Water price decision invests in sustainability

QUEENSLAND irrigators have received some early Christmas cheer with the State Government announcing a change of track for water pricing policy.
For most of this year, the Queensland Competition Authority (QCA) has been conducting a review that would recommend new SunWater irrigation prices for the five years from July 2011.
This review has been a major focus for the Queensland Farmers’ Federation, particularly as the terms of reference contained contentious issues such as imposing a rate-of-return on irrigation schemes and an investigation into irrigators’ capacity to pay increased charges.
We were very concerned that we were headed toward a path that would have made a large number of farms and irrigation areas unviable or unable to invest in their futures.
Instead, following an announcement last week, we are now looking at a policy that is good news for irrigators, communities, and the State.
Minister for Natural Resources, Stephen Robertson, is to be congratulated for his leadership by striking out the additional rate of return for infrastructure built prior to October 1, 2011 (which is when the new price path will begin).
He has also removed the capacity to pay assessment – which would have been extremely difficult and complex – and saved the industry the agony of negotiating this process for another six months with a high degree of uncertainty.
Further he has ensured QCA is in position introduce price increases over a period of five years or more to moderate the impacts of large price increases in particular schemes.
Ultimately, there are still some challenges ahead for irrigation water prices, but this decision brings us into line with the policies of southern States such as NSW and hopefully this gives us the opportunity to continue to grow the sector in Queensland.
Instead of having the irrigation sector looking over its shoulder and trying to pay for dams that the State built decades ago, the sector now has greater confidence looking to the future and is able to make long-term investments to modernise schemes.
This focus on long-term sustainability of agriculture is a cornerstone policy of QFF, so it is pleasing to see Minister Robertson recognising that.
In the future, new irrigation areas and infrastructure built after October 1, 2011 will require a rate of return for SunWater.
Farmers will therefore need to have a strong say in where that capital investment goes. Irrigators will be the ones paying, so it makes sense that they are fully involved in the process.
In addition, another challenge for the sector will be an assurance given by the Minister about the costs of upgrading Queensland’s dams to withstand a one-in-100,000 year flood.
These expensive upgrades to dams are budgeted to cost tens of millions of dollars, and are happening as an insurance policy for the State and communities.
The government has taken this issue off the agenda for the coming price path.
We believe that the need for spillway upgrades must be fully justified along with any proposals for cost sharing involving SunWater customers.
The process is not over though and QFF will also be awaiting the release of SunWater Network Service Plans required in mid January 2011.
These plans will detail the operational and expenditure costs of running irrigation schemes and how this would impact on potential future prices.
Given the rate at which electricity is rising, there could be some big challenges ahead once we see these Plans and prices rises will still be painful.
Despite these challenges, this announcement from Minister Robertson is a significant show of faith in the long-term future of the irrigation industry in Queensland.
For the year ahead, we will be continuing to push for policies of this nature that are productive for Queensland farmers.