How many times have we been told Australia is the driest inhabited continent on earth? And, yes, we know we are among the world’s highest consumers of water. And for this, there is a price.
Amongst OECD nations, Australia is ranked fourth-highest in water use per capita. The average Australian uses 1.31 million litres each year, add this up for every Aussie and we’d fill Sydney Harbour 48 times. Eighty per cent comes from rivers and dams and the rest from groundwater.
We could blame the cows … Irrigated agriculture is the largest user (75 per cent) and the rest is for urban and industrial use. In a typical Australian household, each person uses around 350 litres a day, if you were living in an Asian country, the figure would be closer to 75 litres a day. Quite a reality check.
And the cost for water in Australia is skyrocketing. According to the Water Services Association of Australia, we spend two per cent of our average earnings on our water and sewage bill. Adam Lovell, executive director of the association, believes that “for around $2 per tonne, the delivery of clean, healthy water to your home 24/7, this represents exceptional value for money”.
But rising prices are hurting, and here’s the sting. Australians pay wildly different amounts depending on where they live, and who it is that provides the water.
A dairy farmer in Bega, Steve Guthrey, recently told the ABC he’s paying the NSW government seven times more for bulk water to grow grass for his cows, than his colleagues in the state’s south-west on the Murrumbidgee river system.
The National Water Commission has established a long-term blueprint for water reform called the National Water Initiative. Through it, governments across Australia have agreed on ways to achieve a more cohesive national approach to the way Australia manages, measures, plans for and trades water. Significantly, it aims to improve pricing for water storage and delivery.
This is good news for the consumer because regulation of water pricing by an independent body in each state and territory provides for pricing transparency, to set and review prices on a case-by-case basis and to publicly report on pricing. In most parts of the country, state governments run water utilities but in Victoria, the system has been privatised.
Customers of almost every utility experienced a real increase in residential bills, at a higher rate than inflation. The higher prices reflected increased depreciation, financing and operating costs from large capital infrastructure projects owned by retail utilities or costs passed on to them by bulk utilities or private sector asset owners. Out of 63 utilities that reported to the National Water Commission, 59 recorded increases in typical residential bills.
|Typical residential bill (based on average annual residential water supplied) ($)*
For major capital cities
|Note: Melbourne figures are averages for the three retailers and are weighted based on the number of residential water connections.
As we have been warned for the last decade, householders face steep rises in water bills to fund an estimated $30 billion worth of spending over the next five to 10 years to drought-proof the country.
Billions of dollars' worth of water projects are already under way, including Victoria's $3.5 billion desalination plant at Wonthaggi and Adelaide's $1.8 billion desalination plant, while significant work is expected to take place in fast-growing southeast Queensland.
In Victoria, the elaborate reverse osmosis plant will cost Melbourne water users about $650 million a year.
But while consumers are being educated to expect to pay more, state governments are squeezing increasing revenue from their water and power utilities, a provocative move when they claim to be concerned about the cost of living for average families.
Dividends from state-owned enterprises are siphoning $3.9 billion into treasury coffers during 2011-12, almost $400 million more than governments grabbed last financial year, according to newspaper reports. And most of the dividends are coming from government-owned electricity and water utilities.
|NSW residents copped the biggest bill shock back on July 1, with water prices rising 2.6 per cent. The NSW government budgeted to reap $1.36 billion in revenue from its commercial enterprises in 2011-12, some 27 per cent more than the previous financial year. Revenue from water utility revenue will jump 10 per cent to $379 million.
The NSW Independent Pricing and Regulatory Tribunal is reviewing water prices to reflect the cost of Sydney's new $2 billion desalination plant raising the prospect of even higher bills for families next year.
Dam capacity for:
As of 2nd March 2012
Queensland's pricing regulator, the Queensland Competition Authority, claims that any pricing changes should be phased in to protect customers from nasty shocks. The state's water utilities did not pay any dividends last financial year, although prices rose by five per cent in southeast Queensland, and 6.5 per cent in Brisbane on July 1.
Western Australia's water dividends dropped from 11 per cent to $371 million with households paying 8.5 per cent more for water since the beginning of the last financial year.
Most of Victoria's $415m in dividends will come from water utilities. They increased their retail prices between five and 15 per cent on July 1.
South Australia has privatised its power companies but will take $138.2m in water utility dividends - an increase of 18 per cent, as household water bills have soared 26 per cent.
Tasmania will increase its dividend payments by two-thirds, to $110m - and households are being charged about 10 per cent more for power and water.
|Changes in prices, 2009-10*
|| Real price change (5%)
||Average increase of 7.7% from 2008-09 to 2011-12
|City West Water
||Average increase of 10.9% from 2008-09 to 2011-12
|South East Water
||Average increase of 12.1% from 2008-09 to 2011-12
|Yarra Valley Water
||Average increase of 13.2% from 2008-09 to 2011-12
||Average increase of 1% (water) and 4.8% (sewerage) from 2009-10 to 2012-13
||2009-10 increase of 17.9% (water) and 0% (sewerage)
|WA Water Corporation
||2009-10 increase of 5.4% (water) and 0.3% (sewerage)
||2.7% for water and sewerage in most municipalities
||14.2% for water (250 KL customers)
Householders have been warned of steep rises in water bills to fund $30 billion worth of spending over the next five to 10 years to drought-proof the country. The dollar figure is a broad industry estimate of spending on desalination and recycling plants, pipes, dams, water trading and groundwater.
Australians have learned a tough lesson from the 10-year drought. We can no longer take water for granted. We have to pay for major infrastructure reform rather than risk water restrictions – or worse - when the rain doesn’t fall. As former Premier, Steve Bracks, said in a recent weekend interview with The Age, Melbourne was ''absolutely'' at risk of running dry by 2012 when he decided to build one of world's largest and most costly desalination plants.:
Have water restrictions taught us anything?
Overall, Australian capital city water consumption has reduced by 25 per cent since 2003. If water consumption had stayed at the 2003 level an additional 210 gigalitres would have been consumed in 2011. This 210 gigalitres is the equivalent of the annual consumption of all households in Melbourne during 2008.
Sydney now uses the same amount of water as it did in 1974 but there are now over one million additional Sydneysiders living in that city. This shows the impact of water restrictions and other water saving measures.
Tell us what you think about rising water prices.
* Source: The National Performance Report 2009-10: Urban water utilities - www.nwc.gov.au