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Legislative Council - Fifty-Third Parliament, First Session (53-1)
2014-10-30 Daily Xml
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Water Pricing

The Hon. J.M.A. LENSINK (14:25): I seek leave to make a brief explanation before asking the Minister for Water and the River Murray a question about water pricing.

Leave granted.

The Hon. J.M.A. LENSINK: On 28 October, two days ago, the Treasurer was on FIVEaa and made the following comments:

I want to point out to you something you said earlier saying South Australia had the highest prices in the country. There is a table that I've got here in front of me, which unfortunately you don't have, so you're at a disadvantage, so I apologise for that.

He goes on to say that, in effect, South Australia does not have the highest water prices. The most recent report from ESCOSA, dated 9 April 2014, which is headed, 'SA Water—Water Retail Service Performance Outcomes', a six-page document, shows in figure 2 SA Water typical residential water bills, and shows SA Water Adelaide for the most recent financial year at the highest level, equivalent to the maximum of large utilities and well above the average. I quote from the documents as follows:

Figure 2 details how SA Water's typical residential water bill (for Adelaide customers) has changed against comparable water utilities over the last 7 years. This data was also collected by the NWC for its National Performance Reports.

Figure 2 highlights that SA Water's typical residential water bill was the highest of all comparable Australian water utilities…SA Water's typical residential water bill of $873 in 2012/13 was 30.6% higher than in 2011/12. The rise was due to a 25% increase in the water tariffs set by SA Water...The NWC has noted that the typical residential bill remains the best indicator of the impact of pricing on a utility's customers.

My questions to the minister are:

1. Is ESCOSA right or is the Treasurer correct?

2. If he says that the Treasurer is correct, will he table the table that the Treasurer was referring to in his radio interview?

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 honourable member for her most important question, as usual.

The Hon. D.W. Ridgway: You've got a phone fetish—you look at it every time you stand up.

The Hon. I.K. HUNTER: Yes, well, it is rather important to me that I take messages at this point in time. Unlike privately-owned utilities (and we will come to those privately-owned utilities perhaps in a minute), there are frameworks and pricing regimes put in place by the government preventing the generation of excessive profits and distribution by SA Water.

The Hon. J.M.A. Lensink: I didn't ask for that.

The Hon. I.K. HUNTER: Well, this is information I am providing to the chamber. This government introduced—

The Hon. G.E. Gago: I want to know about it—I'm interested.

The Hon. I.K. HUNTER: Indeed, you will. This government introduced the economic regulation of SA Water by the Essential Services Commission of South Australia for this very reason. We have introduced transparency and accountability to prevent the earning of monopoly profits and excessive returns. ESCOSA now sets a cap on the amount of revenue that can be earned by SA Water.

SA Water's first determination undertaken by ESCOSA was announced in May 2013 and covers the three-year period 2013-14 to 2015-16. Based on this determination the government is able to announce a decrease in prices of 6.4 per cent in 2013-14. They do not like hearing about this. They don't like hearing about the successes of our policy to drive down water prices.

Members interjecting:

The PRESIDENT: Order! The minister has the call. I am having difficulty hearing him as it is, so please allow him to give his answer.

The Hon. I.K. HUNTER: As I said, based on this determination the government was able to announce a decrease in prices of 6.4 per cent in 2013-14. As promised for 2014-15, water and sewerage prices increases have been limited to inflation in line with ESCOSA's determination. This government recognises the impact of cost-of-living pressures—of course we do—and we support those South Australians who are doing it tough. We provide concessions of 30 per cent for 2014 with a minimum of $185 and a maximum of $295 for those who meet the eligibility requirements.

The state government has also committed to introducing a single concession payment to simplify family budgeting by providing all concession payments for the year in one single payment. Specifically, the water supply charges increased from $274.80 to $282.80 per annum and the first tier usage charge for residential customers increased from $2.26 a kilolitre to $2.32 per kilolitre. That is, the usage charge paid by all residential customers is now 0.23 cents per litre and, if you are interested—and, indeed, I am—for sewerage charges for country customers—

An honourable member interjecting:

The Hon. I.K. HUNTER: Indeed. The minimum sewerage charges increased by inflation 2.9 per cent from $341.04 to $351.04 per annum. The sewerage rates will continue to be based on property values—

The Hon. K.L. VINCENT: I have a point of order.

The PRESIDENT: Point of order, the Hon. Ms Vincent.

The Hon. K.L. VINCENT: Just yesterday in this place we had a motion talking about the lacking number of questions that crossbenchers receive, and the more interjections we have between the two old parties, the less likely it is that we will get those questions, so I think we need a bit more order in this place.

The PRESIDENT: The honourable minister.

The Hon. I.K. HUNTER: I fully support the honourable member's point of order; it was entirely appropriate. I have said before that the significant price increases in recent years have contributed to critical investment in South Australia's water security, including the 100-gigalitre Adelaide desalination plant and north-south interconnection system project.

It is important to understand that, to a point, this was a bipartisan proposal. The costs that have been borne out of the desalination plant were the same as would have been borne out of the desalination plant from the Liberal Party, except that we were forward thinking enough to actually double the size of the desalination plant.

How much extra did that cost the average water customer per year? Thirty dollars. It was $30 extra for a doubling of our ability to take water from the sea and turn it into potable water. It was $30, on average, for the average customer per year; less than $1 a week. Yet we now have that water security built into our system for 2050 so that Adelaide will never again face what we faced in the millennium drought, with the very real possibility of having to provide bottled water to some of our communities around the state.

All states and territories are required to set prices for water services in line with national water initiative pricing principles. This was agreed by the Council of Australian Governments in 2004 as part of a national blueprint for water reform. Consistent with the COAG agreement the South Australian Treasurer's pricing audit directs ESCOSA to conduct its regulatory determination of SA Water's water and sewerage services in line with NWI pricing principles. As a result, SA Water is required to set its drinking water and sewerage prices in line with those pricing principles, and the maximum allowable revenue is determined by ESCOSA.

ESCOSA must review and approve these prices on an annual basis prior to the effective date of those prices, and ESCOSA also expressly requires SA Water to comply with NWI pricing principles in its formal determination document SA Water's Water and Sewerage Retail Services 2013-14, 2015-16 when setting prices for recycled water services and excluded services.

As I said, this government has made significant investment to guarantee South Australia's water security. This is particularly important for our state, and we all know the reason that the investment was made necessary was because of the recent drought and overallocation of the Murray-Darling Basin's water by the upstream states. It shows that we can no longer rely on our traditional sources of water to meet our future water needs.

There would be serious consequences from significantly cutting water prices. Of course, we know that too, because South Australia's smaller population also means the cost of water security measures is spread over fewer customers. Lower prices would not reflect the true cost of providing water to South Australians, and it would encourage overuse of this precious resource. In the long run, this could potentially undermine future water security, despite the substantial investments that are now in place.

The latest available data that compares water prices across states is provided in the national performance report that was released in April 2014; however, this report is based on data from the 2012-13 financial year. The report shows that, based on a comparison of water and sewerage bills, SA Water is ranked fourth-highest against comparable interstate utilities based on a water consumption bill of 200 kilolitres. The criterion for this analysis is greater than 100,000 connected properties.

It is important to point out that the gap between SA Water prices and prices of other water utilities and providers has been reduced over recent years, and more current data is needed as SA Water has also undertaken an internal comparison based on the 2014 financial year prices. This comparison compared the total water and sewerage bill for customers using 190 kilolitres of water per annum in 2014-15, which reflects the estimated average residential metropolitan use in Adelaide.

This assessment shows that all of the Queensland service providers, including Urban Utilities, which supplies Brisbane, are more expensive than SA Water. For example, the average SA Water customer was charged $1,306 in 2014-15, compared to $1,743 by Unitywater Moreton Bay, $1,659 by Gold Coast Water, $1,559 by Scenic Rim, $1,540 by Ipswich, $1,463 by Somerset, $1,389 by Unitywater Sunshine Coast, $1,387 by Power and Water NT, $1,328 by Lockyer Valley Queensland—

The Hon. J.S.L. DAWKINS: Point of order.

The Hon. I.K. HUNTER: —and $1,319 by Brisbane Water.

The Hon. J.S.L. DAWKINS: Point of order!

The Hon. I.K. Hunter: You don't want the answer.

The PRESIDENT: Point of order, the Hon. Mr Dawkins.

The Hon. J.S.L. DAWKINS: Mr President, I remind you and the chamber that the minister has been on his feet for eight minutes and has not gone anywhere close to answering the questions asked by the shadow minister.

Members interjecting:

The Hon. J.S.L. DAWKINS: Eight minutes!

The PRESIDENT: Minister, can you get down to answering the question?

Members interjecting:

The PRESIDENT: Order! The minister has the floor.

The Hon. I.K. HUNTER: Mr President, they only get up and take a point of order about relevance and other issues when they hear an answer they don't like.

Members interjecting:

The Hon. I.K. HUNTER: They hear an answer they don't like, which contradicts their premise of their question, and that is when they try to pull on these tactics that the minister should no longer be heard because he is speaking too long. This is important information, Mr President, and they don't want to hear it.

Members interjecting:

The PRESIDENT: Let's get down to answering the questions.

The Hon. I.K. HUNTER: Sir, the analysis—

Members interjecting:

The Hon. I.K. HUNTER: Let me repeat, Mr President: the assessment shows that all of the Queensland service providers, including Urban Utilities, which supplies Brisbane, are more expensive than SA Water. For example, the average SA Water customer was charged $1,306 in 2014-15, compared to—and here is the list—$1,743 by Unitywater Moreton Bay, $1,659 by Gold Coast Water, $1,559 by Scenic Rim, $1,540 by Ipswich, $1,463 by Somerset, $1,389 by Unitywater Sunshine Coast, $1,387 by Power and Water NT, $1,328 by Lockyer Valley Queensland, and $1,319 by Brisbane Water.

The analysis also takes into account the $100 rebate that is currently being offered to Victorian metropolitan water customers. Without this rebate, Yarra Valley would be more expensive than SA Water. They don't take that into account when they ask the questions or go on the radio, do they, Mr President? They don't even bother to find out.

South Australia's water prices are directly related to this state's investment in water security, as South Australia now recognises that we can no longer rely upon the other states to ensure our water security from the River Murray and that it continues to flow. Only this Labor government will stand up for this state and our water security; that lot over there will never help the state out in that regard.

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