Initial Debt Assumption Out by $400 Million
www.tas.greens.org.au
The Tasmanian Greens today said that the Economic Regulator appears to have made an incorrect assumption when he initially prepared the report from which the price increases for the water and sewerage were derived, and said that if this report were to be re-done today it would almost certainly lead to significantly lower price increases for water and sewerage over the next few years.
Greens Water spokesperson said that the Water and Sewerage Corporations have now released their Annual Reports with reliable data which reveals that, collectively, the corporations have about $400 million less debt than initially assumed by the Regulator, and the Greens are now calling on Treasurer Michael Aird to issue new terms of reference in order to trigger a new price inquiry by the Economic Regulator.
The major decrease in debt translates to the corporations carrying assets with about eight percent debt, instead of the twenty-five percent debt that the price increases were predicated on.
“Treasurer Aird does not seem to understand that the 10 percent price increase for water and sewerage has caused a huge price shock for many Tasmanians on fixed or low incomes, and the Greens believe that by moving to address the incorrect debt assumption that underpins the price rise should make further rises either unnecessary, or a lot less than the foreshadowed 22 percent rise over the next two years,” Mr Morris said.
“People are asking us why the Treasurer is not looking at the option of partially debt-funding these reforms in order to protect people from the foreshadowed 22 percent rise over the next two years, and they deserve an answer.”
“Rather than 25 percent debt, we now know that corporation’s debt is in the region of only eight percent, which provides plenty of room to move on reducing or removing future price increases by partially debt funding future capital expenditure.”
“This is a positive suggestion that would make a real difference to Tasmanians who are struggling under massive recent cost of living increases, particularly on power bills, insurance, and for water and sewerage.”
“Water and sewerage systems are intergenerational infrastructure and, as future generations will benefit, it is appropriate to partially debt-fund future capital expenditure rather than funding it from cash flow generated by the massive bills currently dropping into letterboxes,” said Mr Morris.
Mr Morris also said that the Greens support investment to improve Tasmania’s water and sewerage infrastructure, but believe that the long life of many of the Water and Sewerage assets means that they can be partially debt-funded responsibly.
Tim Morris MP Greens Water Spokesperson
