Taken from The Age today, what do you think about this?Direct link to article here.
VICTORIA'S water policy is a shambles. The tip of the iceberg was exposed by the state's top water adviser, David Downie, who admitted last week that the assumptions underlying the Government's promise to pump 75 gigalitres of water a year from the Goulburn River from 2010 have "now proven to be wrong".
The admission was made during a freedom-of-information tribunal hearing into the billion-dollar north-south pipeline now under construction. The pipeline is designed to deliver water to Melbourne from the already stressed Murray-Goulburn basin. This is despite the fact that irrigators in this area haven't been able to get more than a fraction of their water entitlements due to 11 years of drought.
The water was meant to come from the first stage of the $2 billion Foodbowl Modernisation Project. Upgrading to irrigation channels is supposed to generate an additional 225 gigalitres of water to be split between the environment, irrigators and Melbourne. Independent experts point out that most of the so-called savings from seepage find their way into the river system anyway.
Downie admitted "government policy was made before the business case was done". Any water that comes to Melbourne via the pipeline will be at the expense of the Murray River, which is already dying due to acidification from the mouth up. This threatens the viability of most South Australian cities dependent on Murray water and equally the viability of the irrigation towns and farms that produce $9 billion in farm gate revenue.
Downie also told the tribunal that the desalination plant might not be completed until 2012, a point that differs from claims by Water Minister Tim Holding. He is still publicly clinging to the promise that the plant would be completed in 2011.
The scary thing is that while the Government continues to have unrealistic expectations for its water policies, the more sensible options for Melbourne such as connection of water tanks to the home, water harvesting and recycling are being closed off.
Apart from prayer, the answer might be tankers or tugs and water bags from Tasmania providing Tasmanians are prepared to sell a small fraction of the waste water that runs into the sea after generating hydro-electricity.
There is a simple reason why the desalination plant is stalled. The two consortiums bidding for the plant, the French multinationals Suez and Veolia can't raise the money. Their financial partners are, respectively, Macquarie Bank and, originally, ABN Amro — an organisation taken over by the Royal Bank of Scotland, which has experienced the largest financial loss in British history and was bailed out by the Bank of England. (Some of the RBS bits are currently being sold to the ANZ Bank, where they are attached to licences in China, India and Vietnam.) Financially, it looks as if the desalination plant is in limbo.
Public-private partnerships are on the nose with investors around the world. They can't raise money in $50 million dollops, let alone the $500 million dollops required to fund the $3 billion to $4 billion desalination plant. Given global financial markets, the only way Suez or Veolia could raise $4 billion is by having an iron-clad contract with the Victorian Government to supply Melbourne's water for 30 years with built-in price escalations that exclude competition.
This is the sort of deal that both companies created for the supply of water in France and many other countries, which began to unravel in the late 1990s with the Grenoble corruption case.
This resulted in directors of a Suez subsidiary and local politicians being sentenced to jail over a $3 million bribe. The French courts also found the subsidiary overcharged customers, using fraudulent accounting methods and ordered it to return all water fees from 1990 to 1998 to the city. According to the Italian Inter Press Service, it also cancelled Suez's contract in Grenoble.
A report commissioned by Ralph Nader in 2005 and available on his website says: "Despite Veolia's global track record of corruption, broken promises, environmental degradation, price gouging. obfuscation, misdirection and secrecy, the world's largest water company continues to enjoy substantial support within powerful pockets of financial and political circles."
Veolia now delivers Adelaide's water supply. According to Christopher Sheil, a University of NSW historian, in an interview with the Washington-based International Consortium of Investigative Journalists: "When a corporation wins a highly unpopular contract over public goods like water, it gets the privatising government by the balls.
"Politically, the government cannot allow the privatisation to fail. This opens up large arbitrage opportunities to the firm, which effectively gets its operations government-guaranteed".
SA Premier Mike Rann, who is suing upstream states for more Murray water, said in respect of the SA-Veolia deal done by the previous government, you can't unscramble an egg. Will the next premier of Victoria say the same thing about the Brumby Government's water policies?
