Changes to council's water services could hit Gympie ratepayers' pocket

Press/Media: Expert Comment


Expert comment on Gympie Regional Council's proposed move to full-cost pricing for water supply services.


COULD Gympie residents be paying more for their water in the future?

According to a water law researcher at Bond University, the answer could be yes if Gympie Regional Council's new water business unit moves completely to a full cost pricing model.

And it is a change which could be on the cards, listed as a component of the new Water Business Unit to be considered in the 2019-2020 financial year.

A Gympie Regional Council spokeswoman said developing a full cost pricing model would enable the council to charge appropriate and accurate fees and identify savings on the service.

"Council is working on improving its cost management to enable council to identify savings opportunities to keep our bills as low as possible. The purpose of the project is to review the current charging structures and ensure that charging is equitable among all our customers,” she said.

However, while there were pros to full cost pricing like greater transparency, removal of hidden subsidies, and encouragement of water conservation, assistant professor Victoria Baumfield said there were cons to the system, too.

"The most obvious downside of moving to full-cost pricing is that water bills will inevitably go up - yet the previous council revenue streams that have heretofore covered the difference between the amount paid by ratepayers and the full cost of providing water service will certainly not go down, so this represents in effect a new tax on ratepayers,” Prof Baumfield said.

There was also another possibility in the long run.

"Full cost pricing also could be a precursor to, at some point in the (possibly distant) future, either privatisation of water supply or the introduction of competition into water supply,” she said.

She said residents' concerns about any changes to water services were understandable given the severely limited choices in a non-competitive market.

"We are talking about a monopoly business selling a necessary good that everybody must buy. We are all held over the barrel by our water suppliers and dependent upon legal regulation to prevent us from being taken advantage of,” she said.

"Theoretically the ability to pass on costs is limited to reasonable costs, but that only helps to the extent that someone with teeth is actually reviewing those costs and stopping unreasonable ones from being passed on. I am not familiar with any example where overspending by a government water supply business was not passed on to the customers.”

However, a full cost pricing model applied to developers for the increased pressure on infrastructure services would be something which would potentially make the population "very happy”.

Period6 Oct 2017

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