Juggling politics and costs over water

I released a report into Melbourne's water supply options this week.

One of its findings was that, per kilolitre of water, the cost from the proposed Wonthaggi desalination plant would be six times the costs from a new dam in Gippsland.

The Government's Wonthaggi plan seeks to avoid green activists' opposition to new dams.

But the desalination plant has brought its own environmental opposition.  Protesters hate its visual intrusion.

And, noting its energy intensity, they don't believe government assurances that its power will come from renewable sources.

Unfortunately, senior figures within the Liberal Party are also rooting for the desalination plant.

Philip Davis, the Member for Gippsland, wants no more Gippsland water to go to Melbourne.  This is notwithstanding the benefits of a new dam in giving Gippsland farmers better water-supply security and preventing some of the all too frequent floodings in Gippsland.

The Government claims that the variable Victorian rainfall means we need desalination as a permanent water supply source to supplement natural supplies.

But we build massive storage capacities precisely because of that variability of rainfall.  And in spite of a 10-year drought and higher demand as a result of population growth, Melbourne's dams remain 33 per cent full.

Had we started a new dam 10 years ago, as was planned, we would now be at a comfortable 50-60 per cent.

The Government's water policy has seen departures from its 2004 edicts which were centred on ''no new dams for Melbourne'' and ''water cannot be traded between Melbourne and northern Victoria''.

Once it recognised that the demand reduction focus of its policies was failing, the Government cast about for alternatives.

Options like recycling water from the Eastern Treatment Plant have been examined and quietly dropped.  The costs were four to five times the cost of water from a new dam.

Also abandoned was the idea of harvesting stormwater from the local rivers around Melbourne (though harvesting stormwater from new housing developments might have merit).

Proper analysis was compelling in causing the abandonment of these projects, but the even more expensive desalination plant retains a heartbeat.

The Sugarloaf pipeline, which will bring water to Melbourne from the state's northern irrigation area, is only marginally less wasteful of public money.

Aside from abandoning the pledge not to take water from north of the great divide, its costs weigh in at three times the cost of sourcing water from a new Gippsland dam.

The Government intends this irrigation area water to be ''created'' by engineering works but many irrigators want greater assurances that it will not erode their security of supply.

Water policies in Victoria typify the tensions between economics and politics.

The Government wants to avoid conflict with a vocal set of environmental interests.  To do so, it is willing to impose much higher costs on consumers and businesses, gambling that this will cause it less pain.

But good government is also about leadership and persuasion, and ensuring infrastructure is available at the lowest cost.

In the case of water, not only does this mean lower consumer prices, but it also means more competitive businesses.

ADVERTISEMENT