INCREASING the price of water throughout the drought period certainly reduced consumption. Gardens suffered, trees suffered, but alternative ways of managing water were found.
It was a great windfall for Actew Water as the price levers were applied to achieve the reduction. Canberrans could see the impact of the drought, were warned about the dropping levels of water in our dams and understood the need.
But things have changed. Opposition Treasury spokesman Brendan Smyth has been on a mission to hold Actew Water to account and to ensure that there is a fair price paid for our water. He was not far off the mark when he described the hullabaloo around the water and sewage pricing determination as “a fiasco”.
This is grist to the mill for Smyth. The Liberals ran an extraordinarily effective campaign at October’s Territory election based on changes Labor was making to the taxation system in the ACT. A seasoned performer like Smyth understands the importance of hip-pocket politics.
The after-tax profit of Actew Water has been listed in its annual report for 2012-13 as $80.3 million. This is the same Actew Water that has been crying poor with large overhead expenses such as the building of the Cotter Dam. “Building?” I can hear Brendan Smyth cry out, “surely you mean just blowing the budget!” The shortfall in revenue over the previous five years, is the excuse used by Actew Water. It was some $236 million which it is now trying to recover.
The Liberals are already focusing on what they describe as incompetent management. However, it is not enough to attack Actew Water. The punches need to land on the two shareholders – the Chief Minister Katy Gallagher and Treasurer Andrew Barr. This is where the political mileage lies.
“It’s been over a month since the Budget debates, and the fact that Canberrans are still left in the lurch on the impacts of the ICRC price determination on the ACT’s bottom line, is unacceptable”, Smyth claimed in a press release.
“Earlier this year, we saw Canberra households having to pay five per cent more for their water just to keep Actew Water afloat” and, he added, “this was after the Independent Competition and Regulatory Commission’s (ICRC) original proposal to decrease water bills by nearly 17 per cent,”
In late June, the water and sewage price-setting body, the ICRC, set a price that would have the impact of saving households on average around $83 a year. What has provided a political opportunity for Smyth and the Liberals is that Actew Water has not accepted the umpire’s decision and has launched an appeal.
The appeal is its legal right. However, for Smyth it is also a political goldmine. The reason for appealing, according to Actew Water, is that the determination did not appropriately recognise the cost of providing services and of ensuring an appropriate return on investment. When prices went up during the drought, we certainly didn’t see them complaining about the windfall.
One of the problems is that Actew Water is not selling as much of their product at a time when it has an abundance. However, Smyth levelled an accusation that it was really about management and efficiency: “this is compounded with last month’s independent review that uncovered 40 opportunities where Actew Water governance could be improved”.
The challenge is to ensure that the old habits of wasteful water use do not creep back into the mindset. Climate change projections indicate that further drought years can be expected and it is appropriate for the Government and Actew Water to ensure the supply of the future meets the needs of the population.
On April 28, 1998, in his inaugural speech to the Assembly, Brendan Smyth related an anecdote of going to his father as a child and asking for more pocket money and being told: “If you cannot pay, you do not go”. Smyth then added: “I think that what we have to do in terms of financial sense is ensure that in this community we live within our means”.
The statement provides a good insight into what drives this MLA and why he is likely to pursue this issue relentlessly.
Michael Moore was an independent member of the ACT Legislative Assembly (1989 to 2001) and was minister for health