Water prices set to skyrocket after cost blow-out

Steven Wardill, Rosemary Odgers

May 12, 2008 03:37pm

SOUTHEAST Queensland households will be forced to pay much more on water bills than the Government promised last year because of a blow-out in the cost of drought-proofing infrastructure.
The Government yesterday revealed average household bills across the region would rise from $483 a year to $750 a year over the next five years to pay off its $9 billion water grid.

The rise in bulk water costs, which are charged to councils and passed on to households, is significantly higher than the Government claimed last year when it estimated the average bill would rise to only $525 by 2013.

Rising council water charges, soaring capital costs, inflation and interest rates have all been blamed for the blowout in the price of turning on the tap.

The increased water charges will add to the pressure households are already under. Electricity and gas bills have both recently risen despite the Government saying that they would probably decrease under regulatory reform.

However, Deputy Premier Paul Lucas said the State Government had delivered water security to the region for an extra $1.30 a week per household.

“For less than a cost of a can of soft drink a week, southeast Queenslanders will not have to worry about running out of water,” he said.

Mr Lucas said SEQ’s water prices would be 39 per cent lower than those proposed for Sydney and 4 per cent lower than future Melbourne prices.

Treasurer Andrew Fraser said water prices would have been higher had the Government not chosen to forgo $1.5 billion it could have expected to pocket as return on its water infrastructure investment.

“We understand that with rising interest rates and inflation many households are facing a financial squeeze,” Mr Fraser said.

Councils yesterday warned ratepayers of further price increases on their part of water bills – the distribution network – because of new ownership arrangements.

In a bid to offset the extra costs for pensioners the Government has announced another new rebate scheme of $40 a year which will rise to $70 in 2008-09 and a maximum of $100 in three years.

Under the Government’s new price for bulk water, which will be rolled out from July 1, the per megalitre cost will be about $275 with households to pay about 30¢ a kilolitre extra.

Residents of the Sunshine Coast and Redlands have been spared major immediate increases in water costs in recognition of their councils’ investment in infrastructure.

Increases for locals in these areas will mirror inflation in 2007-08 with the price rise halved for the following year.

However, the Government is aiming to implement a uniform bulk water charge in stages with the price to be the same for all households in a decade.

The Queensland Competition Authority has been handed a new watchdog role in an attempt to prevent councils from using the higher bulk water costs as an excuse to increase charges further.

Welcome to the world of water restrictions
25.05.2007

THE Sunshine Coast’s honeymoon in drought-stricken south-east Queensland is officially over.

Premier Peter Beattie yesterday confirmed speculation that his government would seize control of council-owned water assets in the region to satisfy its desire for a united response to the worsening water crisis.

Whether the much-needed rains come or not, the move will usher in an unwelcome period for the Sunshine Coast.

It will be marked by higher water prices, severe water restrictions – as high as level seven – and millions of dollars in lost revenue for the Maroochy, Caloundra and Noosa local authorities.

From October next year, three new state-owned authorities will control dams, weirs and aquifers, as well as the treatment and transport of bulk water to the planned water grid.

Under the streamlined model, two of the bulk water providers will own the dams, weirs and other sources of water, and a third company will control the manufactured water supply to the Gold Coast desalination plant and the western corridor recycled-water project.

The state government will spend billions of dollars compensating Queensland councils by relieving their debt or via direct cash payments.

Between 2008 and 2010 the state government will set the price of water, after which it will consider a move to open the water market up to private enterprise.

From July, 2009, councils will resume managing water in the region, this time as distributors of the water from the state-owned grid and as joint owners of three retail businesses that will bill customers for their water usage.

Maroochy mayor Joe Natoli and Caloundra mayor Don Aldous were in Brisbane yesterday morning with mayors from across the region to hear Mr Beattie unveil the major reforms.

Noosa mayor Bob Abbot learned of them from Canberra.

Mr Aldous estimated the asset takeover would drain Caloundra of about $9 million in revenue.

He said it would force a rates hike or cuts to council services.

“At the end of the day, this takeover by the state will not create a single extra drop of water for the people of this region,” he said.

“To say this council is disappointed in today’s announcement is an understatement.”

At about the same time Mr Aldous was getting the bad news from George Street, his council was deferring a decision to adopt voluntary level-two water restrictions.

In retrospect, level two might turn out to be wishful thinking, as more bad news was to come in the form of a report submitted by council officers at the meeting.

The report warned that level-seven restrictions – which have the potential to limit homes to 400 litres of water a day for drinking, showering, washing up and doing the laundry – could be triggered on the Sunshine Coast before the end of next year. This was because of the pressure brought to bear on Coast dams by the water grid.

Earlier this week Mr Natoli predicted rates would double, but that was before the state government had committed to paying councils compensation.

But yesterday he was more concerned that the income streams the councils had from water were being sacrificed to allow the state government to fatten the water industry and sell it at a profit down the line.

Mr Abbot was not convinced the $2 billion compensation figure, which Peter Beattie conceded was a rough estimate, would be enough to pay for the takeover.

Mr Beattie, however, immediately sought to allay concerns surrounding the massive water overhaul.

He gave assurances that there would be no forced redundancies of workers at council-owned sites.

But he insisted water rates would have to rise.

The rises could be kept lower than feared through vigilant monitoring of council water prices

Cost of our bulk water is set to soar
14 May 2008

By Kathy Sundstrom

The Sunshine Coast will face a 266% increase in the cost of bulk water over the next decade under the state government’s plan to pay off its $9 billion water grid.

Residents won’t feel the pinch this financial year, with the government offering a “rebate” to the Sunshine Coast and Redlands councils “in recognition of those councils’ investment in existing water infrastructure projects”.

But the rebate will be meaningless in the long-term, with the Sunshine Coast facing an average 13.6% price hike on its bulk water charge – excluding the cost of inflation – each year for the next nine years to bring it in line with the rest of South-East Queensland’s bill by 2017/2018.

Tables supplied by the state government showed the cost of bulk water will go up a staggering 18.5% on the Sunshine Coast in the 2012/2013 financial year and 17.4% in 2017/2018 to decrease the gap created by the initial rebate.

Brisbane’s bulk water bill is forecast to increase by only about 4% in 2017/2018.

A spokesperson for Mr Lucas said the cost of bulk water formed only a third of the retail cost of water, with the rest of the charges determined by local governments.

Tables supplied indicated the retail cost of water on the Sunshine Coast would go up by only $30 in the 2008/2009 financial year, but Member for Maroochydore Fiona Simpson questioned these figures and said they “appeared dodgy”.

She said the Sunshine Coast was being “charged more for the privilege of having had better water planning in place”.

“And at the same time the state government is undermining our water security (with the Northern Pipeline Interconnector),” she said.

The NPI, due for completion on December 31, will be able to transfer up to 65 million litres of water from Sunshine Coast reserves to Brisbane each day.

Deputy Premier and Infrastructure Minister Paul Lucas and Treasurer Andrew Fraser played down the impact of the increase and said the forecast price of guaranteed water security for South-East Queenslanders would be only “around $1.30 a week extra in bulk water costs”.