July 16, 2019
South Burnett Mayor Keith Campbell has added his voice to growing opposition to plans by SunWater to force steep water price increases on South Burnett irrigators.
Member for Nanango Deb Frecklington, the Queensland Farmers Federation and the Wide Bay Burnett Regional Organisation of Councils (WBBROC) have all expressed concern over the proposed price rises.
SunWater’s plan is currently being examined by the Queensland Competition Authority (QCA).
A draft decision on the increases is expected to be handed down next month.
On Tuesday, Mayor Campbell said Natural Resources Minister Dr Anthony Lynham had confirmed to WBBROC the QCA was required to “moderate bill impacts for customers and consider prudency and efficiency in proposals” put before it.
“The rate of increase in total water costs proposed by SunWater is very steep, and for some schemes such as Barker-Barambah, amount to 150 per cent over five years, or 30 per cent per year,” the Mayor said.
“Most of this increase is applied in one year (2021) and increases of this magnitude should be smoothed over the five-year pricing period.”
The Mayor said the QCA should also consider a user’s capacity to pay under conditions of drought and economic downturn.
He shared WBBROC’s concerns that SunWater’s proposal also raised concerns about monopoly conduct by a State-owned enterprise.
“Contract termination charges are 11 times the Part A cost (ie. fixed cost) and for an average user with a 200 ML allocation that amounts to $83,000,” he said.
“This locks users into perpetual contracts.
“It also means SunWater’s revenue is guaranteed 11 years in advance, at the expense of the customer.”
The Mayor also raised concerns that local irrigators using BP Dam will receive no water this year but are still required to pay 75 per cent of the cost of the service.
“It is similar to paying for electricity in a blackout,” he said.
“Irrigators don’t get any drought assistance.”
The Mayor said the weighted average cost of capital – that is, what the State Government values SunWater’s assets at – is 5.85 per cent, which is well above the current Australian bond rate of about 1 per cent.
“All cost risks like insurance, dam safety, electricity, dam upgrades and repairs are placed on (irrigation scheme) users, and any profits are retained by the State Government as a dividend,” he said.
“The result of all these factors is that irrigators bear all the risk of managing and providing a return on State-owned assets.”