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Beware water revenue blowing holes in budget

SACOSS today expressed concern at reports that a proposed revaluation of SA Water’s asset base could lead to a multi-million hole in the state budget revenue.

The revaluation discussion has been triggered by a series of reports by Lew Owens. The latest of these, “A Cautious Conclusion”, was written by Mr Owens in his capacity as Independent Inquirer into water pricing as appointed by Treasurer Rob Lucas last year.

The size of the asset base is important because any decrease in the valuation of assets flows through to the calculation of the return on investment and to prices that can be changed. However, it also flows through to the business bottom line which is a massive reduction in revenue to the state government – potentially compromising its ability to pay for vital services.

SACOSS Senior Policy Officer, Jo De Silva said,

“While a reduction in water prices may sound good for consumers, it threatens to blow a hole in the state budget which will mean either higher taxes or cuts to vital services. Cuts to services will hit the most vulnerable members of the community hardest, but will also hit the same businesses who would otherwise celebrate a reduction in water prices.”

“Lew Owens points to these big revenue issues, but says that they are beyond the brief of his terms of reference. However, the state government must consider all the outcomes of any revaluation of SA Water’s assets and take appropriate action to ensure that government maintains a revenue base to pay for schools, hospitals and to provide services to the community.”

SACOSS is calling on the Inquirer, Lew Owens to model a revenue-neutral outcome of a revaluation of the SA Water asset base – potentially by changing other parts of the funding formula (for instance, the rate of return on assets).

SACOSS is also calling for the state government to rule out cuts to services as a result of any revaluation of the water base.


Published Date: 
Tuesday, 8 January 2019