Image for TasWater’s Owner-Councils Vote To Reject State Takeover

TasWater’s owner-councils yesterday voted to reject the Tasmanian government’s proposed plan to takeover TasWater, an enterprise of Mr Peter Gutwein as the Minister for Local Government.

In yesterday’s special meeting in Launceston, TasWater’s owner-councils voted as follows:

Councils rejecting a State takeover of TasWater:

23 ~ Break O’Day, Brighton, Burnie, Central Coast, Circular Head, Clarence, Devonport, Flinders Island, Glamorgan Spring Bay, Glenorchy, Hobart, Kentish, Kingborough, King Island, Latrobe, Meander Valley, Northern Midlands, Southern Midlands, Tasman, Waratah-Wynyard, West Coast, West Tamar.

Councils supporting a State takeover of TasWater:

4 ~ Dorset, Central Highlands, Sorell and Derwent Valley.

[Abstaining from the vote: Launceston and George Town.]

In the run-in to yesterday’s local council meeting, Tasmania’s Treasurer and Minister for Local Government, Mr Gutwein, said that his government remained ‘committed to the takeover plan even if the councils did not agree with it’. (1)

The decision of councils yesterday follows the handing-down of the Liberal’s Federal Budget on Tuesday.  The Tasmanian Liberal Premier, Mr. Hodgman, did not secure one dollar of federal funding for water and sewerage infrastructure in Tasmania.

TasWater Chairman, Miles Hampton was the only invited speaker for yesterday’s meeting;  Minister Gutwein addressed local government during meetings in the preceding weeks.

On the website for the Local Government Association of Tasmania (LGAT), representing the financial interests of Tasmania’s councils, within the Meeting Agenda, May 11, LGAT writes:

‘LGAT concurs with the Chair of TasWater when, in his letter of 21 April 2017, he urges Members to decide, one way or the other, at the 11 May Meeting.  Waiting for more information, including a Bill, will place the sector at a disadvantage if Members decide at that point they wish to challenge the ownership proposal.  Given the intensity of the Government’s campaigning on this issue, the public and the Members of Parliament (particularly the Legislative Council) are likely to have already come to a decision, limiting the effectiveness of any late advocacy by LGAT. (2)

LGAT’s overall perspective, for owners and for communities, is documented in the Meeting Agenda, May 11:

‘Implications for owners:
a) Reduction (likely loss) of future revenue/no return on investment in assets.
b) Likely increased pressure for forced council amalgamations.
c) Reduced influence and scrutiny, transparency and accountability at the mercy of the Government of the day.
Implications for communities:
a) Reduced access to owners.
b) Reduced advocacy by owners for local service provision.
c) Likely increased long-term costs.
d) Risks to rural/service provision in the longer-term + prices capped in the short term + capital program timeframe reduced by three years.’ (3)

It is important to note for the purposes of this discussion, the distinction between the Owners’ Representatives Group (ORG) and the Local Government Assocation (LGAT). 

The ORG represents owner-councils with regard to TasWater, and has legislated responsibilities for TasWater.  All 29 councils are a part of the ORG.  The Chairman is Mayor David Downie.

LGAT are a voluntary association, whose decisions are not binding on TasWater.  LGAT has no responsibilities for TasWater whatsoever, with no legislated interest in TasWater.  Rather, LGAT’s role as an Association, as per the stated objectives on their website, is advocacy in the interests of the financial wellbeing of the local councils who are its members.  LGAT does not have stated objectives on their website with regard to drinking water.  The president of LGAT is Mayor Doug Chipman.

LGAT makes the reasonable and obvious point, in the Meeting Agenda for yesterday’s meeting and vote, that the equivalent State funding from consolidated revenue, as proposed by Minister Gutwein, could be injected into TasWater at any time without a change in ownership. 

And LGAT disputes the claim that the Government will fix the boil water alerts faster:

‘Under council ownership… it is projected that the remaining customers will receive drinking water by August 2018, well before the Treasurer’s plan could take effect.’ (4)

LGAT further challenges the Government’s statement that they will cap price increases at 2.5%. 

‘Pricing is currently set by the independent regulator… the latest national report states that when compared to like utilities TasWater charges per customer are the lowest despite having the highest level of capital investment.’ (5)

Challenging the assertion by the Minister that the State government can borrow money at a lower rate than the councils can, LGAT states:

‘TasWater already borrow money through TasCorp at the same rate as the government.  There is nothing to stop the government from sourcing more money for water and sewerage under a Local Government ownership model if it chooses to do so.’ (6)

Although the Government says it will prevent privatisation through the legislation, LGAT reminds Tasmanians that the current ownership model effectively prevents privatisation. (7)

Of course, a possible limitation of the council-owned model for TasWater is that councils, due to their financial conflict of interest in pursuit of dividends for their communities ~ reasonable or unreasonable ~ base their decision about the future of TasWater, not necessarily on the reasons of best oversight and maintenence values, for drinking water quality into the future, but on the best solution for their dividend income. 

The pre-emptive submission to LGAT by the Brighton Council, bidding for councils to reject the State takeover, can safely be seen to illustrate the decision-making process of other councils, and thus is a a prime example:

‘For Brighton, the loss of TasWater dividends is equal to almost 10% of rate revenue and the position could be similar for most Councils (refer Table of Figures below). LGAT members would be aware that Brighton Council made the unanimous decision to oppose the takeover largely based on this loss of revenue and its effect on Brighton ratepayers and its community.’ (8)

One must consider that councils, as as an extension of this natural tendency or need for dividends for their communities, may also base oversight decisions about TasWater in reference to their own financial interests, rather than the interests of progressive drinking water policy and practice for Tasmanians.

Brighton council went on to write:

‘In the medium term, the Treasurer has said that councils will receive 50% of the total value of returns after 2024/25, but he went on to say that we have “eight years to get ready for life without dividends”... As these distributions will not be legislated it is probable that they will not be honoured due to “budget pressure”.  After 2014/15 it is probable that there will be no distributions to councils.’ (9)

Looking upon this new Tasmanian war, waged under Premier Hodgman, a newly formed Legislative Council Select Committee will investigate the proposed State takeover of TasWater.  The members are: Rosemary Armitage MLC, Robert Armstrong MLC, Craig Farrell MLC, Kerry Finch MLC, Mike Gaffney MLC, Tania Rattray MLC and Rob Valentine MLC.

Also relevant to the future success or otherwise of legislation for a takeover, last Saturday’s election for the Legislative Council in Rumney, delivered a third Labor member to the House of review.  The Labor party’s policy opposes a State takeover of TasWater.

In an interesting associated issue, the State government and the 29 owner-councils are yet to explain the anomoly within the published records of the Department of Health and Human Services (DHHS).  The drinking water data for 2014 / 2015 has not been published on the DHHS website.  A Right-To-Information (RTI) request has been lodged for information in this regard. 

The DHHS are obliged by legislation to publish drinking water data on a uniform, annual basis, separate from TasWater’s own annual publication. 

Returning to the proposed State takeover of TasWater, on ABC radio yesterday morning. prior to the LGAT meeting, Minister Gutwein, when questioned by Sarah Gillman about his view of TasWater’s Chairman, Mr. Hampton, said:

‘Miles Hampton has completely changed his tune… Last year Mr Hampton wrote to me to say, and I quote: “The clean-green image on which Tasmania relies is at risk if we do not grasp the nettle and push forward with this plan [TasWater’s 10-year plan].’ (10)

Minsiter Gutwein went on to say:

‘I presented at a general meeting only three or four weeks ago to local government and provided them with a detailed presentation with regards to how we would bring forward the infrastructure program, what it would mean for the company at the end of ten years.  At the end of ten years, I demonstrated that the high level Treasury advice that we’ve received indicated that… It would be in a net profit position.  All of this information has been provided to local govenment.’ (11)

Chairman Hampton also spoke on ABC radio yesterday. Chairman Hampton answered neatly:

‘It’s whether councils believe there’s a crisis to start off with.  With 99.2% of our customers receiving water they can drink, and the remaining 0.8% having it by August next year, there’s not a crisis in water quality… So my first point to our owners will be: there is not a crisis… If there is no crisis here, why would we make this change?’ (12)

Chairman Hampton went on to say:

‘The accusations of the Treasurer, in terms of a crisis, are completely unfounded.  The accusations that we are damaging the Tasmanian brand are completely unfounded.  Yes ~ we asked for assistance and he [Mr. Gutwein] told us to go away.  Repeatedly.  He told us to go away.  And that was less than a year ago.  He also said he had no money.  Now all of a sudden ~ no, I want to take it over; and by the way, I’ve got some additional money to help you.  I’m sorry ~ I’m challenged by the sudden change of view.’ (13)

Greens Minister Andrea Dawkins spoke in defence of Tasmania’s councils:

‘He should definitely be listening to councils. Local government is the layer of Government that is closest to the people.’ (14)

The shadow Minister for Finance, Scott Bacon, also spoke on ABC radio yesterday morning:

‘This comes down to whether you can trust Peter Gutwein.  He said that prices will be lower and that he’ll be able to do the work quicker.  Ultimately it’s not believeable.  You can tell that its not believeable when Peter Gutwein won’t provide any of the information that supports the claims that he makes.  He hasn’t got a business case.  He hasn’t released any financial modelling.  And he’s produced nothing to say that the 10-year plan that TasWater has in place ~ that he says can be done in 5 years ~ he’s got nothing to back that up… What Mr Gutwein says is just not believeable.’ (15)

Mr Bacon went on to say:

‘They [local government and TasWater] have been asking Peter Gutwein to show some interest, and to put some State government money ~ to lobby for Federal government money ~ to fix the water and sewerage issues we’ve got in Tasmania ~ and Peter Gutwein’s been fobbing them off for three years.  And now he turns around to try to use their words back at them when what TasWater was doing was pleaing for help from the State government.  They’ve sat on their hands effectively for three years, and now they’ve concocted an argument for political reasons.’  (16)

When considering the merits of a council-owned model, versus a State-owned model, it will be interesting for the Legislative Council, when the proposed legislation arrives to them, to consider some further issues:

1) TasWater’s CEO, Mr Brewster, has agreed, after two years of lobbying, to conduct a cost-analyis for the policy of real-time data disclosure (see the Legislative Council’s definition of ‘real-time’).  Will this policy be implemented?  In 2016 the Legislative Council voted in favour of this policy for real-time data disclosure.  Is this policy more or less likely to go ahead under State ownership?  Indeed, is there a genuine interest in real-time data reporting in either model of ownership for TasWater?

2) The failure to call an alert for lead (Pb) at Pioneer earlier than November, 2012.  Specifically, during the three years, 2009-2012.  Would this alert have been called sooner under a State-owned model?  Data showing a theme of lead (Pb) during this time, 2009-2012, shows several results exceeding the Australian Health Guidelines.  This data was released to Pioneer’s residents after the alert was called in November 2012. (17)
 
Minister Gutwein has failed to reply to letters on this question in his time as the responsible Minister.  The ORG’s Chairman Downie has failed to do the same on this question after receiving letters.  Mr. Downie’s seven-word reply yesterday was the first direct reply to me on this question.  Mr. Downie, Chairman of the 29 councils, the owners of TasWater and sole overseers of TasWater, wrote to me: ‘Please refer your question to Mike Brewster.’ And TasWater’s CEO Brewster and Chairman Hampton, have long failed to directly respond to several letters on this question, as Chairman Downie is well aware… 

3) Will Pioneer ultimately receive piped, treated water, from the Ringarooma Valley treatment plant?  [And several residents have not yet received a rainwater tank, four years and six months after the existing alert for lead (Pb), called in 2012.]

4) Will Judbury be offered the available chemical-free treatment option ~ point-of-use ultra-violet (a small unit installed into each home) ~ an option which is approved by the Tasmanian Director of Public Health?  When suitable and government-approved alternatives are available, and when the town is small, in support, and it possesses natural water of a very high quality, will TasWater use a less chemical-reliant treatment method where possible?  TasWater has a legislated obligation to balance the risks of short-term, bacterial risk (eg. e-coli), with long-term risks to health, those associated with chemical treatment, noteably, chlorine.  (Please refer to TasWater’s Disinfection Practices Paper.)

Tasmanians wish good luck to the Legislative Council’s Select Committee for the proposed Sate takeover of TasWater.

It may be of interest to readers that Chairman Hampton made one further new statement yesterday to the ABC’s Sarah Gillman.  Chairman Hampton said that his time at TasWater would soon come to a close:

‘I had a five-year term as Chairman of TasWater, but that comes to an end at the end of January next year.  I made it clear to the owners a year ago that I would not be wishing to stay on.  I think there is always a time for change in leadership in organisations.’ (18)

References:
1. The Examiner, May 10, 2017.  Tasmanian councils vote on TasWater takeover on Thursday. Link:  http://www.examiner.com.au/story/4652903/vote-wont-stop-takeover/?cs=5312
2, 3, 4, 5, 6, 7, 8, 9.  LGAT Special General Meeting Agenda, May 11, 2017.  Link: http://www.lgat.tas.gov.au/webdata/resources/files/11%20May%202017%20Special%20General%20Meeting%20Agenda.pdf
10, 11, 12, 13.  ABC 936 Radio, Tasmania, May 11, 2017.  Interviewer: Sarah Gillman.
14.  ABC News online.  TasWater fight: Councils urge upper house to block takeover plan. May 11, 2017.
15 & 16.  ABC 936 Radio, Tasmania, May 11, 2017.  Interviewer: Sarah Gillman.
17. Lead (Pb) data results (graph) for Pioneer, Tasmania, 2009 -2012.  Ben Lomond Water.
18. ABC 936 Radio, Tasmania, May 11, 2017.  Interviewer: Sarah Gillman.
19. LGAT Special General Meeting Agenda, May 11, 2017.  Link: http://www.lgat.tas.gov.au/webdata/resources/files/11%20May%202017%20Special%20General%20Meeting%20Agenda.pdf

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Data Provided:
Annual payments from State Budget for 2018/19 - 2024/25 if TasWater becomes a GBE (3)

Council / % Distribution / Estimated loss
Launceston City 13.62%  $  2,724,000  
Clarence 11.06%  $  2,212,000  
Glenorchy 10.86%  $  2,172,000  
Hobart 10.86%  $  2,171,000  
Kingborough 6.16%    $  1,232,000  
Devonport 5.46%    $  1,092,000  
Central Coast 4.77%    $    954,000  
Burnie 4.14%    $    828,000  
West Tamar 3.28%    $      656,000  
Brighton 3.08%    $      616,000  
Waratah Wynyard 2.81%    $      562,000  
Meander Valley 2.78%    $      556,000  
Northern Midlands 2.34%    $      468,000  
Huon Valley 2.12%    $      424,000  
Glamorgan S.B.      2.07%    $      414,000  
Break O’Day 1.94%    $      388,000  
Latrobe 1.91%    $      382,000
West Coast 1.81%    $      362,000  
Sorell 1.62%    $      324,000  
Circular Head 1.58%    $      316,000  
Derwent Valley 1.36%    $      272,000  
George Town 1.13%    $      226,000  
Dorset 0.97%    $      194,000  
Southern Midlands   0.76%    $      152,000  
Central Highlands     0.51%  $      102,000  
Kentish 0.44%    $      88,000  
King Island 0.33%  $      66,000  
Flinders 0.18%    $      36,000  
Tasman 0.05%    $        1,000  
Total       $  20,000,000

Tim Slade ~ Reference (19)

*Tim Slade lives in Pioneer, Tasmania.  Tim’s many articles about drinking water in Tasmania can be found in the archives of Tasmanian Times: HERE

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