Report, Motion to Take Note
Mr PERRETT (Gympie—LNP) (3.44 pm): I rise to speak briefly to the State Development, Natural Resources and Agricultural Industry Development Committee’s report titled Consideration of the Auditor-General’s report 8: 2018-19—Water: 2017-18 results of financial audits. The committee looked at the Auditor-General’s findings regarding main water sector entities, including bulk water suppliers and distributor-retailers across south-east and regional Queensland. The issues raised at the committee’s public hearing included the participation returns for local governments from the water entities, the significant increases in costings for dam improvement programs, dividends paid by SunWater, the utilisation of assets held by water entities and developer contributions to water entities in the form of cash or donated assets.
Affordable water used wisely and sustainably is essential to agricultural production. Common sense dictates that we need good planning from government for future requirements. Instead, we see a government dragging the chain to build new water infrastructure. At the same time, the government has profited from more than $347 million from Queensland water customers on the back of water price increases.
According to the Audit Office’s 2017-18 financial audit report, dividends from state owned water companies to the government have surged by 490 per cent in just one year. I repeat: in just one year, they have increased by 490 per cent. That is accompanied by a 62 per cent increase in profits after dividend payments since 2016. There is only one conclusion: this government is riding on the back of profits from water price increases while Queenslanders are struggling with the cost of living. The report noted that—
At the public hearing, QAO advised that returns to the state government increased to $47.8 million in 2017-18 from $8 million in the previous year.
Over the next three years, South-East Queenslanders will be slugged with price increases of between $50 and $90 for their water. It looks like the same will happen to regional customers, with early estimates looking at significant blowouts. The inclusion of dam safety and flood mitigation costs will mean that those costs will be passed directly onto irrigating farmers through significant price increases.
In the Gympie region, Cedar Pocket will need to experience a $340 per megalitre water price increase to reach what they call ‘cost reflectivity’. The Pie Creek distribution scheme is also facing significant fixed cost increases. More than 100 years of price increases is unacceptable. Responsibility for this issue rests with the state government and it needs to step up and solve it. As I said earlier, we need good planning for water requirements.
The government will hand down a new price path from July next year. Currently, the Queensland Competition Authority is reviewing irrigation water prices, with a draft report due in August. In a response about the utilisation of assets, the Queensland Audit Office sector director for water infrastructure, Vaughan Stemmett, told the committee it would be—
… included in the current pricing forecast which has come out through the QCA. Their next determination occurs 1 July 2021.
Unfortunately, it looks like it will provide little satisfaction for farmers.
The committee was interested in why SunWater paid $39.7 million in dividends this year when it did not declare any last year. The QAO advised that ‘last year SunWater was directed to hold back dividends … whereas this year they were instructed to pay dividends’. It is clear that farmers are getting a bad deal from SunWater. We all know water is the lifeblood of our agricultural industries. Without it, communities that rely on agricultural production will lose products, meaning fewer jobs and more expensive food and fibre for all Queenslanders. The government has to put on hold water price increases.
Even though price increases are capped at $2.38 per megalitre per year, by factoring in inflation increases are closer to $2.90 per megalitre. Based on those prices, the reassessment of cost reflectivity every two years means that irrigation customers in the Lower Mary River are starring down the barrel of at least 15 years of consecutive water price increases. Under cost-reflective prices, the Lower Mary River will be hit with a $44.81 per megalitre increase.
Water price increases have a flow-on effect to the whole of our community. Our residents and businesses that struggle under cost-of-living increases can least afford it. Water utilities should not be used, like our electricity generators, as revenue cash cows.