concerns that SACOSS have raised with my office. SACOSS (South Australian Council of Social Services) has strongly indicated that a customer impact study must be undertaken, and the Greens urge that this be done, as residential consumers have a right to know how this regime will affect them into the future. The quote from the minister's second reading speech is the basis for this position, and I quote:

The key to a well-balanced access regime is to promote greater competition, while not disadvantaging SA Water customers broadly by, for example, facilitating private providers gaining access to infrastructure in the low-cost, high-revenue sections of the network, leaving SA Water's customers to bear the full costs of the high cost/low revenue sections.

It seems the government has introduced this bill knowing it has the potential to leave residential customers with increasing costs, but has failed to quantify the impact, nor has the government addressed issues that may arise from the increase in this cost. The Greens also wish to put some questions to the minister in this second reading debate, some of which were raised in SA Water's submission, with regard to the potential impacts of this regime on customers:

1. Does the minister's department have capacity to undertake a customer impact analysis on water pricing in a third party access regime?

2. Will third party access result in additional costs for SA Water? If so, will any of those costs flow to SA Water customers?

3. Will SA Water customers pay additional costs to continue to supply water and sewerage services to a third party's customers if that third party fails and these customers are left without a water and/or sewerage provider? Also, what happens if a third party access seeker is not financially viable?

4. SA Water builds pipes and networks to cater for future population growth. If this capacity is taken up by third parties, will SA Water customers pay for this additional capacity in the future, or will these costs be taken up by the third parties?

5. Where water has been put into the water pipelines, but it is deemed unsafe, SA Water will need to release that water into the environment, and this will incur costs. SA Water may also need to provide customers with bottled water. Can the minister provide clarity about whether or not these additional costs will be paid by a third party or by SA Water customers?

6. Will the costs of spills and other loss of water be taken up by third parties instead of other customers?

7. Can the minister clarify that SA Water customers will not need to pay for upgrades to infrastructure that they have already paid for when a third party is using SA Water's spare capacity?

This bill appoints ESCOSA as the economic regulator to regulate the state-based access regime for water. ESCOSA will provide an annual report and review the access regime established under part 9A to ascertain whether the access regime should continue to apply to water and sewerage infrastructure services in SA. ESCOSA will be required to conduct a review by 30 June 2019, and I understand every five years thereafter.

In conclusion, the Greens will reserve the right to declare our position at the third reading stage. We have asked these questions of the minister and raised our concerns. We have outlined an example of what happens when a third party is given access to publicly-owned infrastructure, as well as the need to ensure that consumers are fully protected and, ultimately, are not picking up the tab for other users.

I also thank the minister's adviser, Roanna McClelland, who arranged a ministerial briefing and has both taken the time to speak to my advisers in the past weeks and to provide appropriate information upon request.

The Hon. K.L. VINCENT (15:59): Like previous speakers, I speak today, on behalf of Dignity for Disability, with some serious concerns about the Water Industry (Third Party Access) Amendment Bill. Dignity for Disability does appreciate that Ms Roanna McClelland from the minister's office arranged a briefing for my adviser to help allay some of these concerns, but we remain concerned that the questions we asked during that briefing regarding risks to increase prices for consumers have not been adequately answered by the minister despite promises that this clarity would be provided this very week.

At present, the South Australian Council of Social Services has raised a number of concerns which need to be addressed before this bill should be allowed to proceed. What exactly is open to third party pricing, what occurs with community service orders and whether this could result in consumers being left—

The ACTING PRESIDENT (Hon. J.S.L. Dawkins): Order! The Hon. Ms Vincent is battling against a number of conversations, and I would ask that those be removed from the chamber. I call the Hon. Ms Vincent.

The Hon. K.L. VINCENT: I thank you for your protection, sir. I will begin that sentence again. At present, SACOSS has raised a number of concerns which need to be addressed before this bill should be allowed to proceed. Some of these questions include: what exactly is open to third party pricing under this bill, what occurs with community service orders and whether this could result in consumers being left with additional costs in the long term. I appreciate that some of these questions have already been put on the record by the Hon. Ms Franks, and we certainly look forward to receiving answers to those and the other questions that Ms Franks has raised as well.

At this point, Dignity for Disability cannot support the second reading of this bill.

The ACTING PRESIDENT (Hon. J.S.L. Dawkins): Order! There is too much noise in the chamber. I call the Hon. Ms Vincent.

The Hon. K.L. VINCENT: Thank you, Mr President. At this stage, Dignity for Disability cannot support the second reading of this bill in its current form. We look forward to the government coming back with some amendments to provide more clarification around this bill and also to provide more transparency about exactly how the new arrangements will be implemented. It may well be that we can support this bill in future with that level of transparency and clarity provided, but at this stage we cannot do so.

The Hon. R.L. BROKENSHIRE (16:02): I rise on behalf of Family First this afternoon to place on the public record our intent with respect to this important government bill that has been tabled by our illustrious environment, water and climate change minister. To make him happy, before he goes to the South-East to do the right thing by the farmers down there, I advise him that we will be supporting the overall principles of this bill and therefore again assisting his government.

That does not mean that we do not have caveats on this, and we may actually still consider putting in an amendment. I am waiting on some information from SACOSS at the moment and how they go with their deliberations with the minister, I assume, or at least the department and the minister's advisers. I will be also looking at other amendments from colleagues in the house, but the principles of third party access are worth trying to get through the parliament, because it has been a long time since we have tried to get some flexibility into the water market within this state, particularly with respect to SA Water.

Of course, I would expect that SA Water would be very unhappy about this, because firstly they will have to be involved in some of the policing and management processes—I say so be it, that is their role—and secondly, this government has given them over $2 billion of core debt that should not have been not created in the first place (that is, the government should not have created it), and to try to make the government's direct balance sheet look better they have handed over a massive debt to SA Water. SA Water obviously, therefore, wants to continue to be a monopoly and rip people off as much as they can.

Of course, there are real concerns about quality control, number one, and I put that on the public record. We will be looking closely at that because, if we are to support this bill, we need to make sure that quality control is there with whoever as a third party may have access, through the water industry, to the provision of water, potable or otherwise, because the last thing we want to do is open up a situation where someone ends up with E. coli or some other bacterial or even worse illness as a result of not having the checks and balances there.

ESCOSA is going to report on whether the access regime in relation to specific pieces of water or sewerage infrastructure should be extended, and we will be looking at that. They will review the access regime established under part 9A to determine whether the regime should continue to apply to particular water infrastructure services in South Australia, and then a review will be conducted by 30 June 2019 and every five years thereafter.

The report will be provided to the minister and ultimately tabled in the parliament. I trust that ESCOSA will be given full, unfettered and transparent opportunities to deliberate on all of the issues as a regulator, notwithstanding that they have not had that in the past, and that has been difficult for them. I think it was Mr Paul Kerin who was the gentleman who spoke about the facts on all of that only a few months ago.

There are some initiatives that have already proven to be successful when it comes to freeing up opportunities for regional and local water suppliers. I note that my colleague the Hon. Tammy Franks made mention of the Salisbury council and the wetlands concept there, the harvesting of stormwater, the cleaning up of that water and the reusing of that water.

Drought proofing the south down my way is something for which I commend Mayor Lorraine Rosenberg, the former CEO, Mr Jeff Tate, and the current CEO of the City of Onkaparinga and the council that have been proactive in that area. There is also the recycled water project, which is a project I personally had a fair bit of involvement with and which was facilitated by the former Liberal government. So, there have been successful parallels of access to the water industry by third parties.

This has been a long time in the making. I actually expected this bill to come through the parliament a couple of years ago or certainly last year. I might not be able to blame the current minister for something that happened two years ago, because I am not sure whether he had the environment portfolio then. He would know if he is listening, but he is not reacting to too much this afternoon.

The Hon. D.W. Ridgway: He's comatose.

The Hon. R.L. BROKENSHIRE: Right; it looks a bit that way. In any case, I will give him credit for bringing the bill through now. I think that it does add opportunities to this state; we desperately need them. We need economic stimulation and growth.

With those few words, we will support the second reading of the bill. We will look closely at the committee stage and reserve our right to look at supporting or putting forward amendments, but the general principles of this, I think, do need to be supported. Again, I offer my support to this minister, as I have on many occasions over the years since he has been in the area of the Executive Council and a minister.

Debate adjourned on motion of Hon. J.A. Darley.