Andrew Chapman is calling for a Royal Commission into the Victorian (Wonthaggi) Desalination Plant. We publish here his comments and some early discussion. We also publish some correspondence with Tim Holding, the Minister for Water under the Brumby government. There seems to be wide support for a royal commission into the matter, which is perceived widely as corrupt. The matter of desalination plants is a huge one in Australia where such plants, not necessary when we had a population of 17m only a decade ago, have been introduced in nearly every state with the excuse that our growing population requires them. The public have not been adequately consulted on the population growth induced by ill-considered government policy nor on the introduction of these plants themselves. What is for sure is that almost no-one likes these plants and governments are bitterly resented for having forced them on Australians.
Andrew Chapman writes:
The Bracks Government won its last election on a policy of opposing a desalination plant to augment Melbourne's water supply. When Ted Baillieu suggested a small desalination plant the Bracks team ridiculed that suggestion but on election Bracks reneged on its election policy and approved the construction of a large scale desalination plant at Wonthaggi.
Times moved on and water storages are now either full or filling rapidly with Melbourne's storages set to reach 60% capacity in the next two or three weeks. Melbourne's water storages have not increased because of the desalination plant, it is a long way from being finished, but because weather cycles moved from drought to floods, something which civil engineers consider when planning water supplies. Taxpayers and consumers are to pay for this very expensive water supply option regardless of whether or not it is needed. The desalination plant will require large amounts of electrical power to operate. Perhaps if the Bracks and Brumby governments pursued water conservation and recycling this huge cost burden would have been avoided.
Whilst the government held a particular view it is clear the planning process did not adequately consider alternative options or submissions presented to the EES that, with evidence, argued that the desalination plant should not be pursued. Many people will remember how the planning process operated right down to the government authorising police files on objectors being handed over to the contractor.
Melbourne's water storages are now at 58.3% (still plenty of wet weather to come), same time last year 35.0% and the year before 26.8%.
The government did not have a mandate for the desalination plant and the planning system has failed Victorians resulting in huge water debts to be met through the purchase of water that is not needed. This is not a small project with a capital cost originally estimated to be no greater than $3.1 but more recent estimates at $5.7b and suggestions that it may be more like $7b when finished.
There are three appendixes below: Appendix A, "Communications with Tim Holding," and Appendix B, "Comments about a Royal Commission from a circular back in March of this year." Appendix C contains some media coverage.
What you can do
If a Royal commission is to get up and running it will only do so with widespread public support. If you could pass your comments on to or post them as comments here on candobetter, we can also work towards canvassing the mainstream media. When the storages hit 60% capacity, the time will be appropriate to launch a major campaign.
So, Royal Commission into the Desal Plant - What do the people think?
CONTACTContact by email or telephone 56741266 or 0438567412
Appendix A: RECENT COMMUNICATIONS WITH TIM HOLDING MP, THE MINISTER WHO ADVOCATED THE DESAL PLANT
As at 19/7/11 there has been no response from Tim Holding.
Re: Catchment Rainfall and Runoff Forecasts for Melbourne's Dams
Perhaps you could confirm whether such information exists?
Re: Catchment Rainfall and Runoff Forecasts for Melbournes Dams
Thank you for your email.
As I am no longer the Victorian Water Minister it would be more appropriate for you to direct your request to the Department of Sustainability and Environment.
Department of Sustainability and Environment
PO Box 500
EAST MELBOURNE VIC 8002
Catchment Rainfall and Runoff Forecasts for Melbourne's Dams
Tim Holding MP
Dear Mr Holding
Catchment Rainfall and Runoff Forecasts
The adoption by the Bracks/Brumby governments of a desalination plant at Wonthaggi to supply water to Melbourne was no doubt based on that government's perceived need for additional water.
When Melbourne's water storages fell to low levels I expect that you, as Water Minister, would have sought expert advice on the long term rainfall and runoff for the catchments supplying the storage dams.
Could you please provide me with, or direct me to where I would find, copies of all the reports and advice provided to you on the catchment rainfall and runoff?
As at 19/7/11 there has been no response from Tim Holding.
Royal Commission into Desal Project
Timothy Holding MP,
Dear Mr Holding,
It appears from your comments in the media that you think the desalination plant, originally estimated at no more than $3.1b and now at considerably more, is good value for Victorian taxpayers and consumers. If you think the cost, social and environmental impacts are justifiable then I imagine you will be happy to support a community move to establish a Royal Commission into the planning and approval process for the project.
It could deal with, but not be limited to, the Bracks/Brumby government's involvement in the process, the role of Ministers and party advisers who worked in the public service, any influence they may have had on process, whether or not the evidence produced for the EES was appropriate or balanced and how the process considered submissions by the public.
The answers to these matters may be readily available and if a Royal Commission is implemented you and your fellow ex Ministers would no doubt have an opportunity to commission consultants and lawyers to present your case. It may determine that your decisions were soundly based but could also reveal an opportunity to abandon the project without cost to Victorians.
As you can appreciate people are shocked by the recent revelations that the cost of this project has escalated and that it may cost $23.5b by 2030.
I look forward to you and your fellow ex Ministers supporting a Royal Commission into the desalination plant approval process.
Appendix B: SOME COMMENTS IN MARCH THIS YEAR ABOUT A ROYAL COMMISSION INTO THE DESAL PLANT
Andrew Chapman distributed the following statement in an email. Below this statement are a number of very interesting comments from the public.
"Yes I do intend to go forward with the intention of getting a Royal Commission Inquiry into the desal plant approval process. It is our one and only big chance to expose the planning system for what it is and what occurred under the previous government. If we don't do something the bureaucrats will eventually persuade the new government to go down the same path on newer proposals. The reason I think we should have high expectations is that it affects so many people in a big way.
Remember when it was announced by Bracks and Thwaites on the same day people were told their properties would be taken, the legal costs awarded against campaigners when they were denied any opportunity to appeal against the decision, then when the government found they required an EES the way in which that was done and then handing over police files on objectors to the contractor.
Then there's the Banks. Westpac signed the Ecuador Principle and made it part of their advertising campaign and yet the way this project was handled was not much different to what happens in third world dictatorships.
All the time people argued that they were going down the wrong path but the Bracks/Brumby obsession could not be stopped.
I think as a starter we should be opening up discussion with as many people and groups as possible. If there are enough people interested in a Royal Commission we should then start to let the media know. We are all burdened with this social, economic and environmental disaster so people should feel free to add their bit in any way they feel they can contribute."
Thank you very much, Mary. I hoped you would forward it. You might also like to mention my blog . The model I refer to is simply a 1 sq. km grid laid over the entire country, where we use on-the-ground and satellite information to populate each element with relevant data. After that, you can apply all sorts of rules and computations to evaluate the usefulness or the sensitivity of that particular element for a particular usage (including “don’t you dare touch it”!).
Anything to make them accountable and process transparent is worth it!! This must be prevented if at all ever stopped? Id love to know why the contract cant be terminated?
yes it does, but I fear the chances are small.
best regards Stephen C
Of course it's corruption. But the reality of it is that our government is Big Business and our Parliament is powerless to stop us being sold into slavery. Most boiled frogs accept the propaganda that we live in a democracy and that our Parliament is Government.
Even if you do manage to get a Royal Commission, it's terms of reference will not be able to tackle the reasons for how such wholesale corruption could have taken place.
And don't get me started on Laws and the Justice system.
I have had a career in civil/structural engineering, town planning and IT, but I simply cannot get my head around what professional, accounting and ethical processes could possibly justify the Wonthaggi desalination plant. I had an exchange of emails with Rosemary West about my blog on sustainable population and I quoted the desalination plant as an example of where the land usage model I proposed could be have been used in the design phase or, given the current catastrophe, to chart all of the problems needing attention. Here is what I said to Rosemary on this topic (with a little subsequent expansion):
Did the State Government investigate every possible site along the coast before selecting Wonthaggi ? If so, what were the criteria used and what were the scores of the various sites ?
If they did not do this, did they select the site for technical, financial, political or governmental reasons ? If so, what were those reasons ?
If they did not select the site, was it selected by the contractor ? If so, were a number of contractors approached to tender for the project ? If so, were they in agreement as to the suitability of the site? If not, did any of them suggest alternative sites ? What were the various contractors’ reasons for selecting any particular site ?
If only one contractor was approached to tender, what were the reasons for selecting that contractor ? If the contractor is a consortium, what due diligence was carried out to satisfy probity requirements ?
I have worked on road and rail projects in the UK, East Africa and Australia. I came to Australia to work on the WA Standard Gauge Railway in 1965, so I do have some idea of where the costs lie in constructing such projects. I have done a little research, looking at the costs/lane (roads) and costs/line (railways) in the 1960s. I projected these to the current time, in accordance with the fall in currency values. Broadly speaking, I believe that infrastructure projects today are mostly costing about double what one would expect. I think this is largely due to the finance models in use today and any investigation should include a discussion on the appropriateness of these for constructing infrastructure projects (as opposed to perhaps managing them afterwards.
Here are a few books which I think are required reading for anyone wishing to participate in this latter discussion:
“Pigs at the trough: lessons from Australia’s decade of corporate greed” by Adam Schwab.
“Zombie economics: how dead ideas still walk among us.” by John Quiggin.
“Our corrupt legal system: why everyone is a victim (except rich criminals)” by Evan Whitton. [ (Ed.)]
This last is a little bit out of left field, but I think it is important because it describes the difficulties (and enormous cost) of the adversarial system used in anglophone countries. An important point is the way in information can be hidden or excluded from consideration by courts and inquiries.
I hope you (and perhaps others) find these remarks helpful in moving things along in this matter.
1. The desal Royal Commission is essential for several reasons. Firstly, to extract accountability from the previous government, and, secondly, to limit the excesses of the current government.
2. Its not party political but necessary for restoration of public confidence in politics of all shades.
3. Given my druthers, I would like to see a Royal Commission into all Public Private Partnerships, over the last 30 years.
All strength to your arm,
Yes, it is essential. Are there plans?
Your correspondent doesn't mention the funding scandals that implicated the Labor Party all the way to Queensland.
The whole thing was a total disaster and according to the Fin Review, Tuesday 3 March 2011, p. 7,
"Even if Victorians don't use a drop of water from the state's desalination plant, it will cost them more than $600 million a year for a quarter of a century, new documents show."
I agree that how the DeSal project was handled was appalling….and it’s not the only one. Billions of taxpayers’ funds have been spent on projects that we in the community (those who finance these mega projects) neither want nor need.
DeSal, the NS pipeline and Channel Deepening all had its opponents spied on and well orchestrated campaigns to denigrate them whilst promoting the project as being the only alternative. That our elected representatives and we as a community have tolerated this lop sided “contest” for so long is a worry in itself.
And there’s little doubt there’s be more to come in future if we can’t change the way we do things. E.g. the reported $9.5 billion+ to do to Westernport what a handful of shippers and truckers want.
I keep coming back to my main themes:
· An extra 75,000 people per year into Melbourne and their housing, food and transport requirements can’t have any other outcome whilst ever we are on the “business as usual” trajectory. Population pressures (driven by those few faceless entities that benefit from population growth) are at the root of this endless expansion industry.
· Those vested interest groups and faceless entities have too great an influence on our elected representatives. They enjoy armchair rides through open doors to the offices and dining tables of those we elect – whilst the likes of you and I (and many other well meaning, well informed, well educated and altruistic persons) are left outside wringing our hands and waiting perhaps months for a 30 minute meeting with the Minister or more likely his lackey. Meanwhile the bulldozer flattens Westerfields or whatever other special place we are concerned about)
· Our present governance arrangements have allowed this inequitable access to influence to permeate how decisions are made, because:
· Those we elect once every 4 years are not legally obliged to do any of the things they led us to believe they were committed to during their election campaigns. Generally they have misled and disappointed us, and our only recourse at present is to wait another 4 years to elect the next lot who don’t have any legal obligations to abide by their undertakings either. Our influence - once every four years as we shuffle into the polling booth is perfunctory, indeed illusory.
Somehow or other we need to find a way to have more direct and regular input into the decisions made by our elected representatives – Direct democracy. Contentious issues and those where our local MP doesn’t have his/her own firm view, local polls could be held to guide the MP on how to vote in parliament. State-wide and national sissies could be resolved via referendum. It is working well elsewhere e.g. In Switzerland where voters not only elect the government, they also directly vote on policy issues and legislation passed by the parliament. So why not here?
A very interesting and relevant program on ABC RN Rear Vision recently on how such a system works in Switzerland is well worth reading/listening to. Here’s the link http://www.abc.net.au/rn/rearvision/stories/2010/3047700.htm
So- If a Royal Commission’s Terms of Reference would address how we could better handle decision making processes on contentious and difficult environmental/social and economic issues like the ones we are so familiar with I’d be all for it.
Thanks for keeping us so well informed and in the loop Mary
I don't think there is any prospect of the current State government deciding on a Royal Commission into the project. The Desal was a decision of the then State government and we might not like the decision but I can't see what the grounds would be for establishing a RC. Bearing in mind too, that a Royal Commission would cost millions to conduct.
Yes, yes, yes! I'm sure the Greens will support it as well. We knew at the time that if we put in the right conservation strategies, we could generate the same amount of water. This was publicised and ignored so that big corporations could get a Salary from the people of Victoria for life. If the Royal Commission would expose this travesty, let's support it 100%
Happy to go ahead with asking for a royal commission.
I agree. Particularly I can not believe that the tax payers of this state are saddled with that massive bill AND the destruction of a lovely area. Talk about a lose/lose situation. I think the terms of the RC should investigate the possibility to minimize $ loss and not go ahead with any aspect of the wretched thing. Remember, the Greens were against it from the start, and the Green candidate for Bass was one of the leading anti-desal campaigners - Neil Rankine. He is a great resource and a fountain of knowledge on the issue.
The argument for a Royal Commission is overwhelming: How was the assessment made-comparing all alternatives? How was the size determined? Was the evaluation of this project fully integrated with other measures, in particular the N/S pipeline and water recycling plans? What was the process for evaluating the most suitable site? What was the basis for selecting the successful tenderer and awarding the contact? What were the true circumstances of commercial in confidence which prevented the Gov't from informing the public beforehand on these issues? What was the basis for electing the extortionist pay rates for this project and what were/are these and all the attendant site awards/provisions? What truth is there to suggestions that the unions involved are selling or seeking other benefits in exchange for the right for workers to work on this project? What was the Gov't policy for managing public opinion and how was this managed and controlled? How much attention did the Gov't give to seeking public opinion and to have genuine consultation with the communities affected? What was the quality of examination of the environmental impacts? What consultants were engaged for this purpose, how was this process handled and what were they paid? There are other issues as well, but surely this is more than enough!
You will recall that the EES process was totally flawed. Rather than it examining all alternatives (including the key one of doing nothing) it was
relegated to an examination of effects after the go ahead had been given.
Bracks in his helicopter said the decision had been made and now there could be an EES.
A Royal Commission could also look at the lack of flexibility (ie cancelling the project) caused by putting it into private hands.
And when they dug up 5000 artifacts what happened to the 2007 legislation designed to conserve and protect aboriginal cultural history and heritage.?
I certainly wholeheartedly agree with your plan. You certainly have our support. Don't know if I mentioned to you also but I intend going to the Ombudsman to ask him to revisit the manner in which the Macarthur windfarm planning permit was amended in July 2010, with so many changes that it hardly resembles the original plan for which they were given approval in 2006. However that will take me a long time getting everything ready for my request and haven't found a moment yet !!!
Let me know if there's anything I can do to help you.
Given Victorians are delivering $2m a day towards this project I think an investigation is more than warranted.
There should be an investigation into the role of the union super funds who invested in this lucrative gravy train. Were independent super funds, such as AMP or MLC or even self-managed super funds given an opportunity to weigh up the investment? I doubt it. I believe an investigation would show that the entire exercise has vastly enriched the CFMEU workers, to the competitive detriment of the entire Victorian construction industry, and enriched the super funds.
Are Bracks and Brumby now on the boards of any of those super funds?
I think this trend to enrich “ALP type” super funds will rapidly shift to Canberra and we are likely to see the bulk of rorting going through the Carbon Tax mechanism and particularly the $10bn Bob Brown Green Bank that will be used to prop up these investments.
Of course there needs to be an Royal Commission.
I presented at the Panel giving advice that the expert technological advice in particular about acid sulfate soil and its eventual disturbance, had been distorted and altered to present a picture of no harm will be done by this Desal excavation of this coastal soil..
Words such as probable were altered to unlikely or similar phrases' There were no recommendations about further testing to establish the extent of this Acid Sulfate Soil l which has a potential to destroy water fish and plants when it is exposed to oxygen and water is withdrawn and returned to the aquifer. I have a substantial submission in which I cited such watering down to the point of negligent culpability and lying.
I have been informed and some items in the local news have relayed that Acid Sulfate Soil had become a major problem.. I also believe the National Policies on disposal of this contaminated soil have been ignored. Mitigation with lime has not been used in appropriate amounts.
I spoke with the project Engineer at an open day earlier this year and he was totally ignorant of the type of soil he was digging up and or how it should be mitigated/managed.
I was enraged about the way I was treated at Panel Hearings in Pakenham when the Chairperson - a woman - was extremely rude to me. I believe discriminated against me because during my 10 minute presentation with power point and handouts which had been an effort of extreme intensity, she stated that I was "holding up lunch" for the panel.
I am am applied scientist and retired University Senior Lecturer . I have studied these soils for over 7 years and I was invited to (perhaps to dumb me down) to join the Government committee of the day. I felt patronised and realised that there was no intent to be sincere in this inquiry.
My colleagues in this protest campaign had undertaken to examine all 25 volumes of the Desal EES reports all agreed that the recommendations had been watered down on each and every occasion in the Executive Summary.
I would be happy to attend any Inquiry and make my outrage known.
Appendix C: MEDIA ARTICLES ON THE DESAL PLANT
Stateline, Age, ABC, Transcripts.
ABC's Victorian Stateline Program of 31/7/09
TAMARA OUDYN, PRESENTER: The State Government announced this week who it’s chosen to build and operate Australia's largest desalination plant at Wonthaggi. It also revealed it’s agreed to act as a lender of last resort to sure up finance for the project, which will be a public/private partnership. Most of the detail, including financial aspects, hasn't been released. Water Minister Tim Holding wasn't available to speak to Stateline, but here’s some of what he had to say to Jon Faine on ABC Radio this morning.
JON FAINE, ABC RADIO PRESENTER: Why’s it being called a PPP if it’s underwritten by Treasury? It’s not really a PPP and wouldn't it really be cheaper and simpler to build it as state infrastructure?
TIM HOLDING, WATER MINISTER: Well it is a public-private partnership. And the question you’ve asked is: would it have been cheaper to build it as a public – provide it as public sector provided project. And as part of this project – or part of this process, we are required to establish a public sector comparator, which is a tool which tells us what it would have cost us to build this project if the public sector had assumed all of the risk and built the project itself. And the public sector comparator tells us that either of these bids - both the Aquasure bid, which is the bid the Government has accepted, as well as the Bass Water bid - were well below the public sector comparator. So that’s the guarantee that the public is getting value for money from the involvement of the private sector in the delivery of this project. ... There will be new renewable energy projects generated as a consequence of the ...
JON FAINE: Where?
TIM HOLDING: Well, of the – the consortium will make that clear through the purchase of their renewable energy.
JON FAINE: So you don’t know? You can't tell us?
TIM HOLDING: Well it will become clearer over time. They will also be purchasing renewable energy credits as part of the process. And that’s the public's guarantee that the power that’s used, the energy that’s used to power this plant has been offset by the purchase of not just renewable energy, but renewable energy in addition to the targets that the Government had already set.
JON FAINE: Can you guarantee that consumers' water bills will only increase by the stated 100 per cent over five years?
TIM HOLDING: We’ve said that over the next price period, bills will double, but not more than double. We reiterate and reaffirm that guarantee. The Essential Services Commission has reaffirmed that. In fact, the price increase will be a little bit less than that. And as I mentioned earlier by reference to the public sector comparator, that both bids came in below the public sector comparator, and that’s a guarantee also that the price impact of this project will not only be less than the full doubling of water prices, but in fact will be less than if the Government had been forced to deliver this project ourselves.
TAMARA OUDYN, PRESENTER: Tony Shepherd is the chairman of the consortium chosen to build the desalination plant. I spoke with him earlier.
Tony Shepherd, welcome to the program.
TONY SHEPHERD, CHAIRMAN, AQUASURE: Hi, Tamara. Nice to see you.
TAMARA OUDYN: How many desalination plants has your company been responsible for and why is this one different?
TONY SHEPHERD: The technology provided to our consortium is Degremont, a French company. Degremont has provided hundreds of desalination plants throughout the world. In fact I think it's the world's leading provider of desalination plants. They’ve done the plant recently in Perth, which is operating and operating very successfully. The difference in this one: I guess it's a modern plant, state-of-the-art, the design and integration into the local environment is different. And the fact that we have to build such a large plant in a very short time is also different.
TAMARA OUDYN: Finance has obviously been a key issue. Whose idea was it for the Government the lender of last resort?
TONY SHEPHERD: Well obviously with the GFC, raising all of this debt and equity was an issue for us. Having raised all of the debt, the banks were concerned about that part of the debt that they wished to syndicate, and we took that to the Government as a suggestion and the Government adopted it. We think it’s a smart way of getting around the issue. But we’re confident that the banks will in fact be able to syndicate that debt.
TAMARA OUDYN: It’s $4 billion worth. Is it true that you plan to offload most of that?
TONY SHEPHERD: No; I think it’s about $1.7 billion that has to be syndicated of that four.
TAMARA OUDYN: So when would you need to finalise your financial arrangements?
TONY SHEPHERD: By financial close, which is in about two months’ time.
TAMARA OUDYN: The price of the project is now being put at $3.5 billion. Will that be the total cost?
TONY SHEPHERD: That's the total cost of the construction of the plant. On top of that, we’ll have things like interest during construction and company costs.
TAMARA OUDYN: So what other sorts of costs are associated with completing the project that aren’t included in that figure?
TONY SHEPHERD: Well mainly interest during construction.
TAMARA OUDYN: And how much would you expect that to ... ?
TONY SHEPHERD: Well I think the total funding will be $4.8 billion, so the difference between the $3.5 and the $4.8 is associated with the financing of the project.
TAMARA OUDYN: Over and above the cost of building the project and getting it up and running, how much will it cost to run each year?
TONY SHEPHERD: I haven’t got the exact number at my fingertips, but it’s into the hundreds of millions a year, including the cost of power.
TAMARA OUDYN: You’ve struck a deal that allows the Government to order as much or as little water as it needs. How do you make a profit in that circumstance?
TONY SHEPHERD: Well, we get paid for having the capacity available. And obviously we get paid for actually producing the water. So, the Government has the flexibility as to how much water they want us to produce, but obviously we have to service our capital in the meantime and keep the plant in good operating condition and we get compensated for that.
TAMARA OUDYN: Are you free to take orders from other customers?
TONY SHEPHERD: No, no we’re not. We can only supply the Victorian Government.
TAMARA OUDYN: So how will you make a profit if we have a big downpour in Victoria and we’re set for water?
TONY SHEPHERD: Well, we certainly take some risks on that. But if you look at the state of the dams at the present time, at less than 30 per cent capacity, it’s highly unlikely that this desalination plant will not be running in a maximum condition for quite a while, in my view.
TAMARA OUDYN: Roughly how much will a megalitre of water cost?
TONY SHEPHERD: We can’t disclose that as yet. This will be disclosed after financial close, when our contract is published.
TAMARA OUDYN: Why can't you disclose that?
TONY SHEPHERD: Because the Government has asked us not to until the contract is disclosed to the public. The price is not exactly finalised until we reach financial close. There could be some slight variations in the meantime.
TAMARA OUDYN: And what’s the price dependent on?
TONY SHEPHERD: The things that might vary in the meantime is the rate of interest and things like that that might vary over this period of time, but relatively minor. We’re talking marginal changes. But the Government prefers to release the details of the contract in one go after financial close, and I think that’s sensible.
TAMARA OUDYN: It’s been reported that the desal plant will produce more than one million tonnes of greenhouse gases each year. Is that irrespective of how the power to run it is generated?
TONY SHEPHERD: That is a hypothetical figure that you’re discussing.
TAMARA OUDYN: More than one million tonnes?
TONY SHEPHERD: Yes, that’s just purely hypothetical. Because the energy that we use – the main energy we use in the plant to produce desalinated water is renewable energy, which, by definition, doesn’t produce carbon. I disagree with the number, yeah.
TAMARA OUDYN: So you can't tell me what the projected emissions would be because ... ?
TONY SHEPHERD: We will be carbon neutral. The plant will be carbon neutral.
TAMARA OUDYN: So what’s your time frame; when do you think you’ll be turning the taps on?
TONY SHEPHERD: December of 2011 is the target, is our contractual commitment, so, that’s a very tight schedule for a plant of this size.
TAMARA OUDYN: And will you be operating at capacity by that stage? Or will it be a gradual run-up to ... ?
TONY SHEPHERD: We’ll be getting close to capacity then.
TAMARA OUDYN: So when do you think you’ll hit capacity?
TONY SHEPHERD: We’re hoping to get it by then.
TAMARA OUDYN: Tony Shepherd, thanks for joining us.
TONY SHEPHERD: Thank you.
Victorians need evidence they’ll be desal winners - "The Age July 31, 2009"
THE deal is done. Premier John Brumby has announced that AquaSure, an international consortium consisting of Suez Environment, Degremont, Thiess and Macquarie Capital Group, will build Australia’s biggest desalination plant. The decision on the $3.5 billion project — $400 million more than the $3.1 billion price tag that the Government has long quoted — has put paid to suspicions that another French-led consortium might be in line for the contract to make up for Connex parent company Veolia and its potential merger partner, Yarra Trams parent company Transdev, losing their public transport contracts.
The project remains contentious in other ways, not least among local residents fearful of its impact on their environment. The higher cost only increases pressure on the Government to provide solid evidence for why it preferred the costly and environmentally dubious option of desalination — which it scorned before the 2006 election — over water recycling and stormwater capture.
The Government has been reluctant to release the public sector comparator of the costs of desalination and the greener alternatives. One suspects recycling costings have been inflated by provision for third-pipe infrastructure to keep a politically motivated promise not to use recycled water for drinking — an internationally tried and tested solution that really should be the basis for comparison. Instead, most of Melbourne’s treated waste water will still be pumped out to sea — a waste of roughly 200 billion litres a year.
Of course, the Government is talking up the project’s benefits, including jobs. An underground power supply allays one concern about impacts on the landscape and landowners. On the face of it, the commitment to use renewable energy is welcome, given justifiable community concern about the wisdom of using a power-hungry, greenhouse-gas-producing plant to make up for the scarcity of water in an environment of climate change. Water Minister Tim Holding said Aquasure would build, with AGL, a 63-megawatt wind farm near Glenthompson. However, this falls short of the power required to produce 150 billion litres of water a year and pump it 86 kilometres. Government documents predict an ‘‘average electricity requirement of approximately 92 megawatts’’. At best, actual output of wind power is about 40 per cent of installed capacity, so the wind farm will supply barely a quarter of the electricity required. Victorians must take at face value assurances that the shortfall can be met from other green energy sources. The contract must ensure an equivalent increase in the grid’s renewable generating capacity for the plan to be carbon-neutral.
The other issue is the huge cost. Mr Holding said that by 2013 Victorians’ average water bills would be held to less than double their current level — largely to pay for this project. Both Mr Brumby and Mr Holding insisted the contract would deliver value for money. It would provide for flexibility to produce water in increments of between 0 and 100 per cent of the plant’s capacity, supplying the system only when needed. This provision is qualified, though, by the minister’s recent decision to advise water authorities that the plant would run at full capacity in any of the next five financial years, as long as dams are below 65 per cent at the end of the preceding March — the month when levels are usually lowest.
Victorians are not yet privy to the details of payment arrangements, but no business is likely to agree to its income drying up in a wet year. That is not the only concern for taxpayers. Mr Holding said: ‘‘The capacity of AquaSure to raise the necessary funds in such a tough global economic environment is a testament to the strong Victorian economy,’’ and then, somewhat contradictorily, added: ‘‘AquaSure will now seek to diversify its investor base, with the Victorian Government providing a Treasurer’s guarantee of syndication. This means the state will be a lender of last resort if required, at commercial rates.’’ How much could taxpayers be up for, and on what terms?
Lack of transparency goes to the heart of the difficulty of simply accepting that this and other public-private partnerships offer value for money. Labor has failed to keep its 1999 election promise, prompted by Kennett government secrecy, that commercial-in-confidence provisions would apply only to patents and trade secrets. The Labor-dominated public accounts and estimates committee has concluded that the score of PPPs entered into by this Government ‘‘diminished the accountability of government for substantial state expenditure’’, to the point that Victorians could have no idea whether these projects offered value for money. The bottom line is simple: if the contract truly represents a good deal, it should be good enough to stand up to public scrutiny.
ABC Online -
Updated Fri Jul 31, 2009 7:54pm AEST
Bidders for the tender to construct the Wonthaggi desalination plant have until the end of the month
Victoria's Water Minister says without a desalination plant the state could run out of water. (ABC TV)
The failed bidder for Victoria's desalination plant will receive compensation from the state government.
BassWater lost out to a consortium called AquaSure in the tendering process to build and operate the $3.5 billion plant near Wonthaggi in South Gippsland
Victorian Water Minister, Tim Holding, says it is appropriate for BassWater to receive up to $10 million compensation.
"You can't compensate the private sector for all of those costs, but you can recognise that sometimes the projects are so large and the bid proposals that we seek are so complicated that it is appropriate to make a modest contribution," he said.
Earlier, Mr Holding, strongly defended the desalination project on ABC 774's Morning Program.
"Without this project we would not have a non-rainfall dependant source of water, which is exactly what we need in an environment of drought and climate change," he said.
Opposition leader Ted Baillieu told the program that Victorians were now "stuck" with a desalination plant and he voiced concern about the fine detail of the contract.
"The details of these contractual arrangements have to be released in full," he said.
AquaSure's Chairman, Tony Shepherd, says the consortium is ready to start work next month.
"We are quietly confident that we'll be able to raise the money," he said.
Meanwhile, the Bass Coast Shire says it will maintain pressure to ensure the local community is not disadvantaged by the project.
Shire mayor, John Duscher, says the council will continue to advocate for ratepayers.
"We will do everything in our power to lessen the impact on our community and maximise any benefits to our community," he said.
The desalination plant is expected to produce about 150 billion litres of drinking water a year and is due to begin operations at the end of 2011.
AquaSure has promised to build a windfarm at Glenthompson, in the state's south-west, to offset the desalination plant's energy needs.