Published: 04 July 2017

Ruth Forrest has a simpler, more collegial solution to state’s water, sewerage problems IT is a sure sign we are heading down the wrong track when disputing parties summon lawyers.

In the case of TasWater, I have been curious as to the legal basis for seizing water and sewerage assets. I simply assumed the government was on safe legal grounds — not according to legal advice obtained by TasWater and its shareholder owners, the 29 municipal councils. What now? The last thing we need is a dispute between two tiers of government. To what end? To score political points? So that things get fixed quicker?

If the latter is the case and money is the problem, why doesn’t the Government invest in the company rather than try a hostile takeover?

Public opinion seems in favour of keeping ownership in public hands. However, no one really cares whether it is owned by local government or the state or a combination.

The Treasurer has changed the emphasis on his need to compulsorily acquire TasWater. We are now told there will be another $400 million to be spent on assets at the end of their useful lives even after the current capital spending program is complete. The Treasurer’s message is that TasWater does not know what it is doing.

There are three major projects the Government wants to see done sooner rather than later — the relocation of Macquarie Point sewerage works, attending to problems at the caravan park near Mona and fixing Launceston’s stormwater problems. TasWater has different priorities when it comes to these.

Has the Treasurer considered all options before heading down this adversarial path using questionable tactics? Is there another way to achieve what Tasmanians want — clean, safe drinking water and compliant sewerage services at an affordable price?

The Government has provided $20 million per year in the latest 2017/18 budget to give councils what they would have received as shareholders of TasWater. Half,

say $10 million, would pay the interest on a $300 million loan the Government could borrow and invest in TasWater. So why doesn’t the Government chip in equity to solve any problems? It would have money left over after paying interest to spend elsewhere.

We have no idea what the effect on the budget bottom line will be once the Government arranges extra borrowings to bring forward capital works and cover the cost of price reductions.

Make no mistake the Government will have to borrow money to cover the loss of revenue from price reductions, as part of its priorities to build Tasmania and win the next election.

TasWater has copped flak from some for the slower than expected pace to bring assets up to standard and for the less than adequate liaison with some local communities. But most people are nervous about entrusting a utility to a couple of Government shareholder ministers to play political games with when it suited them and the electoral cycle.

Past performances with businesses like the Hydro and TasNetworks has left them full of debt and less able to meet challenges. The same could easily occur with a stateowned TasWater. A company loaded to the gunwales with debt, used by its owners to draw out equity for whatever reason and used as a vehicle to win votes every four years is to be avoided. It would lead to a race to the bottom.

If shareholder ministers are to run the show, why bother with a corporate structure outside government? On the other hand, there appears a reasonable argument in favour of the current TasWater structure where councils own shares, but are not interferers who always know best.

Whatever we think of TasWater, they know more about water and sewerage than the Treasurer or his staff. If there’s a funding problem let’s help TasWater address it. If there are governance issues, fix them. Do we need an alpha male-driven hostile takeover with a problematic end result?

It can be a win-win for all parties. The Government can put equity into TasWater so its pet projects can be brought forward, provided existing shareholders agreed to their interests being slightly diluted. The Government could pick up a seat or two at the board table so it could speak for the wider community on the management of infrastructure instead of sniping from the sidelines. And the community would be spared the spectacle of two levels of government engaged in a melee that will ensure a further loss of trust in the political process.

When and if it comes time for the government to withdraw its funds, it could be done in such a way to add to the government’s bottom line. This week we have seen the ingenious way the Government devised to ensure the spending of the Mersey hospital windfall of $730 million over 10 years does not create 10 years of deficits, which would happen if it were left in government coffers and spent.

Parliament has a Bill before it transferring the lump sum to Tascorp as equity, to be drawn out via a special dividend thus creating income each year for the government before spending the amounts as intended.

It’s an accounting trick to create income in the government’s books each year.

The same trick could be used with TasWater. After rescuing it with an equity injection, it could withdraw the amounts in future years as a special dividend boosting the government’s bottom line. The Treasurer would look like a maestro.

Surely a little cooperation would go a long way to solving the reasonably simple problems at TasWater?

Legislative councillor Ruth Forrest is the independent member for Murchison.

Go Back