The Auditor-General's report Planning for Water Infrastructure in Victoria is prefaced by an unusually testy exchange between the Auditor-General himself, Des Pearson, and Peter Harris, the secretary of the Department of Sustainability and Environment.
This highlights the AG's finding that the department had been, at the very least, sloppy in its estimated costs of new water supplies and outcomes. Clearly, the public exchange masks a heightened level of criticism.
The AG's comments call into question the competence of the Government's water policy procedures. His first recommendation is to revise the plan entirely. This is unusual since the scope of the AG's review is pretty much restricted to reviewing the operations of government agencies.
Water Minister Tim Holding claims the matter is simply a vigorous debate about a controversial issue on which the Government has made the right judgement.
Damning though the AG's report is, he was clearly pulling some punches. Thus, in referring to the 2004 blueprint, Securing Our Water Future Together, he does not point out that it was founded on an approach, shown to be erroneous, that sought to balance water supply and demand by restricting supply, especially from northern Victoria.
The reduced-demand strategy came out of the green-left ideology most strongly championed by former minister John Thwaites. It fell victim to the reality that industry and households do not value water savings as highly as environmentalists.
In June 2006, following a 20-year dearth of capital expenditure, during which time the population grew 30% and the drought continued, Melbourne's water availability was looking perilous -- despite restrictions and Government exhortations to use less.
The Government panicked. It announced a $4.9 billion Victorian Water Plan. This involved $3.1 billion for the desalination plant at Wonthaggi and $1.75 billion for the first stage of upgrading the irrigation infrastructure in northern Victoria together with the Sugarloaf Pipeline to send the water savings to Melbourne.
The AG's view was that the plan's preparation was a shambles. It involved hardly any consultation with those affected by it, including government bodies with expertise such as Melbourne Water.
Although the AG examined the water infrastructure with rigour, he was not at liberty to examine approaches different from those that policy dictated the DSE must pursue.
Had he done so, he would surely have reached similar estimates of the costs and availabilities of alternative approaches to those I have calculated. I have assessed costs and availabilities of water for Melbourne from a variety of sources, including from new dams in the Melbourne catchment area and the harvesting of flood waters, as well as desalination and the Sugarloaf proposal. That analysis showed conclusively that the DSE approach was the wrong one.
I have estimated that new supplies can be sourced from rivers in the Melbourne catchment area -- including the Thomson/Macalister, Mitchell and Latrobe -- for 50¢-60¢ a kilolitre. That's a lot less than Sugarloaf (estimated at 166¢ a kilolitre) and a fifth of the 300¢-plus a kilolitre cost of water from the Wonthaggi desalination plant.
Duplicating the Thomson Dam would offer other benefits of flood control and greater security for irrigators south of the Great Divide.
The root cause of the problem is an ideologically driven anti-dam water policy. The DSE has been forced quickly to rectify a disaster years in the making and to do so with solutions other than those based on a new dam, to avoid embarrassing the Government. It is now time to face reality and build a new dam.
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