Page 2578 - Week 09 - Wednesday, 7 August 2013
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The move to an efficient tax base is the most important economic reform for this territory in our second century. It provides a sound and stable revenue base for the future and ensures that our tax system is sustainable for the long run. It is fairer, it is simpler and it is more efficient, and it is the right tax system for the future.
The financial impact of the ICRC’s water and sewerage pricing on the territory budget is not yet available. The final impact on ACTEW and on the territory budget can only be determined once ACTEW and the Auditor-General have finalised consideration of the potential impairment of assets resulting from the pricing determination. And as I have said on many occasions, the government will provide an updated forecast in the 2013-14 budget review. The final report and pricing determination of the ICRC for water and sewerage services was the result of a thorough and robust process which incorporated detailed consideration of the appropriate method to regulate and to set prices for water and sewerage services in the territory.
It is important to note that the ICRC have significantly revised their regulatory model for the setting of water and sewerage prices in the territory. And as can be seen from the final pricing determination, the end result of the ICRC process is a pricing direction that balances the needs of consumers, the electricity and water utility and the government.
The pricing determination has provided the average consumer with a decrease of approximately $83 in their combined water and sewerage bill. The pricing determination has provided ACTEW with sufficient revenues to service its debt and to continue to make appropriate investments in its capital asset base. And it will provide taxpayers with a return on the considerable equity they have, as received through dividends paid by ACTEW.
As I have indicated, when the government is in a position to advise the Assembly of the final financial impact of the pricing direction on ACTEW and on the ACT budget, we will do so. The estimates relating to ACTEW that were included in the 2013-14 budget were based on ACTEW’s submission to the ICRC on 12 April 2013. And as I indicated to the estimates committee in the recall hearings on 1 July and in question time yesterday, the initial estimated impact of the pricing determination on ACTEW’s dividend to government is expected to be in the range of $20 to $25 million per year for the first two years only, 2013-14 and 2014-15. These estimates, however, are before the consideration of any potential impairment of assets that may be required by ACTEW.
The process to determine whether any impairment of assets is required and then to determine the magnitude of any such impairment is complex. It requires ACTEW to receive detailed accounting advice, which must then be presented within ACTEW’s financial statements. Following this, the Auditor-General, as part of her duties, is required to consider the appropriateness of the assumptions made in regard to any potential impairment. Only then, once the audited financial statements are released, can the final impact of the pricing determination be assessed.
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