Lower Water Prices Need To Follow Inquiry

The South Australian Business Chamber Welcomes The Final Report Of The State Water Price Inquiry, Which Found SA Water’s Assets Were Significantly Overvalued By The Previous Government, Translating To Today’s Inflated Water Prices.

The Independent Inquiry Found The Value Of SA Water’s Assets Were Overvalued By Between $520 Million And $870m In 2013, Excluding Any Impact On Wastewater Asset Values Which Comprise A Third Of SA Water’s Total Asset Base.

Executive Director Industry And Government Engagement, Anthony Penney, Said the South Australian Business Chamber Had Provided Several Submissions, Including Independent Expert Analysis By Cambridge Economic Policy Associates. CEPA Found SA Water’s Assets To Be Overvalued By $1.53 Billion, With An Additional $430m For Wastewater Assets — A Combined $1.96b — Equating To 12 Per Cent Lower Water And Sewerage Bills.

“The South Australian Business Chamber has long supported a water price inquiry, particularly given a tripling of the drinking water price since the mid-2000s and its resulting impact on the competitiveness of water-intensive businesses like food and beverage manufacturers,” Mr Penney said.

The inquiry’s report found the government had benefited from the higher RAB for more than six years, and it would be appropriate to choose the lowest possible value with the range of credible options.

​“The South Australian Business Chamber welcomes the report’s conservative findings, but they have not supported our view that the government should have followed interstate precedent under the National Water Initiative and adopted the deprival value methodology. The inquiry’s terms of reference did not include wastewater assets, but this should form part of the State government’s implementation decision, particularly given the burden of both water and sewerage/​wastewater prices on consumers.”

The Inquiry also found that ​“if SA had in 2006 followed the approach generally adopted interstate, the rolled-forward DORC asset value in June 2013 would have been about $6.1b rather than the $7.4b in the 2012 – 13 regulatory statement or the $7.77b set by the Treasurer in May 2013”.

The inquiry said there were many advantages from a determination at the lower end of the range, including lower costs for consumers and businesses, allowing them to spend more on other services and better compete against interstate and overseas suppliers.

​“SA will be a more attractive place to live and invest in, and this will encourage additional growth in output and employment,” the inquiry found.

Mr Penney said the state’s future economic prosperity was intrinsically linked to a low sustainable cost environment, which can help our exporters compete internationally.

​“The State Government has benefited from inflated water prices for at least six years and the inquiry’s report shows price relief for consumers needs to be implemented as soon as possible, which the South Australian Business Chamber estimates should result in a 7 per cent saving on water prices alone, with further savings to come from lower interest rates,” he said.

For further information or to arrange an interview please contact Verity Edwards on 0412 678 942.

24 July 2019