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Legislative Council - Fifty-First Parliament, Third Session (51-3)
2009-06-04 Daily Xml
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WATERWORKS (RATES) AMENDMENT BILL

Committee Stage

In committee.

(Continued from 3 June 2009. Page 2526.)

Clause 8.

The Hon. S.G. WADE: I move:

Page 3, lines 28 and 29 [clause 8, inserted section 65CAA(1)(a)]—Delete '1 June in any particular year' and substitute:

31 December in the year preceding the commencement of the financial year.

This amendment seeks to deal with the government's tacking on to this bill an attempt to hide the water price rise scheduled for December this year until after the next election in June 2010. I stress to the committee that this has nothing to do with quarterly billing, so it has no place in this bill, but the government tacked it on nonetheless.

The Hon. P. Holloway interjecting:

The Hon. S.G. WADE: The minister says 'Rubbish'. I will be interested in his response to hear him explain why it has nothing to do with quarterly billing. There is good reason to maintain a December price announcement date, and particularly in this year it is important for the electors of South Australia to know the price path going forward. The minister might tell us, 'We've given the community information about our forward price path', but in reality that has been in broad headline terms and not in terms of the detail you get in a pricing announcement involving price structures, price thresholds and differences between industrial/commercial users and others.

We believe it is important in an election year, following the government's announcement to double the size of the desalination plant, that the South Australian community have not just government assurances of what prices might do but also a clear legislated commitment to prices in the 2010-11 year. Secondly, as I said in my second reading comments, it is important that consumers know well in advance what the prices will be for the coming year. It may well be that that would be influential on their making a water saving investment. We need to give people an opportunity to be price responsive. Thirdly, it is our assertion that in the normal cycles of the state budget the Treasurer would need to know what the revenue take from SA Water will be in any given year; so, as the decision will be made roughly by December, anyway, why not make it public?

Fourthly, if it is delayed until the end of the budget process (for example, being announced in June), it actually increases the risk that SA Water will be used as a milch cow. It is certainly an issue that the South Australian public has had to suffer with under this government. Over the first five financial years of the Rann government, it took $1.7 billion of funds out of SA Water. In the same period, it invested something of the order of $440 million in capital expenditure, and I should stress that that $440 million figure was for the Adelaide system capital investment. If the Rann government had been investing in capital at the same rate as other governments were investing in their main metropolitan water utilities, the Rann government would have invested an additional $460 million.

Clearly, this government has a preference for using SA Water as a milch cow rather than investing in water security for South Australia. In that context, we think it is very important that SA Water be given a respectful distance from the pointy end of the budget process and that its revenue expectations are set early in the process to reduce the risk of the Treasurer making late budget process decisions that draw even further on SA Water's revenues.

The Hon. P. HOLLOWAY: What a load of nonsense! Isn't it extraordinary that here is a Liberal Party that actually hopes to be in government next year—and, given that it is a two-horse race, you would think that members opposite would think that they have some chance! What the opposition is saying is that the price of water should be determined in December this year, which would then apply for the financial year 2010-11. So, if there were to be a change of government at the next election, an incoming Liberal government would have to use the price that was set by this government for the next 15 months. I just find that extraordinary, although perhaps it is not quite so extraordinary, because opposition members know that they have no chance of winning the election. So, they are playing politics with it, rather than giving themselves, as any responsible government should do, at budget time next year, the opportunity to set the price of water.

The Hon. Mr Wade is the shadow minister for, I think, state/local government relations. I ask the Hon. Mr Wade: if you think this is such a great idea, why would you not do it for local government? Why would you not make local government determine the rates for a financial year seven or eight months out? It really is a dopey idea. There is a reason for water pricing being set in December, and that is that the billing cycle—when we had the consumption year, as it was called—began shortly thereafter. So, you needed to set the price by December so that, within a month of that, the consumption year would begin for some people. With this bill, we are moving away from the consumption year, which was a rolling period; that is, depending on when your meter was read, the year in which your consumption was measured would begin in December.

The whole point of this bill is to ensure that everyone will be billed quarterly and the new price will apply over the financial year. So, surely it is logical that you should have that price beforehand, but why not have it, as the government has suggested, by 1 June, which is a month's notice, so that you can determine the price at the particular time? I would have thought that was simple logic. No company would set its prices seven months out if there was no reason for doing so, and you would not do it for local government. As I have said, if the Hon. Mr Wade thinks this is such a great idea, I challenge him to explain why he would not do it for other areas of government. Let him put it up. I know what the Local Government Association and councils would very quickly say, and that is, 'What a dopey idea.'

The Hon. Mr Wade has also accused this government of trying in some way to cover up in relation to the price. The Minister for Water Security has made it clear that there will be a near doubling of the water price over the next five years.

The Hon. S.G. Wade: What about the threshold?

The Hon. P. HOLLOWAY: Yes, water prices are going to rise, and it is desirable that they rise. The Minister for Water Security has also mentioned, as we had this year, an indicative 17.9 per cent real increase in water pricing. There is absolutely no way the government has been anything other than totally up-front in relation to those increases.

Yes, we know that there will be big increases; the price of water will have to roughly double over the next five years. Surely, it makes sense to set the price around the time of the budget. The budget will be coming down later this afternoon, and that is when a whole lot of other financial indicators for the coming financial year will be set. Why should water be any different? Clearly, there is only one reason why the opposition is doing this, and that is that it wants to play politics with the price.

It is just nonsense to suggest that, somehow or other, things have not changed in relation to the setting date. The setting date was always December, because the consumption year began within 30 days of that date. Now that we have gone to a new system, there is no reason why that price cannot be set 30 days from the new date. That is why the government opposes this amendment.

I think all members, particularly the Independent members, should reject this notion that the government is in some way hiding the price increase or that there is some logic in making it six or seven months before the price increase comes into effect. There is no need to do it and it is not logical to do it, and you would not do it for any other area of government. You do not set your fees and charges nine months out. All fees and charges are set, depending on CPI and other factors, a month or so before the start of the financial year. That is what companies do, and it is what every sensible person would do.

The Hon. S.G. WADE: I believe that the minister has just confirmed our central concern about this government's approach to water pricing. He suggested, as some sort of wise advice from an old dinosaur about to retire, that it would be valuable for us, as an incoming Liberal government, to have up our sleeves a surprise water price increase after we get elected in March 2010. That shows that this government is willing to use SA Water as a milch cow. It is willing to use SA Water as an opportunity to boost government revenues without any regard to the national competition policy.

We, on the other hand, are committed to the national water initiative, and we are committed to the national competition policy water reforms processes. We believe that these processes should be established not by politicians but by an independent economic regulator. We committed to that two years ago, and we have recommitted to that in recent weeks. We will not be doing a Rann government and taking $1.7 billion of revenue out of SA Water over five years and only investing $440 million in Adelaide metropolitan water at a time when South Australia is in a water crisis.

I believe that the minister has shown why it is so important that the committee supports this amendment because, clearly, this government is willing to treat SA Water as a political football and use the revenue as it wants to prop up the budget. This shows even more clearly why the government should be required to disclose its prices before the election and that that should be an ongoing process.

The minister also suggested that we have the 17.8 or 17.9 per cent so we should just be quiet and be happy with that. That is not what we need. We need full disclosure in terms of the price, not just an overall percentage: what are the prices at different levels? This government has increased the number of steps in the inclining block tariff. Are we getting more of that? We do not know, because the government is not going to tell us until June next year. We need to know before the next election, and not in some press release that apparently the minister can screw up after the election because for him budget pressures mean that we need to get more out of SA Water.

We need a legislated price increase by the end of this year, and I cannot see any reason why consumers in South Australia should not have access to early price information. We have been able to do it for at least the past 18 years according to the advice that the minister gave yesterday. Why shouldn't we be able to do it in the future?

The Hon. P. HOLLOWAY: Again, that dishonest part of the honourable member's last comments needs to be corrected on the record. The reason December was the date was that it did apply within 30 days of it. The honourable member can keep repeating it until the cows come home, but it will not make it true. There was a reason why December was the date. That is no longer the case. The case now is that the water pricing will apply for a financial year. It will begin on 1 July each year and that is why there is no reason why one should set it until 30 days before. Really, let us be blunt: the Liberals want to play politics with this. They know that water prices are going up.

Members interjecting:

The Hon. P. HOLLOWAY: You know it is going up; of course you do. We know the way the Legislative Council operates. I find it extraordinary that a future incoming government would have this attitude every time there is a change of government (and, at some stage in the future, governments will change either way). There is a price set. It will be 15 months before there could be any determination of it. It just does not make sense in terms of price-setting. If we are talking about real prices and real increases, how do we know what the inflation rate is going to be, for example, seven months away? It may fall; it may rise. There are all sorts of reasons. It was set at December before for a simple reason, and that was that the consumption year began shortly afterwards.

We all know in here why the opposition is doing this and, of course, it will concoct reasons: it is pure unadulterated politics. We know what the opposition did in government. We know how much money it took out of the water system during the eight years it was in office, so we can dismiss all that sort of holier than thou type of nonsense that the Hon. Mr Wade came up with. We saw what the Liberals did in government. Which other state or other area of government would set its prices that far in advance? The fact is there are none.

The CHAIRMAN: I don't intend to extend this debate much further.

The Hon. S.G. WADE: I don't intend to either, Mr Chairman. I just want to correct the record. The minister suggested that the Olsen and Brown Liberal governments under-invested in water infrastructure. The reality is that industry data shows that the only time in the past 20 years when the water infrastructure investment in this state has exceeded the national average was in the period of the Olsen Liberal government.

The Hon. M. PARNELL: I know you are keen to move on with this, but this is a fairly critical amendment and it does impact on other amendments that are before us, so I think that some time spent on resolving this now will be well spent. I have made it clear that the Greens are supporting the move to quarterly billing.

We know what the repercussions were of having the complicated arrangement with consumption years and financial years. In fact, it was clear that not even ministers understood the complexities of the billing regime. The minister makes the valid point that the reason for setting the price in December each year is that, for some consumers, their consumption year, and therefore the water they consume, will be charged at a new rate and therefore it is important to give some notice.

I think the fundamental principle—with which I do not think anyone would disagree—is that it is improper to retrospectively price-hike. We have to make sure that everyone knows in advance what the cost will be for water that they will consume into the future. The question before us is: how far in advance? The Hon. Stephen Wade's amendment proposes to maintain the status quo in terms of the December setting of the price, but we know that the consumption year is being done away with as a concept, and we will end up with the financial year effectively setting the price six months early for everyone.

It is also worth remembering that even under the current regime, whilst some consumers' consumption year might have started in December, others' will start later, so for some people they were getting effectively six months' notice of the price going up. The question then is whether, under this new regime, we should lock in the six months' notice as, I guess, a best case notice provision for consumers for all time.

I have some sympathy with the Hon. Stephen Wade's position in relation to the next election. The minister is describing it as fairly crass politics, but the Greens for a number of years have questioned the government's priorities over water. We have questioned its commitment to one or two water security options at the expense of cheaper and more sustainable options; and I am referring to the government putting all its eggs into the desalination basket rather than cheaper and more sustainable options, such as stormwater harvesting.

The minister has said, quite rightly, that the government has made it clear that the price of water will rise; the price will double. I think that the people of South Australia have a right to know in the year that we are committing to the desalination plant—we are committing to what effectively will end up being $2 billion worth of expenditure, and members should recall that we do not have a price for connecting the pipeline between south and north—what the impact of some of these decisions will be in relation to the next water price hike.

When we get to the schedule of this bill, I will be moving that as a transitional arrangement for the next financial year we set the price in December so that people will know three months out from the election what the impact of this government's decisions will be on water price. My position is that, after having got the next announcement out of the way, we can reasonably go to a June setting of the water price—which is consistent with other charges. Certainly, most people like to know as far as possible in advance what prices will be, but whether it is in the business sector, or wherever else, it is rare for price rises to be flagged that far out.

My position is that, while I am sympathetic with what the Hon. Stephen Wade is trying to do in perpetuity, there is a case for saying, 'Let's make the government accountable in December this year by telling us what the price will be for the next financial year. Having got this period out of the way, we can then move onto the new arrangements.' What that means is that every four years people will have to think back nine months as to what the last water price rise was—if that is something which will influence their vote—rather than having to think back three months. I do not think we need to go down that path as a long-term solution in the future, but I think the current situation, the current emergency and the current focus on this government's and previous governments' inaction over many years, results in the South Australian people deserving to know in December this year what the next price rise will be.

With those comments, I will not be supporting the Hon. Stephen Wade's amendment, but I urge all members to support my amendment (when we get to it), which is to say, 'Let's find out this December what the price will be next year.'

The Hon. R.L. BROKENSHIRE: Family First is very happy to see water prices up front before any election, irrespective of whether it is a Liberal or Labor government. In 2001-02, I saw many press releases from the Premier that talked about openness, accountability and transparency. I do not know what the difference is between 2002 and 2009, but Family First wants the community to see whether the government has done a good enough job to be re-elected and have another four year term. Part of that includes illustrating what sort of money they will have to pay for water.

When I was on the train from Noarlunga this morning, I saw railway sleepers being stacked up, old sleepers being replaced, heavy earthworks at the desalination plant and, on arrival at Adelaide central, I saw a pretty little banner talking about the greenfields site for the new RAH. It is like fireworks: capital works are happening everywhere in this state at present. In fact, seven months worth of capital works which are happening now should have been happening over a seven year period—and I am happy to see those capital works at any time.

I congratulate the government for at last getting on with it, but when it comes to the water issue we want a solid debate, anywhere and everywhere—and I am sure my colleagues and members of other parties want it, as well—about whether this government has delivered satisfactorily and sustainably for South Australians in this regard. It failed on the River Murray bill; and that is now being highlighted day in, day out in the media right across the eastern seaboard. We missed out there. We should have been fast tracking stormwater harvesting, aquifer storage and recovery, and dual reticulation. Only 15 months ago the government categorically ruled out a desalination plant. They said, 'No way will we have a desalination plant,' but when push comes to shove we now have one and, thanks to the Prime Minister, its size will be doubled.

I want people to know up front what they will be paying in order to make an assessment as to whether this government has done a good job when it comes to water pricing and water availability. Therefore, we will be supporting amendments that tell people up front what the Premier always wanted in opposition; that is, openness, accountability and transparency.

The Hon. P. HOLLOWAY: We understand that the Hon. Mr Brokenshire will support that, but is he supporting the Liberals' amendment or Mr Parnell's amendment?

The Hon. R.L. BROKENSHIRE: I will be supporting both amendments. If the Liberals get rolled, then I will be going with the Greens, because we want to see, one way or another, an openness on price for the next period of water price setting.

The Hon. P. HOLLOWAY: I need to say that that shows how silly this debate is getting. First, I point out that the amendments are incompatible, except for the first 12 months. I should say that at least the Hon. Mr Parnell recognises the long-term need and the absurdity of keeping the thing indefinitely. He puts a case for 12 months, and at least there is some logic to that. In relation to the issues the Hon. Mr Brokenshire raised, apart from all the diversions about what has happened with the River Murray, and so on, how far ahead do we need to know prices?

If you take it to its logical conclusion, going to an election, you should probably put it out for four years in front. However, the problem with that is that you do not know the changing economic conditions or what new proposals or extensions might be done. There has to be some reasonable time limit. As with everything else, the sensible thing is to do it in the budget. So, even if there is a change of government at an election, or thereafter, the budget is always the vehicle—

The Hon. R.L. Brokenshire interjecting:

The Hon. P. HOLLOWAY: Why not do it for local government? Does the member think that local government should set its rates six months, or more, in advance? Put up a private member's bill; go and tell the local government people. Why not do it for everything? Why not do it for all taxes, or revenue? No-one in the world does it—no-one else in the world is stupid enough—and it just shows really what a cloud-cuckoo-land can sometimes exist here in the Legislative Council. But let us get on with it.

The Hon. S.G. WADE: The minister took the opportunity to heap praise on a crossbench amendment. I just highlight the positive aspect (which I think the Hon. Robert Brokenshire has highlighted), which is that every four years we will have an election cycle water price. So, it is quite appropriate that this council says that, because we know it can work—we have been doing it for years—we need to have clarity and transparency leading up to an election. The Liberal Party is committed to independent economic regulation, and we are committed to supporting this amendment, even though we know that in a very short time we may well be on the Treasury benches. However, we are willing to submit to that accountability: the government is not. It wants to hide water prices, while we want to be open.

The Hon. P. HOLLOWAY: The Hon. Mr Wade wants to play politics, and in this debate he is not going to do anything less. I understand that he wants to play politics. I understand that such is the nature of the Legislative Council that politics is always played here, and it will be played today. However, I just want to make sure that he is exposed for doing it. There is absolutely no logical reason why you would do it. You would not do it with anything else. He deserves to be exposed, because if he hopes to be a minister one day, of course, there is no way that he would apply that sort of logic to any other area, and nor should he.

The Hon. A. BRESSINGTON: I would like the minister to clarify (because I have obviously missed the point here) what are the repercussions, if you like, for the government and the department providing this information by December rather than June. Can the minister point out what the obstacles are?

The Hon. P. HOLLOWAY: One can set a price seven months in advance of when it will take up, but there are a whole lot of economic factors that can change within the seven months. This government and the Minister for Water Security have made it clear that there will be a significant price rise; virtually a doubling over the five year period. It will be built into the next price rise. She has indicated the indicative 17.9 per cent real increase. So, that is what the price will be next year.

The only point I am making is that we index a number of charges, and so on, and that is always done about a month before the end of the financial year, because then we are in a better financial position to know what the indexation rate is, and it makes sense to do it about a month out. Everyone has information in advance about what the rate will be. However, if you do it seven months away, clearly, economic conditions can change.

To take Mr Wade's logic, why not do it 12 months or two years in advance? What point do you pick? What we are talking about here is what is a reasonable point at which to pick it. We say a month is about the right time. When that decision is made, it is made with the best available economic information, because it is the most current information, reflecting conditions generally as they are known to government.

The councils, for example, are announcing their rates, I think, about this time of the year. They will apply in September, but they need to know what their revenue will be. They are doing their budgets now for the next financial year. You would not expect them last calendar year to do their budgets for this year, because the budgets will have less relevance, or less credibility, in terms of current economic conditions.

It is really as simple as that. It is not that we do not know, given the way water prices are, the sort of scale of increases that we need. That has been made quite clear by the government, and I am sure that will be an issue at the time. However, if we are to address the infrastructure issues, it has to be paid for. We have made it quite clear what the scale of that increase will be; there is no hiding that. However, with respect to the setting process, it just makes sense to do it closer to the time, because it will more accurately reflect the economic conditions.

The Hon. A. BRESSINGTON: So, in fact, this amendment requires SA Water to basically do a projection budget at the end of December, which is only halfway through the financial year, instead of doing it like everyone else does it, which is a month before the end of the financial year. Is that what the minister is saying?

The Hon. P. HOLLOWAY: I think that is a pretty fair summary. In relation to water prices, the reason why you can do it a little early is that there are the national water pricing mechanisms and guidelines, which governments nowadays follow. The Hon. Mr Wade was earlier claiming how a Liberal government would follow these sorts of guidelines. Of course, all states must and do follow them, as this government has been doing for some time. However, the actual fine tweaking, if you like, of that is something that is obviously best done closer to the time at which it will apply, because it will then best reflect the economic conditions. It is as simple as that.

The Hon. S.G. WADE: The minister's argument is predicated on the basis that, the closer you are to the financial year, the less risk you have of not having the best information to get the best revenue projections. Can the minister give us an indication about what variance there is between SA Water's revenue projections at their current setting date, which is December, for the following financial year, compared with other rates and taxes that the government raises? After all, if SA Water's forecasting skills are poor, perhaps his argument would have merit. However, we have been given no evidence to suggest that the government is not finding a December announcement as unreliable in its budgeting process.

The Hon. P. HOLLOWAY: It is not just a matter of forecasting something. I suppose it also relates to what works a government might indicate. That is really why I was referring to the Hon. Mr Wade and whether he wanted to be a minister one day and, perhaps, wanted to do additional things, for example. They have to be paid for, presumably. He would need to tell people. We are talking about accountability here. If he is the shadow spokesperson at the next election and if he wishes to put up alternative or additional options, the Hon. Mr Wade will need to tell the people of this state how and when he will fund them and how he proposes to do that.

The Hon. S.G. WADE: I indicate to the minister that if I was the minister for water I certainly would not be planning major capital works expenditure in the last month of the financial year.

The CHAIRMAN: Order! That has nothing whatsoever to do with the debate, and it is a big 'if'.

The Hon. R.I. LUCAS: I was listening to the debate in my room and I kept hearing the statements being made by the Leader of the Government, the minister in charge of the bill, that the government, already being open and transparent, had made it quite clear that the price of water was going to increase by 100 per cent over the next five years and that it had already given the indicative price of about 17 per cent as the average price.

That information, as the minister knows, is misleading and untrue, because in the recent federal budget the announcement was made that the size of the desal plant would be doubled. The cost of the desal plant is going to increase by at least $400 million to $500 million, or so, and the minister in charge of water security in South Australia has indicated that there will be flow-on implications in terms of price which everyone will have to have a look at. The announcements which the minister was talking about related to the smaller desal plant and the previous announcements that had been made about it doubling.

What we will see and what this minister and the government are trying to hide before the election are the implications of the doubling of the size of the desal plant, the increase in the cost (at least $400 million to $500 million) and the flow-on implications of that in terms of water pricing. It is clear that there will be more than a doubling under the current government's policy, and that is what this minister and the government are trying to hide before the state election. The only other point I would make is to reinforce what the Hon. Mr Wade said almost 40 minutes ago. I do not have the exact figures, but the government has already indicated that the figure of 17 per cent is, in essence, the average impact, but for the very low consumers in terms of usage I understand that the increase is of the order of 30 to 40 per cent.

The Hon. Mr Wade or someone else may well have the exact figure, but that 17 per cent figure about which we are talking is an average impact figure on households. However, for the very low water use users it is a much higher figure of something like 30 to 40 per cent. The point the Hon. Mr Wade made earlier, and it bears reinforcing, is that we are not just talking about the average figure. The government, if it is required to release its decision in December this year prior to the election, not only will have to release the average figure but will also have to release the range of impacts across the board on the low water users through to the high water users and how that is structured.

The average figure might be 17 per cent plus another few per cent as a result of the increased cost of the desal plant, so we might be talking about an average figure of 20 or 25 per cent. However, depending on how the government structures it, certain consumers (low water usage consumers or others) may well be facing increases of 40 and 50 per cent, and the people of South Australia deserve to know that. The minister knows that the claims he is making are wrong and, in my view, they will mislead this committee in terms of their accuracy.

The Hon. P. HOLLOWAY: The misleading comes from the Hon. Mr Lucas. Again, he indicates that obviously he has no faith in the chances of his party winning the next election. We all know that, with the investment going in, there will be large increases in water prices to pay for it. What members opposite want is for the government to put it up so that they can criticise it but not have an alternative. If they did put up an alternative there would be no point because it will be set in December and it would not be able to be changed again until the following 12 months, regardless of the election.

Again, I reiterate the point that that indicates how little confidence members opposite have that they cannot possibly come up with any sort of alternative restructuring. If they really want to know the detail of it, why would they not, if they have any confidence that they will win the election, leave it until June? They might think they can come up with a better one, but, clearly, they cannot. Again, I make that point. In relation to the size of the increase, there is no hiding it. We know that the price is going up and, if the Liberal Party wishes to do anything other than that, it will have to campaign in an alternative way at the next election and say, 'Look, we're not going ahead with the additional desalination plant.'

Members opposite will have to come up with a credible policy, but they do not want to do that, and that is what this debate is all about. They really do not want to put up an alternative. Their skill, their expertise, is in knocking. They have become experts at it. They will oppose anything. They will wait for the government to put it up. They are quite incapable of having any alternative of their own. They are quite incapable of putting forward any direction. They will just knock because they are experts at it.

The committee divided on the amendment:

AYES (11)
Brokenshire, R.L. Darley, J.A. Dawkins, J.S.L.
Hood, D.G.E. Lawson, R.D. Lensink, J.M.A.
Lucas, R.I. Ridgway, D.W. Schaefer, C.V.
Stephens, T.J. Wade, S.G. (teller)
NOES (10)
Bressington, A. Finnigan, B.V. Gago, G.E.
Gazzola, J.M. Holloway, P. (teller) Hunter, I.K.
Parnell, M. Winderlich, D.N. Wortley, R.P.
Zollo, C.

Majority of 1 for the ayes.

Amendment thus carried.

The Hon. S.G. WADE: I move:

Page 4, after line 5 [clause 8, inserted section 65CAA(1)(a)]—Delete '1 June in any particular year' and substitute:

31 December in the year preceding the commencement of the financial year

Even before the minister's breath has passed, we have an opportunity to highlight a misleading statement he made in his previous contribution. He said that this government follows national water initiative COAG principles, etc. Here we have an opportunity for the government to show that it supports COAG principles. COAG principles say that contributed assets should be taken out of the asset base in the calculation of the price. This government does not do it and the previous Liberal government did not do it. However, the Liberal Party has committed itself to independent economic regulation of water. In moving this amendment, we are asking the committee to keep the government to its word, which is simply to follow the COAG water reform principles of 1994.

I remind members that they are Labor government principles, reinforced by the National Water Initiative and reinforced very recently by the COAG group on NWI principles; that is, contributed assets should be taken out of the asset base. The government does not do that for pre-1995 assets. The Liberal Party is supported by the Essential Services Commission of South Australia. It is clearly demonstrable that it increases the price that South Australians have to pay. It is not reasonable that assets which are contributed by developers through augmentation charges and the like which SA Water took on at corporatisation should remain part of the asset base. Other states and territories have managed to do the calculation to avoid contributed assets being included in their asset base.

We do not believe it is beyond the wit of SA Water to do that. We believe that it is a matter of being honest with our ratepayers and that they should be paying for assets that were paid for, but not for assets that were contributed. We would call on the government and all members of the committee to support what the government says it is doing, which is supporting sound water reform principles.

The Hon. P. HOLLOWAY: The government opposes this amendment. It was interesting that the Hon. Mr Wade referred to the corporatisation of SA Water, which, of course, happened under the previous Liberal government. Of course, it did not do that at the time. Of course, the longer we are removed from that event, clearly, the more complex, in many ways, that will be. The determination of prices under national obligations has regard to the valuing of assets, and arguably this should take account of assets that have been funded by others or gifted to the water utility; that is, contributed assets. However, the treatment of contributed assets in determining water prices has been a matter of difference between the government and the Essential Services Commission for some years.

ESCOSA has argued that the provision the government has made for contributed assets is insufficient. The government has allowed for assets contributed since the corporatisation of SA Water in 1995, arguing that it is generally accepted nationally that contributed assets should be deducted from the regulatory asset base only if adequate information is available to identify those contributed assets. The government's position is that there are major data deficiencies in estimating pre-corporatisation contributed assets. It is not that there is so much of an issue in theory. Incidentally, we are talking about what happened in 1995 under the previous Liberal government. It did not deal with that matter at the time. However, to go back now, given the major data deficiencies in estimating those pre-corporatisation contributed assets, in the government's view, is the difficulty with this proposition, and that is why we oppose the amendment.

The Hon. S.G. WADE: I concede that this task is not without difficulties, and that is why the amendment specifically provides that the Essential Services Commission, on application by the corporation, can provide exceptions or adjustments. The essential services commissioner obviously thinks it is a doable task, otherwise he would not have asked time and again that the government do it. We, on the other hand, are giving the government the latitude to work with the commissioner to come up with a fair price.

Certainly some assets would be extremely difficult to value pre-corporatisation, but I assure members that the South Australian Water Corporation's annual report 1995-96, the first one, was not a blank document and had an estimated valuation of assets. We believe it is not beyond the wit of the government to work with the essential services commissioner to come up with a reasonable estimate of the contributed assets that can be included in the regulated asset base. We believe this amendment gives the government the flexibility to work with the commissioner to respect the principles of water reform, which it says it is committed to.

The Hon. M. PARNELL: To assist the committee, the Greens do not believe the benefits of this amendment justify the difficulties of its implementation and we will not support it.

Amendment negatived; clause passed.

Clauses 9 to 12 passed.

New clause 12A.

The Hon. S.G. WADE: The minister may have responses to questions asked yesterday in relation to metering, water conservation, and so forth.

The Hon. P. HOLLOWAY: I have some information. The material cost of a 20mm meter is currently around $40. South Australia Water's current fee for installing a 20mm meter on a manifold is $388. This fee covers the cost of installing a 20mm meter on the manifold at the boundary and includes a share of the cost of providing the manifold. Such a meter installation would be relevant for a typical single-storey strata or community titled unit complex. The figure assumes that the connecting pipe to the main already exists.

I have also some statistics in relation to the average water use for different types of dwellings. The following data is based on research across four billing groups over the past four quarterly reads. For normal detached dwellings it was 192 kilolitres and for home units 110 kilolitres.

The Hon. S.G. WADE: I move:

Page 5, after line 13—After clause 12 insert:

12A—Insertion of section 86C

After section 86B insert:

86C—Scheme to install separate meters for all properties

(1) The Corporation must establish a scheme under which all land—

(a) that is subject to a separate occupation; and

(b) that is supplied with water by the Corporation as part of a reticulated water system,

will have a meter that records the amount of water supplied to that piece of land.

(2) The Corporation must seek to ensure that the meters required for the purposes of subsection (1) are fitted by 31 December 2014.

(3) However—

(a) the scheme established under subsection (1) is not required to extend to premises where it is not reasonably practicable to fit a separate meter; and

(b) in the case of land within a country region of the State, the Corporation is not required to install a meter in a particular case if the Corporation has an agreement with the owner of the land to the effect that the land need not be within the ambit of the scheme established under subsection (1).

(4) An agreement under subsection (3)(b) must be for a period not exceeding 5 years (but may then be renewed from time to time by further agreement).

(5) The Corporation must, as part of each annual report up to and including the 2014-15 annual report, set out information about the scheme established under subsection (1) and the extent to which the goal set out in subsection (2) is being (or has been) achieved.

(6) For the purposes of this section, the country regions of the State will be those parts of the State that are not within—

(a) Metropolitan Adelaide; or

(b) any other city or township areas brought within the ambit of this paragraph by the regulations.

(7) In this section—

Metropolitan Adelaide means Metropolitan Adelaide as defined by the Development Act 1993.

The discussion on this was commenced on clause 1, so I will continue in the spirit of that discussion. One of the matters raised was the key issue behind this amendment. The amendment proposes that individual meters be provided in the metropolitan area and, unless otherwise agreed, in country areas, because we believe it is shown to be an extremely useful measure to promote water conservation. It is a bit like saying that, if we took the meter off a petrol pump, people would not use more. The reality is that, if you drive up to a petrol station and stick it in, you would show much less regard for what you are consuming.

The minister was not able to provide any information on the water conservation impacts of metering. It is almost half an anecdote, but I offer one example that I believe highlights the benefits of water metering. Christchurch and Auckland are two of the largest cities in New Zealand, similar in climate and in socio-economic circumstances. Both water districts have meters: Auckland has meters, as does Christchurch. Because of political factors Christchurch does not read its meters, except for system management needs. So, Christchurch water users do not have the benefit of that water throughput information or the benefit of the price impact of using too much water.

The information I have been able to obtain since yesterday's discussion shows that in Christchurch the average yearly consumption of water is 164 megalitres. In contrast, Auckland, which enjoys meters that are read, has on average residential water consumption of 65 megalitres. Those figures come from different sources, so they may not be exactly right, but the anecdote I heard at a water function within the past month was that it was in the order of 40 per cent lower, so those figures may overstate it. However, it is clear that the experience of Christchurch and Auckland show that metering supports water conservation, and why would it not? The government is saying that water prices matter. Water prices only matter if you have access to a bill in which there is a relationship between your personal consumption and the price you pay.

The government has seen fit to introduce meters into Housing Trust properties. We believe that, within the spirit of that step, it is an opportunity to implement metering more broadly, as part of an effort to inform consumers and to support them in responsible water use.

The Hon. P. HOLLOWAY: We had a discussion on this matter last night, and certainly the government would disagree with the Hon. Mr Wade's point that, if you have metering, it is more likely to lead to less water consumption than otherwise might be the case. However, the point is (and this is illustrated in the figures that I have just provided to the committee) that, in relation to home units, for example, their consumption is already significantly lower. It is most unlikely that those sorts of dwellings would have the sort of gardens that normal detached dwellings would have, although in times of water restrictions that is probably less relevant. But we do still permit some watering of gardens and, of course, if the residents are pensioners, other exemptions might apply.

Remember that most home units, which average 110 kilolitres consumption, do not have meters, whereas normal detached dwellings, for which the average is 192 kilolitres, which is much higher, do have meters.

I referred to this point last night: the real reason why we oppose the amendment does not have so much to do with philosophical issues as with the practical issue; that is, if you are to require meters to be retrofitted to existing units (and I think this was conceded last night) there are some sorts of dwellings where you could not do it because the cost would be totally prohibitive, for example, in high-rise buildings.

However, even in relation to other sorts of single storey units, there could still be significant costs, which would have to be met by the owner of the property and, presumably, the owner of the property, if it is a group of flats, would pass those costs on to the people renting the property. The cost could be significant if, for example, you have to dig up a concrete driveway. It cannot just be done at the meter because, if you have extra meters, you have to have separate pipes where previously there might have been one pipe serving the entire number of units within the property.

So, there could be quite significant costs involved in the process. Given that in these sorts of home units the average is 110 kilolitres, you are already down to the basic level, and it would take a very long time to save more money than it might cost householders to apply that meter. It is unlikely that, in those sorts of situations, you will get reduced consumption, anyway, since it is already so low, and it would be much more difficult and take a much longer time to recover the sort of costs that might be involved in that process. So, I think that is really a significant impediment to the implementation of this measure, even though, in principle, it would obviously be a good thing if everyone had a meter.

There is also the point that we do have a common land issue in community title properties and, clearly, that raises another issue. If the strata group decides that they want to manage their common land in a particular way, should they not have the opportunity to decide whether or not they want to deal with that through a common meter? So, it is not just a simple question of what is good in principle; there are some very significant practical issues involved. Certainly, it is the government's strong view that, given the sort of information that I have put on the record, the cost of this process would significantly outweigh the benefits.

The Hon. S.G. WADE: With all due respect to the minister, I do not know how the government can assert that the costs outweigh the benefits, because I understand that the government has not done a business case to that end. On the issue of where it is not reasonable, I would highlight to the committee that the opposition's amendments specifically include a reasonably practical clause, that is, proposed section 86C(3)(a), which provides:

The scheme established under subsection(1) is not required to extend to premises where it is not reasonably practical to fit a separate meter.

I will briefly highlight the differences as I see them between the amendment I have moved on behalf of the opposition and the amendment to be moved by the Hon. Robert Brokenshire. As I see them, there are two key differences. First, the opposition amendment has a time frame of 31 December 2014; whereas, the amendment filed in the name of the Hon. Mr Brokenshire has a deadline of 31 December 2012.

Secondly, the Hon. Mr Brokenshire is suggesting a very similar scheme but that it apply throughout the state. The opposition is of the view, because of the special circumstances that often exist in the country, that, whilst there is a statewide obligation on SA Water, with the agreement of the owner of the land, the need to install a meter in a particular case can be waived, and that amendment relates to proposed section 86C(3)(b).

The Hon. R.L. BROKENSHIRE: I move my amendment in an amended form, as follows:

Page 5, after line 13—After clause 12 insert:

12A—Insertion of section 86C

After section 86B insert:

86C—Scheme to install separate meters for all properties

(1) The corporation must establish a scheme under which all land owned by the South Australian Housing Trust—

(a) that is subject to a separate occupation; and

(b) that is supplied with water by the corporation as part of a reticulated water system,

will have a meter that records the amount of water supplied to that piece of land.

(2) The corporation must seek to ensure that the meters required for the purposes of subsection(1) are fitted by 31 December 2012.

(3) The scheme is not required to extend to premises where it is not reasonably practicable to fit a separate meter.

(4) The corporation must, as part of each annual report up to and including the 2012-13 annual report, set out information about the scheme established under subsection (1) and the extent to which the goal set out in subsection (2) is being (or has been) achieved.

In moving my amended amendment, I put on the record that my instruction, through my adviser, to parliamentary counsel was incorrect. So, I accept responsibility for having to amend my amendment. The original amendment, under clause 86C(1), provided:

The corporation must establish a scheme under which all land—

I have amended my amendment to include after the words 'under which all land' the words 'owned by the South Australian Housing Trust'. I advise colleagues that the amendment (in its amended form) is different to the Liberal Party amendments because the intent of Family First is different. We have not had private sector tenants coming to us saying that they have a problem with how they are charged for water rates. Some colleagues might have, but we have not had a rush of people coming to us.

An honourable member: You will if this amendment goes through, though.

The Hon. R.L. BROKENSHIRE: Well, not with this amendment to the amendment. I make it clear that the amendment that Family First is proposing is different to the Liberal amendment. Our intention is confined to Housing Trust stock. I am sure that lots of other colleagues in the committee are aware of all the issues around water meters and water charges and inequities with South Australian Housing Trust stock. Family First wanted to see an earnest effort by the government of the day to ensure equity for Housing Trust tenants wherever it is practicable to install separate meters. That is our amendment in a nutshell.

The Hon. M. PARNELL: I am happy to direct my question to the Hon. Stephen Wade in the first instance, but I note that identical words are in the amendment of the Hon. Robert Brokenshire. It relates to the point that the Hon. Stephen Wade just talked about, and that is the exception to the rule, if you like, that meters have to be fitted. The words in both members' amendments are identical: 'where it is not reasonably practicable to fit a separate meter.'

It seems to me that there are two issues here. One is a question of accessibility, such as in cases where it would just be physically too hard to access the necessary pipe to put the meter on. However, I ask the honourable member: does he envisage that those words 'where it is not reasonably practicable' would include the situation where very low volumes of water are needed and therefore it is not economically justifiable, as opposed to where it is a case of physical access to the pipes?

The Hon. S.G. WADE: I thank the honourable member for the question. It is certainly my understanding that the capacity for the scheme to allow for circumstances would be broad, and I think it is a timely opportunity to remind ourselves of the status of the corporation.

The corporation is a government business enterprise established under the Public Corporations Act. Government ministers can theoretically direct the corporation only by way of a ministerial direction. Rumour has it that ministers have been known to use less orthodox methods from time to time, but that is the government's regime under which the corporation sits. In that context it is actually not only the government that drafts this scheme; it will be the corporation abiding by a legislative requirement of this council.

The corporation would need to come up with a scheme that was convincing in terms of what is reasonably practicable, and my view of it would be that, if the minister to whom the corporation is responsible comes up with a scheme which the minister believes is just a cop-out which avoids the need to introduce what is a key demand management tool, the minister would give a direction. The minister would say, 'No; the threshold for flows will not be 125 kilolitres; it will be five,' or whatever is appropriate.

We do not want to be prescriptive, but we want them to be workable for both the corporation and the government. I would certainly not, by way of commentary in the chamber, suggest that this should be limited in the way that we read it. As the honourable member suggested, the issue might be one of installation costs or flow issues. Those things can all be factored into the scheme.

This statement is clear insofar as the Liberal Party believes that all South Australians should be encouraged to manage their demand for water and be provided with the information to do that. Unlike Family First, we are not just targeting public tenants; we believe that the whole community has a responsibility.

The Hon. P. HOLLOWAY: I will address my response to both the Hon. Mr Wade and the Hon. Mr Brokenshire. They want to change the legislation so that it will prescribe that a scheme must be established to deal with the issue of meters, but who do they suggest should pay for it? Obviously, having put this in, they expect the government or SA Water will have to go away and come up with a scheme. The government will have the final say, so they are dictating that we should have the scheme, but they are not prepared to say who should actually pay for it at the end of the day.

I would have thought that it was a reasonable thing, because the government has already made it clear that it does not believe, in most cases, based on the information that I have given, that this passes a cost benefit test. If it is going to cost this significant amount of money—about $25 million for additional meters at the boundary and about $100 million to property owners, who in most cases will then pass it on to tenants—who is going to pay this cost?

The Hon. A. BRESSINGTON: That was actually going to be my question relating to the Hon. Robert Brokenshire's amendment where this would apply only to Housing Trust tenants. I think it was last night that the Hon. Paul Holloway said that, if this were to be a requirement for people who own a high-rise building or the like, those costs would ultimately be passed on to the tenants through increased rent and so forth.

In relation to the Hon. Robert Brokenshire's amendment, which applies only to Housing Trust properties, would that then mean that the trust would have to put up its rent to accommodate the costs of these water meters; and, if that is the case, I would ask the Hon. Robert Brokenshire how low-income earners in Housing Trust houses would be able to cover those expenses or the increase in rent.

The Hon. R.L. BROKENSHIRE: It is not the intent at all, and it would be not be expected with this amendment by Family First for the cost recovery to go back to the tenants. It is unfortunate for this government—

The Hon. R.P. Wortley: It's an unintended consequence.

The ACTING CHAIRMAN: (Hon. J.S.L. Dawkins): Order! The Hon. Mr Brokenshire has the floor. The Hon. Mr Wortley is out of order.

The Hon. R.L. BROKENSHIRE: It does not necessarily have to be a consequence for the tenant. It is a decision of the government. It is unfortunate that—

The Hon. R.P. Wortley interjecting:

The ACTING CHAIRMAN: Order! I remind the Hon. Mr Wortley that he is out of order. The Hon. Mr Brokenshire has the floor.

The Hon. R.L. BROKENSHIRE: Thank you, sir. There has been debate for a long time about inequity in relation to water meters and the water charging situation within the Housing Trust. As far as the practicalities and decision-making are concerned, whether imposts are picked up by Housing SA or the government through a contribution from Treasury, they are decisions for the government of the day. I feel sorry for this government because this has occurred under quite a few governments, but governments have to take the good with the bad. This matter must be addressed, and I am trying to accelerate this process if my colleagues believe that they want to support it; and that is what democracy is about.

The Housing Trust over many years could have made a conscious decision to ensure that there were water meters there so we did not have this outrageous situation where, as a result of infill and different development processes, a large family with many children can live on a large block with a swimming pool and next-door there is a single person. My advice is that there is total inequity in relation to the water situation.

We support base water rates so families do not get hammered, and that is why they have capital value in the private sector. My point is that this is an opportunity to retrofit and fix, once and for all, the problems of inequity in water charges to tenants. I am representing a number of tenants and the Housing Trust Association Tenants Association, which has said for many years that this matter needs to be addressed.

I give credit to the former minister (Hon. Jay Weatherill), who was in the process of addressing the issue, which has fallen by the wayside since. The government has put up these amendments, so we feel it is worth while raising this matter in debate. If the committee feels inclined to put pressure on the government of the day to address the problem with the Housing Trust, it has the opportunity to do so now.

The Hon. S.G. WADE: I remind members that this decision should not be seen in isolation. The reality is that water utilities around the world are procuring demand management opportunities to avoid expanding their systems. In other words, if they can encourage water users to reduce their consumption it might mean they do not need to build the next dam or, if you like, buy the next entitlement from the River Murray. I appreciate that the minister has done back of the envelope estimates of the cost, but we have not been given detailed information on the costs and the benefits.

Members interjecting:

The ACTING CHAIRMAN: Order! Other members will get the call in a moment, if they wish.

The Hon. S.G. WADE: This is a significant opportunity to offset the $100 million guesstimated cost for the installation of meters by the fact that augmentation opportunities might not need to be implemented. Let us not see this as a one-sided equation.

The Hon. P. HOLLOWAY: In summary, the government believes that the cost is significant, and that is why we do not support the amendment. It is interesting that the debate which began this morning was all about declaring water prices. Clearly, if we are going to do something that incurs a significant additional cost to the system, it will increase the cost and someone somewhere has to pay for it all.

New clauses negatived.

Clause 13 passed.

Schedule and title passed.

Bill reported with an amendment.

Third Reading

Bill read a third time and passed.

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