Mismanaging water policy can drain a budget

Bookmark and Share Water | Alan Moran
Herald Sun 29th April, 2011

FOLLOWING the report into state finances by an independent committee, we are seeing the hollowness of the previous Victorian government's claim to budgetary competence.

Further evidence of the Brumby/Bracks government's ineptness is coming from a Productivity Commission inquiry into urban water supplies.

Central to Labor's water policy was avoiding a new dam.

Instead it regulated water use and embarked on the disastrous Wonthaggi desalination plant.

The Auditor-General has already estimated that the Wonthaggi capital costs have blown out from the original $3.1 billion to $5.4 billion. And even at its original price Wonthaggi's water was to cost five times that of alternative supplies from a new dam on the Macalister, the Mitchell or Latrobe.

But, terrified of seeing television coverage of green demonstrators and ever willing to believe propaganda that human actions were drying the clouds, Brumby and Bracks wasted $1000 per Victorian on the Wonthaggi project. Clearly, they preferred avoiding stress to acting on the basis of objective reviews of options.

Though Australia is a dry continent, only Iceland and Russia have more rainfall per head of population. But Australia's rainfall variability requires more storage.

That's why Melbourne, like Sydney and Brisbane, has dams that can store more than five years of water demand.

Our requirement for extensive storage is a cost that few other countries need to bear. And that makes saddling ourselves with unnecessary expenses all the more objectionable.

Victoria presents an unmitigated disaster in water policy.

The backyard tank is even worse than the desalination plant. After a tank's purchase and maintenance, the water it provides can be twice as expensive as desalinated seawater.

Regulations have forced 26 per cent of Australian households to install these inefficient devices.

Of the non-traditional water augmentation options the only urban stormwater harvesting has promise with water costs on some estimates comparable to those of a new dam.

The Baillieu Government is flirting with this.

However cost estimates are untested and, in any event, the additional supplies urban stormwater can provide are relatively small.

MELBOURNE'S water bills have risen by over 17 per cent in each of the past three years. But these increased costs are largely due to the over-staffing and other excesses seemingly inevitably incurred by government businesses.

In fact, the water itself delivered to the major cities accounts for only one tenth of the total bill, the rest being pipes and sewerage disposal.

As the desalination contract is in place, bearing down on pipe and operating costs is the best chance of now undoing some of the legacy of the Bracks/Brumby maladministration.

This will require strong incentives and disciplines on managers.

But such rigour is rarely seen in Australian governments.

While managers in business entities see their careers wrecked if they don't succeed, in politics it is different.

Brumby, Bracks and former water minister John Thwaites obtained post-parliamentary positions that appeared to involve little actual work.

Their unsuccessful administrators rarely got the chop.

Acquiescence in failure was a hallmark of the previous government. Can a Baillieu administration avoid such outcomes?