Water Pricing

I seek leave to make a brief explanation before asking the Minister for Water and the River Murray a question on the subject of water prices.

The Hon. J.M.A. LENSINK: It has been revealed that the Premier and Treasurer have had influence over the regulated asset base of SA Water through the second pricing order which was signed on 17 May 2013. This led, through the overestimation of demand being set at 190 gigalitres, to the overinflation of the RAB by some $700 million by the Premier's actions. On FIVEaa on 28 May 2013, Mr Leon Byner's show, the Premier claimed:

I don't think SA Water were expecting to have the cost ripped out of their regulated asset base in the way in which ESCOSA carried out their work. 

He then went on to say that that would reduce the government's dividend by $800 million per annum. My question is: why did the Premier deliberately mislead the people of South Australia through this claim? 
The Hon. I.K. HUNTER  (Minister for Sustainability, Environment and Conservation, Minister for Water and the River Murray, Minister for Aboriginal Affairs and Reconciliation)  ( 15:15  ): Thank you, Mr Premier. I thank the honourable member for her most important question.

 Members interjecting:  
The Hon. I.K. HUNTER: Mr President—I note that I have been advised at some stage that, unlike other jurisdictions, there is no prohibition on premiers coming from this chamber. I am not sure if that is still the case, Mr President— Members interjecting: 

 The PRESIDENT: Order! 
The Hon. I.K. HUNTER: —but that is something that a number of people could aspire to, perhaps. Mr President, let me just put to bed this unfortunate question asked by the Hon. Michelle Lensink. Given the premise being so completely unfounded I will need to give some background information about water pricing.

Unlike privately owned utilities there are frameworks in place and pricing regimes put in place by this government preventing the generation of excessive profits and distributions by SA Water. This government introduced the economic regulation of SA Water by the Essential Services Commission of South Australia for this very reason. We have introduced transparency and accountability to prevent the earning of monopoly profits and excessive returns, and ESCOSA now sets a cap on the amount of revenue that can be earned by SA Water.

SA Water's first determination undertaken by ESCOSA was announced in May 2013 and covers the three-year period 2013-14 to 2015-16. Based on this determination the government was able to announce a decrease in prices of 6.4 per cent in 2013-14—a decrease in prices of 6.4 per cent. As promised for 2014-15, water and sewerage price increases have been limited to inflation or CPI in line with ESCOSA's determination.

Delivering those lower prices meant contributions to government were estimated to be reduced by $80 million over the three-year regulatory period. Over the period of 2014-15 to 2017-18 the government has forecast to receive $630 million in dividends and $284 million in tax equivalent payments, and over this time the government will make two very significant forms of return on this income. Community service obligation payments back to SA Water are $515 million, which lowers the water and sewerage prices and provides for community services, in particular ensuring that regional customers do not pay more than metropolitan customers.

Water and sewerage concession payments of $177 million benefit low-income water and sewerage service customers. This is important because the recharging of our system in returns to our communities primarily affects customers who are on low incomes or living in rural and regional South Australia. They are the major beneficiaries of these CSOs, and these are the beneficiaries that the Liberal Party opposite want to attack. They want to attack these people by actually taking away the deregulation that drops prices and privatising SA Water to their mates in the big end of town. That is their plan; that is their secret plan and yet we do not want to hear that from them because they say it is not true. But we know, from when we talked to their federal counterparts, that is exactly what they had in mind.
 The Hon. J.M.A. Lensink: Oh, really! That's actually a lie.
 The Hon. I.K. HUNTER: After taking account of—
 The Hon. J.M.A. Lensink: That's a lie.
 The Hon. I.K. HUNTER: —community service obligations—

 The PRESIDENT: The Hon. Ms Lensink, the minister has the floor.
 The Hon. J.M.A. Lensink: Well, he's lying.
 The Hon. I.K. HUNTER: After taking into account community service obligation payments and water and sewerage concessions, a total of—

 Members interjecting: 

 The PRESIDENT: Minister, please sit down.
 The Hon. G.E. GAGO: Point of order—

 The PRESIDENT: The Hon. Ms Lensink, it is totally unparliamentary to refer to the minister as being a liar.
 The Hon. J.S.L. Dawkins: No, she didn't say that.

 The PRESIDENT: You said 'he's lying'.
 The Hon. J.S.L. Dawkins: She did not say that.

 The PRESIDENT: She said he was lying. That would naturally mean you are saying he is a liar. I want you to withdraw that remark.
 The Hon. J.S.L. Dawkins: Well, she doesn't have to.
 The Hon. J.M.A. LENSINK: No, I will not withdraw that remark—that is a lie.
 The Hon. T.A. FRANKS: On a point of order, the honourable member was not on her feet when she said those words, so I don't understand how she can withdraw them.

 The PRESIDENT: I personally couldn't care less; she called across the floor and called the minister a liar.
 The Hon. T.A. FRANKS: I'm asking you: how can she withdraw them if they weren't put on the record?
 The Hon. J.S.L. Dawkins: She did not. She did not do that.

 The Hon. J.M.A. Lensink interjecting: 

 The PRESIDENT: You said he was lying.

 The Hon. J.M.A. Lensink interjecting: 

 The PRESIDENT: Well, just withdraw that he was lying.
 The Hon. J.M.A. Lensink: Well, it's true.

 The PRESIDENT: Are you going to withdraw it?
 The Hon. J.M.A. Lensink: No, I'm not.

 The PRESIDENT: Well, I've got no other alternative but to name you. Totally unacceptable, this unparliamentary behaviour.

 Members interjecting: 

 The PRESIDENT: I honestly think, the Hon. Mr Dawkins, that the Hon. Ms Lensink can handle it herself without you sitting in the background giving advice.

The Hon. I.K. HUNTER  (Minister for Sustainability, Environment and Conservation, Minister for Water and the River Murray, Minister for Aboriginal Affairs and Reconciliation)  ( 15:26  ): Thank you, Mr President. I apologise for that brief interruption to my answer. It does bear some noting, of course, that the opposition now have trashed the standards of this house—the house that they go out and say they want to uphold. As they are wont to say—

 Members interjecting: 

 The PRESIDENT: Order! The minister has the floor.
 The Hon. I.K. HUNTER: 'Standards don't matter,' I heard from the other side of the chamber, 'when you have the numbers.' That's the way they operate now, Mr President. Going back to talking about community service obligation payments and water and sewerage concessions, a total of $222 million is forecast to be available for general government services during the period of 2014-15 to 2017-18.

On an annual basis, this means we are providing $43 million back in water and sewerage concessions during 2014-15 and $126 million in community service obligation payments. After taking these items into account, the expected return to the government this financial year is $26.65 million, I am advised, which again goes back to delivering services to South Australians, and that's not including the $43 million the government spends on concessions.

The net contribution of the government in 2014-15 is $69.96 million. As a comparison in today's dollar terms, the Liberals took out a lot more in their last term of government. They took out a net contribution of $170 million in their last term of government—that's $100 million more than what we have taken out this year.

This government recognises the impact, of course, of cost of living pressures, and so supports South Australians who are doing it tough and provides concessions of 30 per cent for 2014‑15, with a minimum of $185 and a maximum of $295 to those who meet the eligibility criteria. The state government is also committed to introducing a single concession payment from July of next year to simplify family budgeting by providing all concession payments for the year in one single payment.

This government has a very proud history of water reform and reform of the industry. We introduced the Water Industry Act to create a level playing field for water retailers. There is already a range of procedures and processes that are designed to ensure fair and appropriate pricing. This government is committed to fair and equitable water pricing.

We have secured our water security for future generations and last year delivered, as I said earlier, a 6.4 per cent reduction in water prices while ensuring water prices will rise by no more than CPI for the next two years. The arrangements for pricing water in South Australia have met and continue to meet all appropriate regulatory requirements and are consistent with the National Water Initiative.

Our water pricing ensures equitable service delivery for all South Australians irrespective of where they live, and these policies take into account essential investment in infrastructure that will secure our water supply into the future. This is particularly important, given South Australia's uniquely dry climate. We can no longer rely on our traditional sources of water to meet our future water needs, and neither are our requirements the same as other jurisdictions.

The government has in place a range of measures to ensure we offer transparent and accountable practices in relation to water services. There is now a requirement for external reporting and monitoring of SA Water's performance and compliance, as well as a requirement for audited regulatory accounts for SA Water. We have increased transparency on noncommercial activities through a direction from the minister, and the water industry now has an independent technical regulation through the transfer of responsibility for technical regulation from SA Water to the Office of the Technical Regulator.

The government has expanded the Ombudsman to the Energy and Water Ombudsman of South Australia to independently assess SA Water customer complaints and, unlike the Liberal Party in this state which sold off our electricity assets, we will not be pitching a 'for sale' sign on SA Water, or any of its assets, and seeing profits going interstate or overseas. This state government will ensure that SA Water remains SA owned, with any benefits going straight back and providing concessions and services to South Australians.

The PRESIDENT: Supplementary.

The Hon. J.M.A. LENSINK  ( 15:30  ): Is it not true that by deliberately inflating demand to 190 gigalitres, the government deliberately manipulated water prices prior to the election and has set them on a trajectory of being increased for the next 50 years, as has been stated by the former chief of ESCOSA?
 The Hon. I.K. HUNTER  (Minister for Sustainability, Environment and Conservation, Minister for Water and the River Murray, Minister for Aboriginal Affairs and Reconciliation)  ( 15:30  ): My understanding and recollection, without having notes in front of me, was that the government set a projected usage of 190 gigalitres and after 12 months the usage was, in fact, about 191 gigalitres—of that order. So, the government actually got the projection right.

The PRESIDENT: Supplementary.

The Hon. J.M.A. LENSINK  ( 15:31  ): Does the minister concede that this was against the advice of SA Water and ESCOSA? 
The Hon. I.K. HUNTER  (Minister for Sustainability, Environment and Conservation, Minister for Water and the River Murray, Minister for Aboriginal Affairs and Reconciliation)  ( 15:31  ): Making projections into the future is a difficult task. The government uses ranges of information sources to get the right figure, and on my understanding, from memory, we came very, very close.