Australia, the second driest continent on earth, has the highest volume of stored water per person in the world; per capita consumption of water is also one of the world's highest. JANET PARKER looks at the problems of water in our most populous state.
Australia has a huge investment in water infrastructure. In March 1992, the Industry Commission estimated the cost of replacing this infrastructure at $82 billion.
Last year, the CSIRO issued an alarming report on the state of our rivers. "Deoxygenated waters, odours, dead fish, dead kangaroos and impoverished invertebrate fauna may be what we can look forward to, unless we act decisively", it said.
The mismanagement of water resources has devastated our natural environment. In NSW, more than half of the native vegetation has been cleared. The damming of rivers has caused erosion, sedimentation and silting-up. Wetlands, an essential component of the ecosystem, have been drained and destroyed. Ground water has been depleted and polluted. And in rivers such as the Murray, sewage is being dumped into water which is later used for drinking.
Alarm bells began to ring more loudly in 1992, when a poisonous bloom of blue-green algae stretched 1000 kilometres along the Murray-Darling system.
In the midst of this crisis, the gargantuan Sydney Water Board (SWB) has produced a series of scandals. The annual Special Environmental Levy (SEL) of $80 instituted in 1990 disappeared into general government revenue. These funds were supposed to go to special projects to clean up Sydney's sewage and pollution problems.
In February 1993, it was revealed that the state government had forced the SWB to pay an extra $100 million into Treasury coffers last year — an amount equivalent to annual SEL income. The chair of the SWB, David Harley, had resigned in protest.
While the NSW opposition clamoured for a public inquiry, it was disclosed that yet another $100 million special dividend had been squeezed from the SWB in January 1993 — taking to $200 million the amount siphoned from the Board in just six months.
Then it came out that a community audit committee, formed by the state government in mid-1990 to oversee the project, had not met since the end of 1991. An environmental representative on the committee, George Threlfo, said that its first and only report, completed more than 18 months previously, had still not been released. Questions raised by the report had received no response.
Moreover, the latest SEL update, Threlfo added, did not include detailed information on how the fund was spent.
In a February 23 Sydney Morning Herald feature, University of NSW public accounting expert Bob Walker described the SWB as a "milch cow". The Liberal-National government insists that state government business enterprises make a profit in order to deliver a return to the "shareholder": the government. Walker says that although the board's cash flow gives it the capacity to pay high dividends, this can't be afforded when massive expenditure is required to repair and extend infrastructure.
Walker asserts that the SWB is now undercapitalised. He says that some close to the water industry claim that the government's aim is to financially weaken the SWB to speed handing over capital works projects to the private sector. That probably takes conspiracy theories a little too far, he suggests. But does it?
Three consultancy reports on privatisation of water were commissioned by the state government last year at the hefty cost of $229,000. Furthermore, plans are under way for the building of a $520 million water purification system based on four new treatment plants built by private enterprise.
The new plants, costing a total $515 million, are to be situated at the Prospect and Macarthur reservoirs, the Woronora Dam and the head of the Illawarra supply system. According to Danielle Cook, environment writer
for the Sydney Morning Herald, the banks involved want a minimum contract of 25 years to guarantee a return on their investment. The SWB would provide the water to the private operators, who treat it and sell it back. The board estimates this will cost $70 million a year ($1.750 billion over 25 years) — a $1.25 billion profit to the plant builders.
The SWB acknowledges that privatised water treatment will cost more, but claims that significant savings will be made in other areas — namely productivity. This cost-cutting crusade is being led by the newly appointed chief, Paul Broad, former head of the Hunter Water Corporation.
A media campaign has promoted Broad as the saviour of NSW. He's the no-nonsense new boy in town who takes short showers and has even been known to answer customer inquiry calls in the office. This "proactive, pro-market" chief has described his aims as speeding up corporatisation, stopping the "one-off cash raids" by converting the board into a statutory corporation and paving the way for user-pays pricing.
The board has proposed a new user-pays system which it claims will raise prices around 4%. The SEL would be dropped, the levy being integrated into water bills, and residents charged a flat rate of 65 a kilolitre.
The SWB estimates that the average Sydney household uses some 300 kilolitres a year and pays $510 in water bills. If water use does not drop, this would rise to $532 per year. The claim is that sending "price signals" to the consumer will cut water use. If a household saves 44 litres a day, it could cut costs by up to $52 per year.
However, a report by the government Pricing Tribunal says that the average household's annual water bill could rise by up to $250, dependent mainly on the rate of productivity gain by the SWB and the size of the "dividend" exacted by government.
The second element of Broad's plan is dramatic cost-cutting. All new capital works projects have been frozen, and no more consultants or professional service contractors are to be engaged. Employment of
casual, temporary or agency staff has been barred, with cuts of up to 75% in some departments. Under review is the board's involvement in the promised $7 billion Clean Waterways program with a view to handing over its functions to agencies like the Environmental Protection Authority or the Department of Water Resources.
Accused by the environment movement of abandoning the promised attention to the environment, Broad's response was predictable: "If you get the economics right, you tend to get the environment right as well".
These plans could spell disaster. They threaten to increase the financial burden on low income earners. Pensioners, formerly exempt from the SEL, will have it incorporated into their bills — receiving a rebate in the first year only.
Secondly, if the responsibility for cleaning up Sydney's waterways is devolved, it will almost certainly disappear. The notion that the EPA could be responsible for the clean-up would be funny if it were not so tragic. A November 1992 Total Environment Newsletter assessed the EPA in its first year of operation as yet another obstacle that had to be fought. It cited the EPA's decision to issue the Forestry Commission with "pollution control licences" that simply endorsed existing inadequate logging rules. It has sided with developers and objected to members of the community taking pollution cases to the Land and Environment Court.
Most recently, the EPA had failed to prosecute the SWB despite clear breaches of its licence to discharge treated sewage into the Hawkesbury-Nepean river. The EPA had ignored the board's failure to lodge compulsory certificates of compliance for any of its 23 sewage treatment plants along the river for the past two years — a prosecutable offence.
Thirdly, if the NSW government is laying the groundwork for privatised water, we'd do well to study the English experience [see page 13].
The SWB claims that it must contract out the purification of Sydney's water because it does not
currently meet the stringent national guidelines on taste, colour, odour or bacteria levels. But many in the environment movement say this is tackling the problem at the wrong end.
The Coalition of Hawkesbury and Nepean Groups for the Environment (CHANGE) has called for money to be used instead on improving the catchment, storage and distribution systems, fixing the source of the problem not treating its result. Dr David Hughes, spokesperson for CHANGE, says that by the board's own figures, less than one quarter of all our drinking water needs any treatment at all.
A submission prepared for the NSW Pricing Tribunal by the Australian Conservation Foundation and the Australian Consumers Association also emphasises the need to set the question of the use and pricing of water in an environmental context. Market forces alone, they say, will not take account of past environmental degradation, meet current environmental goals or ensure a secure environment for the future.
The board must be accountable and set in place mechanisms for public consultation. A comprehensive demand management system must be established that draws on the experience of other countries and their achievements in this field, they say.
Ultimately, water conservation and the preservation of the integrity of the water cycle can not be achieved by the SWB alone. A comprehensive strategy must look at a whole new model of urban development and decentralisation to ensure that the problems generated by unplanned urban growth and sprawl do not just keep re-emerging in other forms.