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Water Costs Blowout Feared

South Burnett irrigators will face a $44 per ML water price increase if the Queensland Competition Authority accepts an application from SunWater to lift its prices

July 15, 2019

South Burnett farmers could be hit with steep rises in water costs for the next 18 years … and they might not be the only ones facing massive hikes.

There are also fears a new pricing model proposed by SunWater will lead to increased charges for councils, which would be forced to pass on the costs to all users connected to town water schemes.

SunWater’s new pricing plan was submitted to the Queensland Competition Authority (QCA) which is currently reviewing all charges by State-owned water utilities SunWater and Seqwater.

The updated cost forecasts were submitted on June 17, months after the deadline. The QCA noted it would “use reasonable endeavours” to take the information into consideration.

Under the SunWater plan, Barker-Barambah irrigators would face a price rise from $35/ML to $79/ML – a 125 per cent increase.

However, price increases would be capped at $2.38/ML per year plus inflation.

This would mean farmers would face 18 years of annual price rises to hit SunWater’s target price if the QCA adopts the proposal.

SunWater’s plans also affect irrigators accessing other Queensland schemes, with some – such as Callide and Eton – facing even steeper increases.

The QCA’s draft decision is due on August 31.

The SunWater plan has provoked outrage from the Queensland Farmers Federation (QFF), the Wide Bay-Burnett Regional Organisation of Councils (WBBROC) and the LNP Opposition.

* * *

In its submission to the Competition Authority, the QFF said many schemes would struggle with the unacceptable water price increases.

It called on the QCA to investigate the effects the proposed price rises would have.

“Continued escalation of prices, particularly fixed tariffs, are likely to continue to drive down demand in many schemes and hence push prices higher,” the QFF said.

It warned the price increases could reduce demand to the point where some irrigation schemes – such as Paradise Dam – became unviable.

The QFF also raised concerns about SunWater’s “consistently unreliable” spending plans and estimates.

The QFF submission pointed to a 112 per cent blowout in non-routine expenditure across irrigation schemes between 2013 and 2018.

The QCA had set a target of $69 million for the period, but SunWater figures showed a $146 expenditure, the QFF submission said.

The QFF also noted SunWater had experienced a 59 per cent increase in non-direct expenses from $11.1 million in 2017 to a forecast $17.6 million in 2019.

SunWater’s operations expenditure had a similar blowout, rising from $39.6 million in 2017 to a forecast $47.2 million in 2019.

“What confidence can irrigation customers have in any [capital expenditure] plans when they are so consistently unreliable?” the QFF asked.

The QFF also called for a major review of SunWater’s asset management system in order to rein in non-routine expenditure.

“The cost of running this system and the inefficiencies of the approach is driving up … costs,” the QFF said.

* * *

WBBROC has similar concerns for irrigators but is also worried about price impacts on reticulated water users in town areas.

It is also annoyed SunWater was allowed to submit revised prices five months after submissions to the QCA review closed.

“SunWater have revised upwards their proposed water price increases to the QCA review currently under way and due for draft release in August,” WBBROC chair and Gympie Mayor Mick Curran said in a letter to the QCA on July 5.

“The magnitude of these increases is substantially greater than the original proposal and could significantly impact the viability of a large number of irrigators across the region,” he said.

“This is not a transparent process and would seem to be a case of having ‘two bites at the cherry’.”

The letter expressed concerns councils would also be affected.

“Steep price increases will have an effect on the budget bottom line of councils, as it will also mean that reticulated water for our townships will be more costly.”

WBBROC was also critical of SunWater’s financial management, noting the average annual increase in water charges over five years would be 13 per cent, significantly above CPI.

It said SunWater’s effort to insulate itself from any commercial risk was “an effective misuse of [monopoly] power”.

* * *

Opposition Leader and Member for Nanango Deb Frecklington also joined the chorus of protest about the SunWater plan.

“Labor’s projected price increases for some irrigation schemes would be a hammer blow for farmers and local jobs,” Mrs Frecklington said.

“Based on the initial estimates, farmers in the South Burnett will be hit hard.

“Barker-Barambah irrigators will experience more than $44 per ML price increases under Labor’s plan.

“Even though price increases are capped at $2.38/ML per year plus inflation, this will mean Barker-Barambah irrigation customers are staring down the barrel of at least 18 years of consecutive water price increases.”

Mrs Frecklington said what made matters worse was the water allocation for the scheme as of July 1 this year was zero.

“So our farmers are paying for water they’re not even receiving – this situation is totally unacceptable.”

She said jobs would be lost and the cost of food and fibre for all Queenslanders would rise.

“It won’t come as any great surprise to farmers that the Palaszczuk Government’s SunWater doesn’t appear to have its house in order when it comes to providing the QCA with up-to-date and accurate data,” she said.

“You have to start questioning whether Labor is deliberately shifting the goal posts to make it more difficult for irrigator groups and farmers to access up-to-date and reliable information.

“Farmers are already paying sky-high water and electricity prices and further unsustainable increases will have devastating impacts on agricultural production in this state.

“It’s time for Annastacia Palaszczuk to rein in SunWater and ensure it is working for our farmers, not against them.”

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