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October 19th 2010 print

Ian Mott

You waste, we pay

The full dams in South East Queensland now hold enough water to last until 2018 even if not a single drop of extra water falls until then. But once again, the urban media just skims the surface of the issue without getting close to what is actually going on.

A regional view of urban waste

How regional Queenslanders are subsidising the cost of SEQ water incompetence. 

A recent article in The Australian has pointed out that the full dams in South East Queensland now hold enough water to last until 2018 even if not a single drop of extra water falls until then. This means that none of the $9 billion spent on their water grid will be needed for at least a decade. And all this just as the desalination plant has been handed over so it can supply its pathetic 44 megalitres a day that no-one needs. 

But once again, the urban media just skims the surface of the issue without getting close to what is actually going on. The real story is the same old story, of urban indulgence, subsidised by regional folk who get to share the inflated costs of something they were never going to benefit from in the first place. 

At 44 megalitres a day, the desalination plant will only produce 16,000 ML a year. That is only 2/3rds of the 24,000 ML that went over the Wivenhoe spillway on 11th October just after it hit 100% full. And it is only an eighth of the 130,000 ML that followed as a flood release a few days later. Meanwhile, the 5% interest bill on the wasted $9 billion worth of drought proofing (!!!) is $450 million a year or $1.23 million today, tomorrow and every other day. Add the $32,000 for useless desal water then divide this by the 664 megalitres SEQ actually uses each day and the interest bill alone adds $1,905 to the cost of each megalitre or $1.90 to each kilolitre. The current price paid by SEQ residents is only $1.84/KL which, in theory, covers the cost of all the existing infrastructure. This is damning evidence, if you’ll pardon the pun, that 1.5 million regional Queenslanders are subsidising the SEQ water incompetence by at least 1/3rd of the interest bill, or $150 million a year. 

But wait, this is only the interest bill. Few Australians would have experienced the luxury of a mortgage at the kind of interest rates that governments enjoy. At the 7% interest rates that we all pay, the annual payments on a  20 year mortgage are the loan amount divided by a factor of about 10.5. But for governments paying only 5% over the same term, the annual payments are  calculated by dividing the $9 billion loan amount by a factor of 12.46 to get annual repayments of $722 million. This works out at $2.98/KL if it were only paid for by the people who actually get water from that system. But in fact, $245 million of this is being funded, at about $163 each, by regional Queenslanders who are already paying for their own water infrastructure. 

And at an average of 2.7 people per household, the $440 a year would cover the payments (at 7% interest over 20 years) on two 22,000 litre water tanks. In the remote indigenous communities that cram 8 or more people to a house while they wait for their public housing to arrive, it would cover the payments on 6 tanks. But of course, most regional folk already have a water tank but there are plenty of other priorities they could spend their own share of state revenue on. 

To put that another way, 750,000 North Queenslander’s are covering a 17% share of the $9 billion debt, about $1.53 billion. It might not buy much in the way of urban road tunnels but it would sure buy some impressive improvements to the Pacific Highway between Mackay and Cairns. And as far as Qld Deputy Premier, and Health Minister, Paul Lucas’ sneering question of how North Qld MP, Bob Katter’s proposed new State in North Qld could possibly afford a decent hospital, he need look no further than the ongoing cost of his own mistakes as former minister for infrastructure.

Ian Mott blogs at Regionalstates