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Legislative Council - Fifty-Fourth Parliament, First Session (54-1)
2018-07-03 Daily Xml
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Independent Water Pricing Inquiry

The Hon. D.G.E. HOOD (16:11): My question is to the Treasurer. The government has just announced an independent water pricing inquiry. What is the proposed time line for the inquiry and when will consumers see results of the inquiry and the impact?

The Hon. K.J. Maher interjecting:

The Hon. R.I. LUCAS (Treasurer) (16:11): Thank you, Mr President. I don't need the assistance of the Leader of the Opposition answering my questions, with great respect. I thank the honourable member for his question. As the member would be aware, the government appointed a person with unique skills to conduct the independent water commission inquiry in Lew Owens, a gentleman who has been appointed by both Liberal and Labor governments to significant positions over the years but, more importantly, in relation to this particular position, he has been on both sides of the argument.

He has been a distinguished former chair of ESCOSA, the Essential Services Commission, the independent regulator, but on the other side of the fence, he is a former chair of the SA Water Corporation Board, so he actually knows what the SA Water Corporation gets up to. He knows what is in its accounts. He knows all the detail of the SA Water Corporation, so in Mr Owens I think we are very lucky to have a person with a unique blend of skills to conduct the inquiry.

The inquiry will commence as soon as is possible. It is intended to be reported no later than about June of next year. The timing issues are important for members to be aware of, in that the independent regulator, the Essential Services Commission, has set a series of regulatory arrangements for price increases for this current period, under the former Labor government, which was from 2016 to 2020. So the impact of any results of the inquiry from the independent commissioner and then any decision the government takes—because ultimately it's a decision for the government and then ultimately the independent regulator, ESCOSA, as in relation to water pricing they have the final decision—will be impacting on consumers from the period 2020 to 2024.

ESCOSA has already commenced its work for that decision to take impact from 2020 to 2024. They have outlined a program of work that they have to undertake for a period of basically two years from around about now through to when the decision will be announced so that it can take effect from July of 2020 for the period through to 2024.

So the independent commissioner's report will inform the government in relation to the terms of reference which are part of the public record—I won't repeat them here—in terms of the regulated asset base, the weighted average cost of capital and a variety of other issues like that. He will report to the government, the government will then make a decision in relation to what, if anything, it does in relation to the pricing order that the Treasurer is required to issue, and that is an important input for, finally, the independent body, the Essential Services Commission, to make a decision in setting water prices for the period from 2020 to 2024.

It is a long process. It is an inevitable by-product of having an independent regulator setting water pricing. We hope that ultimately it will lead to lower water prices for consumers and businesses in South Australia because this government was elected on a program of growing the economy, growing jobs in South Australia and, to do so, we have to reduce the cost of doing business in South Australia. With the Treasurer's hat on, looking on the SA Water Corporation as a never-ending cash cow for the pockets of Treasury and the budget, it is very tempting from a Treasurer's viewpoint, but from a growing jobs viewpoint and from struggling families trying to pay their bills viewpoint it is not the approach that this government wants to adopt.

It is possible that the end result of all of these complicated processes might mean, hopefully, lower water prices and it may well mean lower dividends coming into the state budget from SA Water. That means that the amount of money that the government has got to pay for services will obviously increasingly need to be targeted, efficient, economical and deliver results, rather than the sort of wasteful expenditure, throwing money at anything that moved financial management approach that the former Labor government adopted, sadly, over 16 years at a cost to the budget and at a cost to the people of South Australia.

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