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Fair Billing Methods for Sewerage and Water Rates

Radio Broadcast

John Darley, Advance SA MLC (5AA 9.10-9.20) Proposal to change the method of calculating sewerage and water rates

(Byner: ESCOSA capped the amount of revenue SA Water can raise through bills each year based on the value of an asset base ... you’ve heard Professor Blandy say this and others, by overvaluing SA Water’s assets it means that SA Water can raise more revenue through bills and that means you pay more ... we kind of know that. However, sewerage rates are calculated on a property’s value which is determined by the Valuer-General ... this is on the assumption that a person’s ability to pay is reflected by their property value. That is to say, the more your house is worth, the more capacity you have to pay higher rates but there are many owners in South Australia who purchased properties decades ago which are worth a lot of money due mainly to the demand for land, but these owners are now in many cases elderly. Their income has not increased to the same rate in which their property value has increased. So this has created a situation where pensioners are faced with huge bills due to the value of their property ... there is an opportunity here to examine again alternative billing methodologies to ensure it’s fairer for you ... the Australian Productivity Commission conducted an inquiry into Australia’s urban water sector in 2011 and they found that sewerage rates should be charged on a fixed basis which ... is in line with the majority of other jurisdictions ... ESCOSA conducted an inquiry into reform options for SA Water’s drinking water and sewerage prices. They recommended that sewerage rates should be based on the capacity requirement of the customer, not the value. Their recommendation further stated that best reflection of this is the size of the sewerage connection ... now I’d like your comment ... what do you think about this assumption that because your house is worth more ... therefore you’re wealthy, you’re better off, pay up. John Darley from Advance SA ... I’m glad you’ve taken this on. Tell us what you want to do?)

... as far back as 1992 the Productivity Commission investigate water and sewerage rates generally and this is what they said. ‘Property values have no necessary relationship to cost of providing urban services such as water and sewerage and the practice of using them as a basis for charging should end.’ ... as we know, sewerage rates are based on the value of your property ... back in 2009 the Parliament approved amendments to the relative Act to allow SA Water to read ... water meters quarterly and everyone knows that during the winter months, basically the only water that’s used through the system is for household waste disposal purposes ... what I suggested is that instead of determining sewerage rates on the basis of evaluation, we should determine the actual usage waste of the system through the water usage during the winter months ... from May, June and July.

(Byner: Do you think you’re going to get a warm response to this given that-)

Oh, you never get a warm response to any suggestion that reduces the Government’s capacity to rip money out of people.

(Byner: But what about the business of fairness? ... there are two things ... that taxes should always be. They should be fair and they should be transparent. I’d put to you that with the evidence we’ve had from both ... Professor Dick Blandy and others and indeed the Productivity Commission, neither is the case here?)

No and Professor Mike Young from the Wentworth Group, I think he mentioned on one occasion that the best way to measure water use used through the sewerage system, is through the water meter reading during the winter months. Now, we have that system available but we’re not using it.

(Byner: ... is there anything you wish to legislate or is it you’re trying to give the current Treasurer, Rob Lucas, a nudge?)

Well we can’t legislate anything that involves money ... I’ll be talking to Rob Lucas about it ... perhaps it’s about time that SA started looking at other methods of charging for sewerage rates and the one that I’ve suggested seems to be the one. Now in ... ESCOSA’s report, they suggested that most states don’t base their sewerage rates on property values. In other words, South Australia and Western Australia are the only ones that do. So at this stage, we’re tail-end Charlie following the rest.

(Byner: ... the thing that was interesting ... yesterday we had an email ... where the person’s water consumption is $2.79 but their bill’s ... $253. It’s all tax.)

And the majority of properties in this state are like that. Mine are not unlike that ... the proposal I’m putting forward, let’s work out how much water is used through the system to clear away waste and the best time to do that is in the winter months and SA Water are reading meters quarterly so that can be ascertained so you can get a clear indication as to how much water is being used and base your charge on that.

(Byner: The other thing that we’ve got to mention here and it runs parallel to this argument. Just as the Productivity Commission and others have said ... the value of where you live is not commensurate with your capacity to pay. Council rates are in that same area where the council deems you to be wealthier just because the price of the dirt on which your house sits goes up.)

That’s just a straight out tax ... when we found, and I think it is Lew Owen who’s investigating this matter at the moment and his interim finding is, they’ve confirmed the fact that ESCOSA was right when they said SA Water have overvalued their assets. I think if you look into council assets you’ll find they are overvalued as well ... they’re taking money from the people when they shouldn’t be taking it ... they overvalue their assets and therefore they have to make allowances for depreciation on those assets like roads etc and if they’ve been overvalued, well then they’re collecting more money than they need.

(Byner: Do you think you’re going to get Parliamentary support given the fact that both major parties have been doing this?)

Well we’ll wait and see. There was no support coming from the Labor Government, I can tell you that. I think Rob Lucas has adopted a different approach to the whole situation ... we’ve noticed with the budget this year where the South Australian budget was based on a zero based budgeting principle ... you look at what you’re going to do this financial year and you budget according to that whereas in the past, governments in the main took last year’s budget, added on what they thought they were going to do and had no regard to the fact that a number of activities that they were carrying on, were no longer needed.

(Byner: John, in my view, you’ve more than justified while you’re still there in the Upper House and whilst you can’t legislate, what is it you hope to do by making this public? What is your best hope?)

My best hope is to convince Rob Lucas that we need to do something about it and I think he’s already looking at that ...

(Byner: Alright, thank you John ... )