Let TasWater finish the job

Miles Hampton challenges talk of a crisis in Tasmania’s water and sewerage system

TASMANIANS are being told that there is a crisis in the provision of water and sewerage services around the state, that this is damaging Tasmania’s brand and that we have a failing Third World water and sewerage infrastructure system.

As a director and chairman of the board of TasWater, I have an obligation, indeed the responsibility, to protect the reputation of the business and to defend the policies and strategies of the board and management. This is specially necessary when the reputation and performance of TasWater is subject to unfounded criticism and attack.

The claims of a crisis in our water and wastewater are demonstrably false. Today, some 99.2 per cent of Tasmanians have access to potable water at least equal to Australian quality standard. And the remaining fewer than 1 per cent of the population will do so by the middle of next year.

Our sewerage services are being upgraded. The system performance continues to improve and compares favourably with similar systems interstate.

The most relevant measure of sewerage system performance is volume compliance and the Environment Protection Authority recorded this at 84 per cent in 2015-16, up from 81 per cent the previous year. In the December quarter of 2016, the volume compliance improved to 86 per cent.

But, from this, state Treasurer Peter Gutwein has claimed a crisis, saying the system is getting worse, not better. Based on his assertion, the State Government now wants to take over TasWater from July next year, claiming that by doing so it can ensure Tasmanians get better water and sewerage services faster, with lower prices and with no increase in rates. It’s also promising more jobs, some 1000 of them, and actually reducing householders water and sewerage bills.

The reality is, there is no crisis. Neither the Environmental Protection Authority, the Department of Health of Human Service nor any other regulatory authority has ever raised any issue or made any suggestion of crisis.

TasWater has been working strenuously to improve water and sewerage services since the initial creation of the four original businesses in July 2009 and the establishment of TasWater four years’ later, and now through our 10-year upgrading program. The Government has been a latecomer in showing any concern or taking any interest. It has not previously raised any disquiet, attended any community meetings on the issue, nor offered any solutions.

TasWater has had some nine meetings with the Government over the past three years and it has never expressed dissatisfaction with TasWater’s rate of progress in upgrading the state’s diverse water and sewerage infrastructure. More specifically, when TasWater asked the Treasurer for help in removing the boil water alerts in small towns, he declined, saying he was happy for them to go onto tank water. Similarly, no assistance was forthcoming for the 10-year infrastructure upgrade plan.

Costs are undoubtedly a key. At the end of our 10-year program, our modelling indicates customer prices will be at or below the national median for comparative businesses.

The Government says it will cap annual tariff increases at 3.5 per cent, while TasWater has flagged it is likely to seek an average annual increase of 4.1 per cent over the six years from July 1, 2018.

TasWater’s position is yet to be finalised and in any event the Economic Regulator will ultimately determine what tariff increase is justified. But, assuming a customer is paying $1141 a year for water and sewerage on June 30, 2018, the bill in 2023-24 will be $1403 under the Government proposal and $1461, just $58 more, under TasWater’s plan.

However, in the TasWater case, debt will be $900 million, whereas in the Government case debt will be $1.5 billion.

This is an additional debt of $3000 for every Tasmanian household that will have to be repaid with interest. At the same time the State Government’s budget will take a $160 million hit to compensate councils for the loss of distributions.

So, the Government will need to borrow an additional $600 million and pay out an unnecessary $160 million to fund its proposed plan, thrusting an enormous debt burden on TasWater and every Tasmanian household.

Tasmanians will pay more for very little benefit, as the Government has now acknowledged that its initial four or five-year plan is in reality a seven-year plan.

In any event, TasWater’s expert engineers do not believe additional funding would enable it to sensibly move much faster than its 10year plan. It could possibly speed up the work to completion in 8½ to nine years at best. But doing it faster is not justified on water quality or environmental grounds, so why would Tasmania incur the cost and massive increase in debt that will come with it?

TasWater’s pricing path provides a sensible balance between the price today’s consumers will pay for water and sewerage services and the costs that will be passed on to future generations. The Government’s plan will see water and sewerage charges turn into an election football, with the political parties seeking an advantage at each election, inevitably leading to under investment in infrastructure and services.

Under the Government plan, TasWater will become financially unsustainable. This means the Government will have to fund TasWater and, as a result, the community will

TasWater has a responsible, affordable and fully funded 10year plan to upgrade Tasmania’s water and sewerage infrastructure.

miss out on important services such as hospital beds, more teachers and more police.

TasWater has a responsible, affordable and fully funded 10year plan to upgrade Tasmania’s water and sewerage infrastructure. In contrast, the Treasurer’s plan would saddle every household with an additional $3000 in debt that will have to be repaid, if not by current consumers, then certainly by future generations.

The establishment of TasWater is arguably the state’s biggest single microeconomic reform of the past 25 years and it promises much.

It is a great pity that the Government has decided to make it a political football in its campaign against councils, particularly when we are only part way through the journey. Miles Hampton is a Tasmanian business leader and company director. He has been chairman of TasWater since its inception on July 1, 2013.