Page 3159 - Week 07 - Thursday, 30 June 2011
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In the case of Actew, the key shareholders, now Chief Minister Gallagher and Deputy Chief Minister Barr, set the dividends. They require Actew to pay them, as trustees for the government, 100 per cent of Actew’s net profit. Actew is not allowed to build reserves for, dare I say, a rainy day. Actew is not allowed to maintain a commercially acceptable level of working capital. Actew, while being told by the government to operate at arm’s length as a commercial operation, is not allowed to determine the dividend it should pay to its shareholders.
The government will tell you that it does not tell Actew what it should budget for net profit or the dividend it is to pay to the government. The government will tell you it is for Actew to determine its budgeting, including its profitability. Only the most gullible would believe that.
So when Actew sets its budget and makes its pricing applications to the ICRC, it factors in the government’s dividend requirement. Thus, if consumption falls and price goes up, the government will still take its pound of flesh, and that is why the people of Canberra are paying more for less water. The government’s dividend amounts to yet another tax on Canberra’s families. It is another impost on the cost of living of families, and the government does not care.
Possibly on a more positive note, there have been whispers and hints about a review of the way that water prices are calculated and that they be based more on demand than supply. I certainly am open to a review that creates a fairer pricing system for water. Struggling Canberra families certainly could benefit from some relief. So I will be watching the progress of this review with interest.
I will finish with a brief cautionary note in relation to the looming plan for water diversion limits in the Murray-Darling Basin. The ACT is the largest urban settlement in the basin, and we have quite different demands on water than anywhere else in the basin. The diversion limits as proposed in the guide for the plan released in October last year to come into effect in the ACT will mean a considerable shake-up in water management policy in the ACT, including supply limits and water prices.
I have said before that the proposed limits would result in permanent stage 3 or stage 4 water restrictions for the ACT, with a consequent impact on water sales for Actew and water prices for ACT residents. It would also bring into question the cost benefit of our water security projects, especially the enlarged Cotter Dam, which by itself was assessed by the Centre for International Economics in 2009 as having a negative economic benefit. We may be able to store all the water the dam can hold but we may never be allowed to use more than the diversion limits imposed by the Murray-Darling Basin Authority. If we do, we will have to pay for it, no doubt at grossly higher prices.
The government says that it has gone in strongly to bat for the people of the ACT in this exercise. Mr Corbell even said that there were positive indications of a more acceptable outcome for the ACT. I certainly hope so.
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