SA Water Infrastructure

The Hon. J.S. LEE (15:13): I seek leave to make a brief explanation before asking the Minister for Sustainability, Environment and Conservation questions about SA Water pipe renewal.

Leave granted.

The Hon. J.S. LEE: On 20 February, the minister stated that SA Water will invest an additional $55 million over the next four years to replace water mains across the state with the intent of reducing the number of bursts and leaks. However, SA Water's CEO, Mr Cheroux, told a recent Budget and Finance Committee meeting that over the next four years, with the exception of 2017-18, SA Water plans to spend less on pipe renewal projects compared to the $57.9 million spent in 2015-16.

Compared to 2015-16, figures obtained show that SA Water will spend $3.7 million less in 2016-17, $15.5 million less in 2018-19 and $17.3 million less in 2019-20. Clearly, with the exception of 2017, there are significant reductions in spending on pipe renewal projects. My questions to the minister are:

1. Can the minister confirm whether SA Water's spending on the pipe network will be $54.2 million in 2016-17, $42.4 million in 2018-19 and $40.6 million in 2019-20?

2. Can the minister also explain how the additional $55 million that he announced over the next four years will be spent on pipe network renewal?

The Hon. I.K. HUNTER (Minister for Sustainability, Environment and Conservation, Minister for Water and the River Murray, Minister for Climate Change) (15:15): I thank the honourable member for her important question because it allows me to clear up some confusing information that the Hon. Rob Lucas has been putting out into the community. As is his usual wont, he takes some lines and distorts them unto his own desires, and then sets a little trap for honourable members, such as the Hon. Jing Lee, who listen to him and believe in him. Unfortunately, she is completely wrong in all of her undertakings.

The Hon. D.W. Ridgway: Just get on with your answer.

The Hon. I.K. HUNTER: The Hon. David Ridgway says get on with the answer because he is embarrassed as well—absolutely embarrassed by the antics of the Hon. Robert Lucas, the architect of privatisation in this state. Of course, you should be ashamed of him, Mr Ridgway, and I'm not surprised that you are. Nonetheless, you will have to sit down, settle back and listen to this answer.

I did understand that on 3 May, SA Water attended a hearing of the Budget and Finance Committee of the Legislative Council. I also understand that a number of matters were taken on notice, and these will be compiled with answers provided back to the committee in a timely manner, of course. But I need to give a little bit of detail because of the subsequent media confusion that's been raised by the Hon. Mr Lucas.

Overall—and these points have been made in the past, but I will take the opportunity to make them again—South Australia's water mains failure rate has been very stable over the last 15 years. We do experience seasonal variations over the years, but on average the rate has been reasonably consistent. What it does recognise is that burst water mains are an inconvenience for customers—of course they are—and pipe network renewals are designed to minimise failures as much as practicable.

This includes expenditure related to reticulated water mains network, trunk mains wastewater network, trunk water mains network and other related infrastructure works. I am advised that actual expenditure varies significantly from year to year, depending on the number of large projects, engineering complexity, construction materials and/or whether the projects are in high-traffic areas, and that is, of course, based on location. It is much more difficult to manage, and much more expensive in many cases, changing systems over (for example, the type of pipe) in a major thoroughfare in the CBD, or in the peri-CBD area, compared to something in the outlying areas of Adelaide or in regional South Australia.

The level of expenditure is determined based on a set target for customer levels of service. The strategy of setting a level of service and matching investment to meet that level of service has been in place since the early 2000s and has resulted in relatively stable burst rates. SA Water's expenditure on pipe network renewals has steadily increased since this strategy was introduced in order to continue to meet a targeted level of service to the community.

In 2015-16, the expenditure of $57.9 million is the highest ever spent against this budget line and included significant projects, such as Hackney Road water trunk main, South Road, Torrens to Torrens water and wastewater infrastructure, and O-Bahn wastewater infrastructure. From 2012-13 to 2015-16, SA Water spent $180 million on pipe network renewals, averaging $45 million per year, and through this expenditure 237 kilometres of reticulated water mains were renewed, I am advised. SA Water's original pipe network renewals budget, put forward as part of the second regulatory period submission, was $149 million with an estimated 275 kilometres of reticulated water mains to be renewed. This four-year budget covers the years 2016-17 to 2019-20.

I will just stop there and put a lie to the case that the Hon. Jing Lee was positing in her explanation: that there should be—every single year of a four-year regulatory period—exactly the same amount of money spent on a particular type of project every single year. Otherwise, the Hon. Jing Lee and others come along and say, 'You're spending more this year than you did last year,' or, 'You're spending less this year than you did last year.' It makes no difference. We have a four-year plan of expenditure. Whether we spend the bulk of it in the first year or the last year makes absolutely no difference. The plan is still the plan. We have that checked by ESCOSA and it is signed off on by ESCOSA.

Whether we expend a lot of that money, for example, renewing pipes in the first year, perhaps in more expensive areas to excavate like the city, as opposed to the final year in cheaper areas to excavate like the outer suburbs or in regional South Australia, makes absolutely no difference to the amount of pipe that is being renewed and makes absolutely no difference whether we are spending $10 million less in one year or $10 million more in another year. It is absolutely ludicrous to think that a year-on-year budget change up or down is of any significance whatsoever. I hope the Hon. Jing Lee understands that. We have a four-year expenditure cycle. How that is divided up year-on-year makes no difference to the amount of infrastructure that is being put in place.

In February 2017, I announced that this budget has been increased by $55.5 million—this is the pipe network renewals budget—specifically directed at the reticulated water mains network, further increasing the estimated water mains to be renewed from 275 kilometres to 375 kilometres. This has brought the total pipe network renewal budget to $205 million, with an average annual spend of $51 million, representing a 14 per cent increase over the previous four-year period. It is important to understand that it is over the previous four-year period. The 375 kilometres for estimated mains to be renewed represents an increase of 58 per cent compared to the previous four-year period.

As I said in this place on 1 March 2018, which was ignored by the Hon. Mr Lucas, and as recorded in Hansard:

…there will be no increase in SA Water customer bills as a result of this increased expenditure on these upgrades. This is because the $55 million investment is coming as a result of a reprioritisation of resources that was, I am advised—

An honourable member interjecting:

The Hon. I.K. HUNTER: Yes, you're right; 2018 hasn't happened yet—

negotiated successfully with ESCOSA.

They don't want to hear what is in Hansard. I don't think they even read it. It states:

This is because the $55 million investment is coming as a result of a reprioritisation of resources that was, I am advised, negotiated successfully with ESCOSA.

The Hon. R.I. Lucas interjecting:

The Hon. I.K. HUNTER: The Hon. Mr Lucas is a fine one for talking about making things up. He is the author of more fiction in this place than in the whole history of the parliament. The Hon. Mr Lucas is the architect of privatisation in this house. Pulp Fiction has nothing on him.

As I said, this $55 million investment is coming as a result of reprioritisation of resources negotiated successfully with ESCOSA. That is the answer the Hon. Jing Lee should be listening to, not to any furphies being trafficked by the Hon. Mr Lucas.