Abandoning the characteristics of a fiscally responsible Treasurer, Peter Costello yesterday argued for downgrading economic considerations and adopting multiple desalination plants around Australia. This week's demonstration against Mr Brumby's plant in Wonthaggi reminds us that there are contrary powerful views that are also not anchored in economics.
The proposed Melbourne desalination plant, like that for Sydney, was spawned by a Government reluctant to build dams to service the growing urban population.
The water agenda in Australia has been largely hijacked by claims that we are the driest continent, fuelled by environmentalist hysteria.
One fiction that is easily addressed is the dry continent myth. Although most of Australia is desert, rainfall per capita is, after Iceland and Russia, the third highest in the world. And, although most of the rainfall is in the monsoonal far north, the eastern and southern seaboards have more rainfall per person than do the southern European countries.
It also needs to be recognised that 85 per cent of the water that is actually used Australia is for irrigation and other farm uses. Farmers, being businessmen, will buy and sell their entitlements to water when the price is right.
The Melbourne desalination plant owed its support to the mistaken beliefs of former environment minister John Thwaites, that water derived from rainfall had become too scarce. On coming into office he abandoned Melbourne Water's longstanding plans for sequential dam construction, opting instead for chic, New Age slogans involving "less is best".
When the drought arrived, this solution was shown to be empty of logic, politically unpopular and economically crippling for many industries.
The issue now is how to resolve the crisis the Government has created. The present plan is to replace a decade of inaction by four separate projects to be developed simultaneously. Asdie from the desalination plant, these involved:
- Upgrading the irrigations ystem in the Goulburn Murray area (largely entailing taking back water from irrigators.
- Linking the Goulburn River with the existing Sugarloaf dam.
- Treating recycled water.
The Victorian Government generally provides few costings on water supply to accompany its glossy brochures and flim-flam. From the figures it offers (which include some optimistic estimates of the cost of wind, its preferred power source), a desalination plant would entail a cost of $2.25 per kilolitre. In addition, its sea level location would entail considerable pumping costs.
By comparison, the Sugarloaf Pipeline, including the costs of buying water from irrigators, would cost $0.54 per kilolitre. In other words, the Government is considering two projects, one of which supplies the water at less than one quarter the cost of the other.
But there's more. The Sugarloaf solution is only being proposed because it allows the Government to maintain a skeleton of its commitment to building no new dams. A new dam along the lines previously envisaged could be built either using the Macalister or the Mitchell. Previously the Government has used the cost, $1 billion, as justification for inaction on a new dam. This cost, however, is not much greater than that for its favoured Sugarloaf option and only one-third of the cost of the desalination plant.
Based on the $1 billion capital cost and the operating costs of the Thomson Dam, a new dam could supply water at $0.33 per kilolitre. This is some 40 per cent less than the costs of the Sugarloaf pipeline and only one-seventh the costs of the desalination plant. Such a dam would also deliver two to three times the supply of the 75 billion litres envisaged for the Sugarloaf proposal.
A new dam in the north-east of the state would also assist in relieving flood damage. It is easy to overlook that in its natural state about one-third of Victoria, including virtually all the populated places, was regularly engulfed by floods. Melbourne could not exist if earlier generations had not tamed the Yarra and many townships in the east of the state continue to be flooded with alarming regularity.
The Government sailed into office on the back of placating disparate interest groups including the green mystics who oppose all development. Now secure in a longstanding tenure, it has to gently unpick the policies that it cobbled together a dozen years ago to appeal to disparate single-issue interests.
Mr Brumby has placed his most trusted lieutenant in charge of reviewing urban water provision. The key task is to find a face-saving way of extricating the Government from the $3.1 billion white elephant desalination facility bequeathed by the Bracks-Thwaites team. Mr Costello's intervention in favour of such facilities has now made it that much more difficult.
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