Water Industry Competition Bill
Central Coast Water Corporation Bill
CHAIR: The Committee will deal first with the Water Industry Competition Bill.
Clauses 1 to 9 agreed to.
Mr IAN COHEN [11.13 a.m.]: I move Greens amendment No. 1:
No. 1 Page 5, clause 10, lines 32 and 33. Omit "sufficient quantities of the water supplied by the licensee". Insert instead "all water supplied by the licensee (other than such water as is necessary to maintain water supplies during periods of peak demand or infrastructure failure)".
The intent that any new water service provider should obtain water from alternative suppliers, not simply act as retailer of water currently provided by a public water utility, is appropriate. However, the reference to "sufficient" water being obtained from sources other than a public water utility is too broad and open to interpretation. While circumstances may arise where peak demand or infrastructure failure means that supplies may need to be topped up with current potable supplies as an emergency contingency, this needs to be made explicit. A new clause should be added to state that use of water from public utilities is only to be permitted as a contingency measure in the event of infrastructure failure or peak demand exceeding supply. I commend the amendment to the Committee.
The Hon. JOHN DELLA BOSCA (Minister for Finance, Minister for Commerce, Minister for Industrial Relations, Minister for Ageing, Minister for Disability Services, and Vice-President of the Executive Council) [11.14 a.m.]: The Government does not support the amendment. A clear objective of the bill is to ensure the long-term sustainability of water resources, and especially to promote the production and use of recycled water. The requirement in the bill that new water suppliers source a sufficient quantity of water from a new water source rather than simply drawing on existing public water resources is directed towards that objective. The proposed amendment, however, goes too far. It would stifle investment and effectively strangle competition at birth, undermining the very objectives it is supposed to be achieving.
Preventing new suppliers from entering the market at all unless they obtain 100 per cent of their water from new sources would create a significant barrier to entry, undermining investment in new water resources, and especially in recycling. For example, a new operator in the initial stages of operations may need some access to existing water sources while commissioning a new or larger recycling works, or while it builds up its market share in, for example, the sewerage market, which will provide it with the raw materials for its recycling operations. It would undermine long-term investment if operators were required to be entirely self-sufficient from day one before they were allowed to enter the market at all. The use of the phrase "sufficient" in clause 10 is deliberately flexible. It enables consideration of all the circumstances of the licence application to permit the Minister to take a long-term view in determining whether a new supplier will contribute positively to the State's water supply.
The Minister's consideration of this issue will be informed by the advice of the Minister for Natural Resources, the licence applicant, stakeholder submissions and the recommendations of the Independent Pricing and Regulatory Tribunal following public consultation. The bill is designed to strike the right balance between promoting competition and ensuring the sustainability of our valuable water resources. This bill does not extinguish any pre-existing contractual rights and will not allow a licence to be issued where a proponent does not have a proper proposal for creating an alternative water source. For those reasons, the Government does not support the amendment.
Clause 10 agreed to.
Clauses 11 to 13 agreed to.
Mr IAN COHEN [11.17 a.m.]: I move Greens amendment No. 2, as amended:
No. 2 Page 7, clause 14. Insert after line 28:
(2) The amount so determined must not exceed the costs of administering this Act, during the year to which the fee relates, in relation to the licensee.
The wording of this clause does not specify on what basis the Minister will determine an annual licence fee. This leaves open the possibility that these could be set at inappropriate levels and act as a barrier to the entry of new operators in the water industry. This clause should be amended to specify that the licence fees will be set at the level of cost recovery of IPART's administration of the licence. I commend the amendment to the Committee.
The Hon. DON HARWIN [11.18 a.m.]: This seems to me to be a fairly commonsense amendment and we would need to hear a good reason from the Government as to why we should be opposing it. If there is one, let us hear it. Otherwise, the amendment seems to be commonsense.
The Hon. HENRY TSANG (Parliamentary Secretary) [11.19 a.m.]: The Government will support the amendment.
Amendment agreed to.
Clause 14 as amended agreed to.
Mr IAN COHEN [11.19 a.m.]: I move Greens amendment No. 3:
No. 3 Page 7, clause 15. Insert after line 37:
(2) Before taking action under subsection (1), the Minister must refer the matter to IPART for inquiry and report.
(3) Section 9 (subsection (1) (a) excepted) applies to and in respect of any matter referred to IPART under this section in the same way as it applies to and in respect of any application lodged with IPART under section 8.
Clause 15 of the bill would allow the variation of licence conditions without any public review process. This is totally at odds with the principles of public transparency and community consultation. This clause should be amended to require a public review of any proposed changes by the Independent Pricing and Regulatory Tribunal and public consultation prior to any variation of licence conditions. I commend the amendment to the Committee.
The Hon. HENRY TSANG (Parliamentary Secretary) [11.20 a.m.]: The Government does not support the amendment. The concerns raised by this amendment are already addressed in the bill. In particular, clause 17 requires the Minister to consult with persons prescribed in the regulations before taking action to vary licence conditions. This provision will enable regulations to be made which specify the consultation requirements applying to particular types of licence variations. There will be some cases where the Minister will need to be able to act quickly to amend certain conditions of the licence in the event of an emergency or to respond to concerns that may arise from time to time. There is no requirement for the Independent Pricing and Regulatory Tribunal [IPART] to conduct an investigation and seek public submissions prior to the amendment of the Sydney Water or Hunter Water operating licences.
It is even more important that the Minister is able to act quickly in relation to licensees under the proposed legislation. Licence conditions are the primary means used to control the activities of private sector service providers. This contrasts with Sydney Water and Hunter Water, which may be given directions by the portfolio Minister under the State Owned Corporations Act. If the Minister were required to await a public review by IPART before making any amendment to the operating licence, there is a real risk that public health and safety could be compromised.
Clause 15 agreed to.
Clauses 16 and 17 agreed to.
Mr IAN COHEN [11.23 a.m.]: I move Greens amendment No. 4:
No. 4 Page 9, clause 18, line 21. Insert "to the environment or" after "risk".
In relation to emergency directions under clause 18, risk of environmental damage should be included in the grounds for a direction by the Minister to take action to reduce or eliminate the risk. The section refers to situations such as risk to public health. It would be entirely appropriate to include environmental risk as a trigger for emergency directions. I commend the amendment to the Committee.
The Hon. HENRY TSANG (Parliamentary Secretary) [11.23 a.m.]: This amendment is not supported, as it is unnecessary. There are full and comprehensive powers to direct licence holders under the Protection of the Environment Operations Act if there is a risk to the environment arising from their activities. For example, a clean-up notice may be issued to direct an occupier of premises where a pollution incident has occurred to take the clean-up action specified in the notice. A prevention notice can be issued if the regulatory authority reasonably suspects that any activity has been carried on in an environmentally unsatisfactory manner. Prevention notices require that action specified in the notice be taken. The Minister for the Environment can issue a prohibition notice directing that an activity cease for the period specified in the notice. There has been no suggestion that these provisions are inadequate, and they should continue to be the primary mechanism for protecting the environment from harmful activities. This amendment would overlap with and duplicate these provisions, creating regulatory uncertainty.
Clause 18 agreed to.
Clauses 19 and 20 agreed to.
Clauses 21 to 104 agreed to.
Schedules 1 to 4 agreed to.
Dictionary agreed to.
Title agreed to.
The CHAIR: The Committee will now deal with the Central Coast Water Corporation Bill.
Clause 1 agreed to.
The Hon. DON HARWIN [11.28 a.m.], by leave: I move Opposition amendments Nos 1 and 3 in globo:
No. 1 Pages 2 and 3, clause 2, line 26 on page 2 to line 6 on page 3. Omit all words on those lines.
No. 3 Pages 63 and 64, schedule 7, line 25 on page 63 to line 4 on page 64. Omit all words on those lines.
So that honourable members are clear, amendment No. 1 deals with—
The Hon. John Della Bosca: I do not want to assist the Opposition, but is there a reason that we can't consider amendment No. 4 at the same time? They seem to be closely linked.
The Hon. DON HARWIN: My instruction from the shadow Minister is to move amendments Nos 1 and 3 and then to move amendments Nos 2 and 4. That is how I will move them. So that honourable members are clear, Opposition amendment No. 1 will omit subclauses (5), (6), (7) and (8), which are very much about arrangements for proclamation. Amendment No. 3 relates to schedule 3 on page 63 and will delete all lines from line 25 on that page to line 4 on page 64. That amendment relates to the constitution of the water supply authority and basically omits Gosford City Council and Wyong Shire Council as water supply authorities. That is the scope of the amendments. The Opposition moves the amendments, as outlined to the House yesterday by me, by Reverend the Hon. Dr Gordon Moyes and by the Leader of the Opposition, because we are concerned about and opposed to the way the Government has decided to move against Gosford and Wyong councils and their traditional role as water suppliers for the people of the Central Coast. Effectively, those subclauses intend to ensure that the councils are stripped of their authority to make decisions for the benefit of the residents of the Central Coast.
The interesting and sneaky thing about what the Government proposes is that this will happen in two steps. Although we have this bill now, there is no intention to trigger any substantive change prior to the 24 March election, but after the election the bill will give the Government the capacity to make major changes to the traditional arrangements for the supply of water on the Central Coast. We have had the benefit of taking advice from Wyong Shire Council, which was provided with Senior Counsel's advice on the nature of the bill. That advice makes it quite clear that the practical effect of the amendments proposed by the Government is:
To denude the councils of the power to raise funds for water and sewerage services. They will lose the power to levy service charges and impose fees and other charges and the power to recover the cost of existing works or to claim the cost of proposed works as a condition of granting a certificate of compliance for a development under the Water Act.
I will not read the whole advice. My colleague the honourable member for Gosford read from large slabs of the advice in the other place. These amendments oppose the arrangements the Government is putting in place to try to change the traditional water supply arrangements.
The Hon. Dr Arthur Chesterfield-Evans: They are trying to pinch the whole authority.
The Hon. DON HARWIN: It is the Government's latest attempt to take that authority and vest it in something that clearly will be under the Minister's control in Sydney. We are not buying it and we urge the Committee to support the Opposition's amendments.
The Hon. JOHN DELLA BOSCA (Minister for Finance, Minister for Commerce, Minister for Industrial Relations, Minister for Ageing, Minister for Disability Services, and Vice-President of the Executive Council) [11.34 a.m.]: The Government does not support Opposition amendments Nos 1 and 3 in relation to the Central Coast Water Corporation. The bill creates a new entity to better deliver water and sewerage services to the Central Coast community. I am not sure of the veracity of the advice from the honourable member for Gosford, but as I live and have lived for 20 years on the Central Coast I can tell the Hon. Don Harwin that there is a great deal of community concern about the water issue on the Central Coast. The people of the Central Coast are now very appreciative of the fact that the Iemma Government has clearly created an opportunity to address both the medium-term and long-term issues of water supply on the Central Coast, and in an innovative context, effectively creating a water grid for the major urban populations that now reside on the Central Coast and in the Hunter Valley. That has created considerable interest.
There is a great deal of community sensitivity about these matters. There have been traditional arrangements on the Central Coast that have grown from the time when Gosford shire and the other smaller local government entities, including Wyong and Woy Woy, had their own water supply arrangements. Those water supply arrangements culminated in a joint water supply authority arrangement. It is important to understand—in response to the interjection from the Hon. Dr Arthur Chesterfield-Evans—that there is nothing to pinch or grab here. There is no way that the Government is seeking to get hold of the authority, but we are trying to make sure, in a collaborative way with the institutions that have run the water supply on the Central Coast—that is, the two councils through a joint water supply entity—that proper governance arrangements and proper responsibilities are in place. To secure this grid to share water effectively, or to allow water to be relayed and transferred between the Hunter catchment and the Central Coast and vice versa, has involved a great deal of confidence and a long-term requirement for the public interest to be observed.
My colleague the Minister for Planning is not using any big sticks. As someone who lives on the Central Coast I am very aware that the Minister is consulting in great detail with Gosford and Wyong councils. The Government as a whole has sought to move swiftly through the Premier's announcement the other day to resolve some of the serious issues of water supply that Gosford and Wyong councils face. I assure the Opposition spokesperson that regardless of the advice he is getting from his colleague the honourable member for Gosford, recent announcements about these arrangements are genuinely appreciated. It is agreed that the overall solution must be in the public interest and must be fair, not only to the people of the Central Coast but also to the whole of New South Wales and the people of the Hunter, who will, through that innovative policy model announced by the Premier, be sharing water as the occasion arises—not only now but well into the future.
The Government has consulted extensively, through the Minister for Planning, with the Gosford and Wyong councils and the corporation. The proposed corporation is the best model to deliver efficient management of the Central Coast water supply for the benefit of the local community. This is what the people of the Central Coast have asked for; indeed, it is what they are demanding. The effect of the Opposition's amendments would be to create three separate bodies dealing with water, sewerage and drainage on the Central Coast. That would be inefficient and irresponsible. The Opposition has said in the other place that supporting three organisations instead of two will result in increased costs to taxpayers. That is why the Government cannot support this amendment.
The Government's model is for the Central Coast Water Corporation to replace Gosford and Wyong councils as the legal entities with responsibility for water, sewerage and drainage. Under the Government's model the current two bodies with these responsibilities will be replaced by a single, efficient corporation wholly owned by each council. Under the Opposition's model the current two bodies with these responsibilities would be expanded to three. That is clearly not acceptable and fundamentally irrational. It is an illogical policy position that does not help with any of the serious issues facing both the Central Coast and the Hunter in relation to water supply.
The Government supports a smooth transition to the corporation becoming a water supply authority, and this is provided for in the bill. Clause 2 provides that the Central Coast Water Corporation will become the water supply authority with responsibilities and powers under the Water Management Act. This will happen after the corporation has been established for 12 months by operation of the law. The Minister has no power—I repeat this because it was very pertinent to the remarks of the Hon. Don Harwin, who led for the Opposition on this point—to change the date unless the request is received from the councils. The date may be changed to an earlier date or a later date if the councils request it. The later date must be no later than two years after the corporation is established. Once the corporation is a water supply authority Gosford and Wyong councils will no longer levy funds for water and sewerage charges. This is because they will no longer be providing water and sewerage services.
Instead, charges will be levied by the Central Coast Water Corporation on behalf of the councils. Obviously, the councils should not be able to charge ratepayers for a service that they will no longer be providing. No dividend will be paid by Central Coast ratepayers to the State Government because of any provision in this bill. That is simply a scare campaign. If the Hon. Don Harwin could communicate that to his colleague Chris Hartcher, it would save us all a bit of time with respect to the scare campaign that Chris Hartcher obviously intends to run on the Central Coast on this matter. Any dividend payments made by the corporation will be paid to Gosford and Wyong councils. Clause 19 makes this clear. I do not want to have to get on to Central Coast radio and call Chris Hartcher a liar again but it is very clear that that is the case.
The Hon. Don Harwin: You would not do that.
The Hon. JOHN DELLA BOSCA: Not unless I have to. The Opposition is out of touch and has no idea how to solve the problems of water on the Central Coast. The Minister for Water Utilities and the Premier are sensitive to these issues. As the Hon. Don Harwin and members familiar with the politics of the two local government bodies involved would know, Labor is in the minority on both those councils. The mayors involved are Independents and there are considerable and influential people from the conservative and Liberal Party persuasions as well as green politics involved in those councils. Much of the work on solutions for Central Coast water have been worked on the basis of a consensual approach with the support of those councils above politics. If the Opposition thinks that it can win a few points on the Central Coast by playing politics with water, regardless of what the member for Gosford says, it is barking up the wrong tree. The people of the Central Coast know how dire the situation is. They want solutions; they do not want propaganda.
Mr IAN COHEN [11.44 a.m.]: I am somewhat in a quandary about these amendments. I would like to keep these issues closer to the ground by giving the local councils more control in the situation. I understand the amendments would provide only for a period of two years, so it is not as though a permanent arrangement is being put in place. I am equally concerned when I hear that, for a change, Minister Sartor is not using the big-stick approach. It is the first I have heard for quite a while. I was at Budgewoi where the local community was up in arms about the current situation and the possible introduction of temporary desalination plants on the beachfront—massive infrastructure. I am concerned that the Government is pushing hard. As the amendments provide for only temporary measures, I am inclined to, dare I say, trust the Government on this matter, and that makes me feel rather uncomfortable. The Greens will support the Government.
The Hon. Dr ARTHUR CHESTERFIELD-EVANS [11.45 a.m.]: I must admit that I find the amendments hard to understand. It is a shame that the Opposition has not given us more briefing than in the Chamber. It is a very disappointing feature of all Opposition amendments; they very rarely take the trouble to brief the crossbench and then they complain when they do not receive support from the crossbench. This was originally said to have been a problem because the crossbench leaked it to the Government. I do not believe that in the eight years I have been a member of this place that there have been any significant leaks to the Government. It is a very worn excuse for an Opposition that simply does not brief people when it wants help. It appears to me that the Opposition merely spends its time posturing in order to win elections rather than actually improving legislation.
The Government's response seems a little lame, on the other hand. It says that the new authority will fix the water problem. These are happy little assertions that may or may not be the case. I am sure there is a new authority and its intention is to fix the water problem. The Government criticises the Opposition for having no policy but it might be noted that there is only 1.5 per cent water reuse in an area that is very short of water—an abysmal rate, given that Adelaide is reusing 19 per cent of its water. There is also practically no demand management strategy. The Government has allowed this water shortage to develop over a long period by having a lack of any serious water policies. So for the Government to criticise the Opposition is the pot calling the kettle black.
The ownership of assets is still not quite clear. Does the corporation become a separate entity or will it be owned by the people of Gosford and Wyong? The Minister said that the State Government will not charge a dividend at any time. However, it might be noted, and as I pointed out yesterday, the reason that Sydney Water is in such a muddle is that as a corporation it was charged $100 million a year by way of a dividend and that money was not used to replace pipes and sewers that needed replacement. This resulted in an increase in water use to compensate for water leaking out of pipes and sewage plants had to process rainwater that leaked into the sewerage system. The pipe systems have not been well maintained because the Government has been happily taking a dividend of $100 million without raising other taxes. It was taking money from the statutory water corporation.
This is always done when the Government wants to corporatise things. It sells everything possible to Macquarie Bank or whoever else and downsizes government. That always creates vulnerability. Obviously the corporate entity will trade with other suppliers. The Opposition has said that this is a takeover bid by the Government. I am not sure that there is a problem with regard to the three entities—Wyong Council, Gosford Council, and the new water entity. If the councils cease to charge for water and sewerage services, they will still charge for government elections and so on. The billing system will have to be rationalised, and presumably the three bodies will work that out sensibly, as the two councils have a history of co-operating on water supply and sewerage. The suggestion that the amendment should be discarded because of the Government's position that this would result in three entities, which would make the situation complicated, is probably a furphy in order to defeat the amendment. I am inclined to think that the amendment probably has merit.
Reverend the Hon. Dr GORDON MOYES [11.49 a.m.]: I spoke at great length about this yesterday and I do not propose to repeat myself. Since yesterday I have had the opportunity to speak to the mayor of Gosford. I discovered that, contrary to some of the earlier publications presented by the Gosford City Council, there appears to be a diversity of views between Wyong and Gosford councils. I am sorry about that, because the people suffer when local councils cannot agree.
The practical effect of the amendments is, in the words of one person, "to denude the councils of their power to raise funds for water and sewerage services". They will lose the power to levy service charges and to impose fees and other charges. That does not relate so much to new works. However, all councils would have some residual costs that have not yet been covered for more recent works, such as extending pipelines and so on to new housing developments, and they need that opportunity to impose a levy on water and sewerage services. Once the councils' water distribution infrastructure is transferred to this combined corporation, they will lose the power under the Local Government Act to impose special rates and charges for water supply and reticulation because a condition for doing so is that the land is supplied with water from a water pipe provided by council. Contributions cannot be extracted under section 94 of the Environmental Planning and Assessment Act 1979 for public amenities or services comprising water supply and sewerage works.
I wish we did not have to vote on an issue about which there is no clear understanding of what the councils jointly want. Accordingly, the effect of the councils ceasing to be water supply authorities will be to prevent them from raising money, whether by levies or contributions, for water or sewerage services, and to restrict their power to raise money for drainage purposes. This is a very important issue on the Central Coast, where much of the land and housing development is roughly at sea level and drainage is very important. The extent to which a council will be able to impose a rate or charge for water, sewerage or drainage will depend, in the case of water and sewerage, on the extent to which the council retains its infrastructure and the proximity of the infrastructure to the land upon which the rate or charge is to be levied.
It is unfortunate that we are not getting clear guidance on this from the councils' point of view. All we can do is represent the viewpoints of the councils, and yesterday I represented the viewpoint of Wyong Shire Council, its general manager and Mayor Bob Graham accurately and faithfully. I am inclined to think from a conservative point of view that we should support the Liberal Party's amendments.
Mr IAN COHEN [11.53 a.m.]: I have listened to the debate with interest and I take it very seriously. Ms Sylvia Hale and I do not feel that we have received enough information. I appreciate the input of Reverend the Hon. Dr Gordon Moyes on this matter. We had further consultations in the short time available and I am inclined to be convinced by the debate on the floor of the Chamber that this could be worthy of support. I obviously take this very seriously. I also take seriously the powers of local government to be able to operate basic infrastructure and I have consistently had major concerns about the overlay of big infrastructure. I will discuss that matter, but I make it clear that I am listening to the debate as it is taking place and will then decide whether or not to support the amendment.
The Hon. Dr ARTHUR CHESTERFIELD-EVANS [11.54 a.m.]: I take the point of Reverend the Hon. Dr Gordon Moyes about the inability of councils to raise money for items of water infrastructure. On the other hand, if there is an overarching body that is doing that and it is effectively a satellite body of Wyong and Gosford councils, I am sure that will not be a huge problem in the sense that if they delegate the task to a body over which they have a significant influence, they do not then have to do it themselves. It does not have to be done twice.
I do not know whether drainage is included in that, but I presume that it will also be a function of the new water corporation—it would deal not only with water and sewerage services but also with stormwater drainage. There are obviously some elements of that. However, from a drainage point of view and in terms of building culverts and gutters, that is obviously a council function. Normal rates for services such as garbage collection would presumably be able to encompass that. Therefore, the division of water and sewerage services between the new entity and the traditional jobs done by the council surely would not be difficult to address.
I am interested in the proclamation by the Government that creates this entity and what the Government wants to do with it. Obviously it should belong to the people of Gosford and Wyong, and I am inclined to support the Opposition's amendment. However, as I said, there has been a lack of information provided to assist us to make this decision, and that is most unfortunate.
The Hon. DON HARWIN [11.55 a.m.]: I hear what the Hon. Dr Arthur Chesterfield-Evans and Mr Ian Cohen have said about these amendments. These are not easy bills to deal with when they are put through in the time frames required at this stage of a session. I sympathise with them. To the extent that it is necessary, I offer them an apology on behalf of the Opposition for what they feel is not enough detail to make a decision at this point. They should remember, of course, that we are the Opposition, not the Government, and we do not have the resources of the bureaucracy to respond in the time frames that the Government can. We have earnestly tried to do our best. We also flagged at the end of the second reading debate yesterday that we would move these amendments. I refer the crossbench to the lengthy remarks made by the shadow Minister in Committee in the other place, because these are the same amendments as those moved in the other House. I trust that that has been of some assistance to the crossbench. I commend the amendments to the Committee.
Ms SYLVIA HALE [11.58 a.m.]: I echo the comments of my colleague Ian Cohen. I am reasonably familiar with the Central Coast area and the problem confronting the residents. If ever an area that has been laid waste by rampant, unplanned development it is the Central Coast. It has been a case of killing the goose that lays the golden egg. It is not as though the problems we are encountering with water on the Central Coast could not have been anticipated; it has been an ongoing problem. The rate of housing estate sprawl has contributed to that problem and to the despoliation of the environment. Wyong and Gosford councils have had strong differences of opinion about how to deal appropriately with water supplies for a long time.
The Hon. Duncan Gay: What is despoliation?
Ms SYLVIA HALE: It is the despoiling of the environment. As I said, Wyong and Gosford councils have had differences of opinion for a long time about how to deal with the problems of water supply. For quite some time Gosford council ran very strong on the proposals to introduce a desalination plant for the area—to the despair of many members of the local community.
The Hon. John Della Bosca: You've got it round the wrong way, Sylvia.
Ms SYLVIA HALE: It was Gosford council that was keen to introduce a desalination plant. I remember having detailed discussions regarding the issue with the Greens councillor on Gosford council, Councillor Terri Latella, who was very much opposed to that approach. To the best of my understanding, Wyong council certainly was far more reluctant to proceed with any proposal to introduce a desalination plant. As the community is well aware, a desalination plant is far from being an appropriate answer to any water problem.
Pursuant to sessional orders progress reported and leave granted to sit again.
QUESTIONS WITHOUT NOTICE