Estimates and Financial Operations - Water Corporation
Estimates and Financial Operations
Hearing commenced at 3.15 pm
HON HELEN MORTON, MLC - Minister for Mental Health representing the Minister for Water
MRS SUE MURPHY - Chief Executive Officer, Water Corporation
MR PETER MOORE - Chief Operating Officer, Water Corporation
MR ROSS HUGHES - Chief Financial Officer, Water Corporation
MR LLOYD WERNER - Manager, Pricing and Evaluation, Water Corporation
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[Supplementary Information No C2.]
Hon ALISON XAMON: I refer to the Waterwise programs as they potentially exist in Perth.
Hon HELEN MORTON: Which page is it?
Hon ALISON XAMON: It is page 876. What I need to know is—there is not a line item here—how much has been put aside for any sort of Waterwise programs in Perth and what that consists of. Also, I want to get a final figure for the showerhead rebate scheme.
Hon HELEN MORTON: It is obviously not a line item in the budget. Consequently, that specific information that you are looking for is not here; however, the chief executive officer can make some general statements about it. Mrs Murphy: We have a number of programs that we are running in the demand management area and we see it as —
Hon ALISON XAMON: I am specifically interested in the metropolitan area.
Mrs Murphy: We have our showerhead swap program, whereby our customers can bring in a recent bill and up to two inefficient, not-wise showerheads.
Hon ALISON XAMON: Do you have a final —
Mrs Murphy: A dollar value for that?
Hon ALISON XAMON: Yes, a dollar value —
Mrs Murphy: I think the dollar value for the suite —
Hon ALISON XAMON: — for how much you have spent to date for the last financial year and how much is projected for the next financial year. I am happy to take that on notice.
Mrs Murphy: It is of the order of $8 million all up for those Waterwise programs, but that includes some country towns, so I would have to pull it apart. We will take that on notice if you wish.
Hon ALISON XAMON: I confirm that it is what is projected for the showerhead swap scheme for the last financial year and for the upcoming financial year. Could I also have a list of the towns that were covered by that?
[Supplementary Information No C3.]
Mrs Murphy: Was that just the showerhead swap or all —
Hon ALISON XAMON: No; that is just for starters. I want to go through the other ones as well.
Hon HELEN MORTON: So you do not want that to be just metropolitan now?
Hon ALISON XAMON: Metropolitan and the towns as mentioned by Ms Murphy.
Mrs Murphy: The showerhead swap is in Perth and Mandurah.
Hon ALISON XAMON: That is fine.
Mrs Murphy: There are no other towns for the showerhead swap.
Hon ALISON XAMON: I was going on what you said just then.
Mrs Murphy: There is a suite of demand-management programs that all-up total about $8 million, but that is divided into a number of components—the showerhead swap; the one-on-one behaviour change with customers, which is a selfselect-in option; and some retrofits in country towns. I would have to get the whole list. Because none of that is in the budget, we would have to take that separately.
Hon ALISON XAMON: Of course; that is why I am here—to try to get that information. In terms of the retrofits for some towns, could you please explain the sorts of retrofits that you are looking at? Is it going the whole hog in terms of a third pipe? It is very basic retrofits, is it? Which towns are being targeted? I am assuming that this ties in with the comments that you just made to Hon Ken Travers.
Mrs Murphy: No; it is not third pipe or anything along those lines. The retrofits are water-efficient showerheads. The biggest bang for your buck is usually in the showerhead, because, once it is installed, people, no matter how long their shower is, use less water per minute. It also helps power consumption quite dramatically. We will retrofit waterefficient toilets in areas where people do not have water-efficient toilets, and we will do water audits of people’s houses and look at some of their garden areas and give them some advice about ways to cut water usage quite dramatically. It is in Albany, Perth, Karratha, Port Hedland and Onslow. In Kalgoorlie, we are doing a trial of smart metering to give people an automated meter reading—the trial is not rolled out fully yet—so that people can get a much more instant understanding of the water they have used in that period.
[3.40 pm]
Hon ALISON XAMON: How long do you estimate that trial will go for?
Mrs Murphy: It goes forever when it is installed. The trial is that we are only installing it in the Kalgoorlie-Boulder area, and then once it is installed we will be monitoring water use to see if the more frequent meter reading and the more frequent access of data for the customers allows them to drop their water use.
Hon ALISON XAMON: I will rephrase the question. When are we likely to get the initial results from the effects of that trial to see how successful it has been?
Mrs Murphy: We will have all the meters installed within the next six months or so, and, obviously, it will probably be 12 months before we have anything meaningful in the way of data, and then we will keep monitoring it.
Hon ALISON XAMON: That is still an answer, so that gives me an indication of how long you are going to be looking at.
I am happy to take it on notice, but could you please provide the costings that have previously been done by Water Corporation in relation to the cost per kilolitre of the implementation of various forms of water conservation measures, from rainwater tanks, obviously, which I understand are quite costly per kilolitre, right through to showerheads, presumably? Are you able to supply the full list of that?
Mrs Murphy: Yes. They vary by location.
Hon ALISON XAMON: Of course.
Mrs Murphy: And, by location, the number you are comparing them with varies.
Hon ALISON XAMON: I understand that rainwater tanks in Albany are drastically different to even Perth at this point.
Mrs Murphy: Correct. Similarly, the installation costs in, say, Onslow are greater than they are in other areas, so there are some installation costs, and then the viability of the program depends on the original cost of water supply. In Perth, the cost of water is much cheaper than it is in, say, most of our country schemes, even though that may not be what the customer pays.
Hon ALISON XAMON: I should probably put that on notice.
[Supplementary Information No C4.]
Hon ALISON XAMON: I was also hoping to get the costs of various types of recycling, and I will refer also to the “Wastewater Program—Groundwater Replenishment Trial” listed under “Works in Progress” on page 876 of the Budget Statements. I will concentrate, firstly, on the groundwater replenishment trial. Of course, the minister has indicated a desire to speed up that trial, and I note that there is nothing in the forward estimates to indicate that that is likely to occur. Would you like to comment on whether it is likely that that the program is going to be sped up, and, hence, where that will likely appear in the forward estimates?
Mrs Murphy: The trial continues to the end of 2012, and the numbers in the forward estimates include that. In the out years we have chunks of money for new sources. It is not necessarily specified in detail in the next two years which source is which, but we will look for the most cost-effective and value-for-money source. We are presupposing the outcome of the trial as being successful, and that being the case and the public acceptance is right and government policy lines up, then all of those things lead us to continuing with groundwater replenishment as a potential source option. There is money in for future water source augmentation, but which source it will be by the out years is not locked in.
Hon ALISON XAMON: I just want to clarify, because there is a difference between speeding up the trial and then determining that the trial is successful and proceeding with a permanent reinjection of waste water. Can I confirm, then, that it is not the intention of the Water Corporation at this point to speed up the trial, and that at this point, according to the budget, it is pretty much staying on track in terms of the original time frames for that trial?
Mrs Murphy: That is correct. We have signed a memorandum of understanding with the various regulators, and we are working through that process. It is a ministerial decision if that trial is to be amended in any way.
Hon ALISON XAMON: I understand, but at this point there is nothing to indicate that the original decision is going to be amended in any way?
Mrs Murphy: No.
Hon ALISON XAMON: Do I understand that if the trial, as I think we are all hoping, is determined to be successful and there is public support for this, that if you were to start implementing permanent reinjection, at the earliest it would be in 2013-14?
Mrs Murphy: Yes.
Hon ALISON XAMON: As I understand it, it actually still takes a while for the water to be able to be available for reuse anyway. At what point down the track would you be anticipating that that water would be subject to extraction?
Mrs Murphy: From when you drop the flag with environmental and all the suite of approvals to having some water out is of the order of 18 months to actually physically build. But the scheme we would be proposing—the longer-term scheme—is not to suddenly build a huge thing, but it would be an incrementally augmented scheme and we would start small and grow and grow and grow. After injecting the water there is quite a long time frame for the water flowing through, and we are doing a lot of modelling work with our water regulator, which is the Department of Water, about different ways to access that water. Depending on where you inject, you can use it to, sort of, bank some of the water that is naturally flowing out to sea. Our intention would be that from the minute we start injecting, we would be able to withdraw at least that volume of water in the same time frame, so we are not waiting for that water that we inject to physically get to the extraction bore before we would be proposing to start pulling water out again.
Hon ALISON XAMON: I am obviously going on the sorts of documentation that have been made available in terms of the likely travel time from the injection sites to the various bores.
Mrs Murphy: That is true, yes.
Hon ALISON XAMON: It is a significant period of time, which I am not objecting to, but I am trying to determine whether, as a future viable water source, we are actually looking at a fair way into the future. We are not looking at something in the immediate term; is that correct?
Mrs Murphy: No—well, it depends what you mean by the immediate term.
Hon ALISON XAMON: When I say “immediate”, I am probably talking about the next five to 10 years in my own mind.
Mrs Murphy: We would hope that it is a water source in the next five to 10 years, definitely. From the minute we inject we would expect our abstraction licence to be increased by at least the amount we are injecting. The abstraction licence does not wait for those water molecules to travel through; if we are putting water in here and pulling water out there, we are assuming that the molecules of water do not know where they came from and it is one for one. There is modelling that shows that when you inject in the very deep aquifers you could actually get a bounce-back effect that gives you more than one for one, depending on where you inject. If your injection is able to intercept water that would have been naturally flowing out to sea and hence not available, you could potentially—it has happened in Orange County in California—abstract marginally more water than the water you are injecting, because you are slowing down the rate of loss of water that you would normally not have had access to.
Hon ALISON XAMON: Pulling together what you have just told me, I want to see if I have this right. Assuming the trial is successful and passes all the hurdles you talked about, it will take about 18 months to actually establish an ongoing injection site, and you will be looking at approximately 2015-16 until you could look at extracting?
Mrs Murphy: No. The trial completes in December 2012, and we would be looking at 18 months’ construction from that period, which is mid-2013, and let us add six months for making sure that we have the appropriate approvals along the way. By the end of this year, if it is pretty clear that the trial is going well, we would start some of those approval processes in parallel. We would aim to be starting to inject by the end of 2013, and we would be starting to abstract at about the same time. I am sorry, 2014; two years from the end of the 2012 trial we should have water coming out.
Hon ALISON XAMON: Now that you have explained that you are going to have parallel processes, it makes sense. Is there any concern that you may actually be jumping the gun on that? I understand the trial may be on track, and my understanding is that the indications at this point are that it is, but if it were to turn out that it was not ultimately viable or entirely appropriate, does that mean that Water Corporation is effectively taking a punt that the expenditure that it is going to put in at that period of time is actually going to ultimately be worthwhile? Because it sounds to me as though the building of that is premised on the hope that the trial—even though it may be an educated hope—is ultimately going to be successful.
[3.50 pm]
Mrs Murphy: The punt would be on our environmental approval application process. We would not physically build anything—I think we are not allowed to build anything—without environmental approval. There would not be physically pipes and filters and bores being constructed, but we would start the approval process in parallel. There would be some expenditure on that, but not —
Hon ALISON XAMON: But not infrastructure expenditure.
Mrs Murphy: No.
Hon ALISON XAMON: Thanks very much. Can I just also ask—I should have gone back to this before—can I please have the costings per kilolitre that it is considered. I suppose they are basically consistent to the cost per kilolitre of extraction from the Gnangara.
I am being very unclear. What I am after is what is expected at the end of the injection process that the cost per kilolitre of water is going to be as a result of that process. I am assuming it is higher than the cost of a straight out extraction from the Gnangara at the moment, because there is an extra process involved.
Mrs Murphy: Yes.
Hon ALISON XAMON: But could I please have a final costing? I am happy for you to take it on notice.
Mrs Murphy: I can give you a range of costs, because it is very difficult to be prescriptive, because there are a number of variables in how you calculate that. When you pull the water out and treat it, it is exactly the same as using our existing groundwater assets.
Hon ALISON XAMON: I understand that.
Mrs Murphy: The complexity lies in the fact that we have an existing allocation of water from the many aquifers that make up the Gnangara suite of aquifers. Over time—in fact when the second seawater desalination plant opens—we start the process of reducing that extraction level, so we would potentially have capacity in our existing groundwater extraction treatment processes that we would be looking to make up with this. The process to treat the waste water to a high enough level to inject in the aquifer is basically the seawater desalination process. However, it uses less energy than seawater desalination, because it is not quite as salty. At the moment the modelling shows that the costs are of the order of the same as seawater desalination.
Hon ALISON XAMON: So about $2.10 a kilolitre generally?
Mrs Murphy: If you look at the out years, it is between $2.10 and $2.40 a kilolitre. The more existing assets that can be reused and the more likely it is to get more than a one-for-one abstraction trade-off, the more attractive groundwater replenishment becomes financially. It is very difficult to give you a specific answer to that question, because there are so many variables still out there. The generic process thinking is that, if it costs more and uses more energy than seawater desalination, it is not a viable option in the near term. If it costs less per kilolitre and uses less energy, then it is a viable option. At the moment the modelling going forward with our projected re-use of existing assets and our projected abstraction trade-offs has the price between $2.10 and $2.50 a kilolitre.
Hon ALISON XAMON: So it is comparable.
Mrs Murphy: Comparable, yes.
Hon ALISON XAMON: And then of course there are the environmental potential advantages in terms of —
Mrs Murphy: In terms of the local aquifer.
Hon ALISON XAMON: The local aquifer and what that means for the local wetlands. Thank you very much; that was very helpful. I could go all day, so I am just going to keep going until someone stops me. I have a question specifically about Perry Lakes. I just want to confirm that Water Corp will not be putting any money towards the Town of Cambridge’s request to have the recycled water pumped into Perry Lakes for this coming year.
Hon HELEN MORTON: Once again, we are looking for this item in the budget.
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Hon ALISON XAMON: It is to do with the Town of Cambridge’s request for waste water to be redirected into Perry Lakes, which I have no doubt at all that you are aware of. I was wondering whether there was any intention by Water Corporation, either in the next financial year for any future year to contribute moneys towards that.
Mrs Murphy: The discussions with the Town of Cambridge have been going on for many years. The proposal that they have is to take treated wastewater from the Subiaco Waste Water Treatment Plant and use it to create a buffer, which will slow the flow of groundwater down to replenish the lake. It does not displace scheme water or put any water into the scheme. Water Corporation is in recycling to have more water available. The benefit from the scheme is undoubtedly aesthetic and potentially environmental, but from the Water Corporation’s point of view , as a commercial entity under the act, we get no more or less water.
Having put that to one side, we have worked closely with the Town of Cambridge on a number of areas. One is we have come up with a design that can be built for the amount of money the federal government is offering them. We have undertaken that. If they proceed with the project, we will do all of the construction works and take the risks on it not being at that amount of money. We will take the money that the federal government will pay to the Town of Cambridge and do the works for that amount of money and take that risk. We will make the treated wastewater available to the Town of Cambridge at no cost. Any water that we would have had to pump anywhere in any part of the process that no longer has to be pumped, we will credit them, if you like, with the power and the cost of any of those operations that are foregone. Any power consumption over and above that that is required to operate the scheme for the long haul, which is an operating cost, we are saying we are not reimbursing that, because there are a number of benefits to other entities, but not to the operation.
Hon ALISON XAMON: Do you have, or I am happy for you to take it on notice, the costs that you have estimated that it would be over and above—that cost you are referring to?
Mrs Murphy: It is of the order of $55 000 per annum estimated at the moment.
[4.00 pm]
Hon ALISON XAMON: At the moment?
Mrs Murphy: Yes, which is the ongoing operation cost of electricity, or largely power costs. This is not to pump water to them, but this is for them to filter water to the level that needs to be filtered for them to infiltrate.
The DEPUTY CHAIR: Does that satisfy your question?
Hon ALISON XAMON: That one, yes.
The DEPUTY CHAIR: You do not need supplementary information?
Hon ALISON XAMON: No. I am impressed that you have managed to do that off the top of your head.
The DEPUTY CHAIR: Any further questions?
Hon ALISON XAMON: I am happy to come back.
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Hon KEN TRAVERS: The other one was the recycling and reinjection trial. I know that you mentioned a range of environmental issues and economics and all of that, but I would have thought that the other one is the social acceptance of it. What work is being done on the social acceptance side of it? I am still sceptical about it, to be honest. I would have thought there might be some other ways we could use that recycling.
Mrs Murphy: You know that we are doing the trial at Beenyup. We have a visitor centre that is attached to our Beenyup waste water treatment plant. We have a visitor centre at the site and we have been working with schools and community groups and encouraging them to come and have a look at it. We have done quite a lot of public consultation.
We have a regular newsletter that goes out to key stakeholders. We will talk at anything on groundwater recycling to try Estimates and Financial Operations Thursday, 16 June 2011 – Session Three Page 17 to get the public debate going. In parallel with our regulators in health, environment and water, there is a wider discussion going on with a lot of the stakeholders that they are interacting with as well.
[4.50 pm]
I guess what we have tried to do is be very transparent and never use cute language—we do not call it anything other than it is—and try to be very open about the whole process. We are very mindful of what has happened in Queensland in recent years where billions of dollars have been invested in wastewater recycling facilities that are basically mothballed at the moment because it rained and the public view switched. We do not believe that that model of bringing things on in a rush as a kneejerk is sustainable, so we need to bring the community on slowly. The fact that we are injecting the water into an aquifer—people kind of understand that it goes through the sand to be extracted, so there is another barrier, a sand filter, if you like. I think there is a reasonable public acceptance of that, but we do need to move slowly through that process. We are doing community surveys and quite a lot of work as well to try to measure what that community sentiment is.
Hon ALISON XAMON: Can I make a comment on that? The Greens’ position in terms of support for recycling options as a way forward is, I think, well and truly on the record. Can I say, every time I still get quoted in the paper as supporting recycling options, I will get a flurry of phone calls from people in the public saying how much they object to my support for what they virtually see as toilet-to-tap options. It is almost as though they see a singular pipe that is going—I will say that I think that public knowledge and understanding of this, particularly in comparison to recycling and how it happens around other parts of Australia and around other parts of the world, is actually fairly low. I think that certainly getting some comparative information out there would be really beneficial, because people really do not seem to understand the role that it actually plays globally, in Perth anyway.
The DEPUTY CHAIR: Taken as a helpful comment.
Mrs Murphy: Any suggestions on how to influence the media will be gratefully accepted.
Hon ALISON XAMON: It is not necessarily the media that complain. I think generally there is a lack of understanding about the role of water recycling and what it actually means. I am not joking; people talk as though we are actually asking them to drink straight out of the toilet bowl.
Mrs Murphy: I do not think Alston cartoons help us with that either.
Hon ALISON XAMON: Cartoons along those lines certainly do not help.
Mrs Murphy: We certainly feature this strongly in our waterways school program and our view is that these sort of behaviour changes are probably intergenerational.
Hon ALISON XAMON: I think you are so right. I think you are really on the money there. Certainly, when I talk to younger people, they take it as a given. But certainly my generation and older with days of spending summers running through the sprinklers maybe do not have quite as critical understanding of how low on water we actually are.
Hon HELEN MORTON: Thank you for the comments.
Hon KEN TRAVERS: I think back to on the east coast they were going down a similar path. One of the dangers, of course, is that you go down there with a program like that and then the nature of the community is that their opposition will show up at the last moment and you have then got to go for a more expensive option because you have to do it at the last minute. I think that is what tended to happen on the east coast; they put their eggs in the basket of recycling and everyone might be happy to explore the concept of recycling, but the danger I see is that you reach a point of no return and then you have got to go to a very expensive option if there is a massive community backlash to the concept of recycling. My view is that it is one of those things that if you are going to progress it, you have got to be progressing it as an add-on or a bonus that allows you to sort of do extras in terms of putting water back into the environment rather than as your major sources, until at least you are confident that there is community acceptance. I think that until it is done on a widespread basis, you cannot be guaranteed of that community acceptance. That is my political advert for the afternoon.
The DEPUTY CHAIR: Another helpful comment.
Mrs Murphy: The Water Corporation absolutely agrees with the sentiment of that. The good thing about this program is that it could be augmented gradually. If we did not face the drying climate as extremely as we do, in an ideal situation you would potentially inject seven gigalitres and then maybe two years later start to up that and gradually increase it and maybe have a 10-year program of investment and increasing injection and abstraction and you would use that to kind of balance out your other ground water abstraction levels so that you are actually balancing the whole ecosystem network and looking more holistically. That would be the ideal world. We are nervous about knee-jerking to accelerate in a ridiculous way; to accelerate a little bit is perhaps not —
Hon KEN TRAVERS: And that is the danger. If people start seeing it as an alternative next major source, then I think that is where you run the real risk. There was, I guess, some media commentary—I am not necessarily suggesting it was what the minister intended to convey—around the sense that the suggestion was being put there that this was going to become the next major source a couple of weeks ago, and I think that would be very dangerous.
Hon ALISON XAMON: Yes, it is not helpful. You need to bring the public along with you, plus you need to ensure you are following due diligence. I understand that there has been a lot of care put into this trial, and I certainly support that, but there are always the issues around the contaminants that potentially could end up in our groundwater sources. I think it is absolutely imperative that we stay true to the integrity of those trials.
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Mrs Murphy: Water is tragically incompressible and heavy, and no-one wants to pay for it. It is not like gas.
Hon KEN TRAVERS: I feel that I am about to get a budget paper dropped on my head if I do not yield to Hon Alison Xamon.
The DEPUTY CHAIR: You cannot see her face, like I can!
Hon ALISON XAMON: You must be psychic, Hon Ken Travers.
Hon KEN TRAVERS: I could feel your eyes on the back of my head.
Hon ALISON XAMON: Thank you, Mr Chair. I have a grab bag of questions that I want to ask.
I want to refer to the water optimisation trials. I want to know whether any money ended up going towards that in the last year and whether anything —
Mrs Murphy: The water pressure optimisation trials?
Hon ALISON XAMON: The water pressure optimisation trials; I am sorry—it has been a long time waiting! Is there anything in the forward budget—I am assuming that the trial has been completed—to actually roll out that initiative. I suppose that is the first part of the question: is there any money?
Hon KEN TRAVERS: If I had known that you were going to ask my next question, I would have yielded sooner.
Hon ALISON XAMON: You asked a bunch of mine.
Mrs Murphy: The budget papers for the Water Corporation only contain our capital expenditure.
Hon ALISON XAMON: Yes.
Mrs Murphy: So there is no money, or very little money, in our capital expenditure for that, but we do have some operational—there is some—but a lot of the expenditure going forward is in operational ways of doing business. Our intent is to keep rolling out the trial. We are finalising —
Hon ALISON XAMON: So you are still treating it like a trial?
Mrs Murphy: No.
Hon ALISON XAMON: Okay, the initiative.
Mrs Murphy: To look at pressure management in areas where we believe it can deliver a reduction in leakage without a problem for our customers.
Hon ALISON XAMON: So are you looking at doing that in the next financial year?
Mrs Murphy: Yes.
Hon ALISON XAMON: I am happy to take on notice which areas you are identifying as well for the next phase. You can do my area if you like. I am fine.
Mr Moore: The first bit I can answer; the second bit on which areas is a bit more difficult.
Currently, we have a contract in place with a consultancy looking at various areas around the metropolitan area to identify the highest priority areas for the future. We would expect to have that work completed towards the end of this calendar year and that will lead us to a position then that we can start choosing which areas we start working on next.
Hon ALISON XAMON: Are you anticipating that once those areas are identified that you will actually be looking at that in early 2012 or are you imagining that that is going to go into the following financial year?
Mr Moore: No; I would hope that we would start looking at—it does not mean necessarily physically on the ground, but looking at because there is a lot of planning and community consultation that goes with these things—in early 2012.
Hon ALISON XAMON: Okay. But it is something that is looking at going into the future.
Mr Moore: Yes.
Hon ALISON XAMON: I also listened with keen interest to your response to Hon Ken Travers’ question about identified future water sources. In particular, I was very interested to hear you talking about the Kwinana industrial recycling. How far advanced is thinking about that? Is it something that is just an idea at this point?
Mrs Murphy: No; it has been operating since 2006.
Hon ALISON XAMON: Why were you talking about it as an additional water source?
Mrs Murphy: Because the foundation customer for that plant was HIsmelt. HIsmelt then went into care and maintenance, and so we had a plant without a customer. We have now got more customers for that plant, so we can actually use the plant at full capacity. Our intent for the future is to augment that plant and displace more water in the Kwinana area.
Hon ALISON XAMON: How many gigalitres are we talking about per annum?
Mrs Murphy: Six.
Hon ALISON XAMON: That is not an inconsiderable amount.
Mrs Murphy: No.
Hon ALISON XAMON: How much does that generally cost per kilolitre? How much is that estimated to be?
Mrs Murphy: Because we sell to commercial customers, with the way the ERA recommends our pricing, they have to pay the cost, so it is a commercial transaction. What is the cost per kilolitre?
Hon ALISON XAMON: Is it cheaper than desalination? That is the question.
Mrs Murphy: Yes, but remember that it is not potable water that we are selling.
Hon ALISON XAMON: But, having said that, it is still water that is still useful. If they are not reliant on the scheme, that is a benefit for everyone.
Mr Werner: For industrial purposes, it is better than scheme water, because it has a lower salinity. It is a better product for the industries that can benefit from that lower salinity. They can use it more times in their processes because of that.
Mrs Murphy: But it has pathogens in it so you cannot drink it.
Hon KEN TRAVERS: Give it to the Greens.
Hon ALISON XAMON: Thank you very much. I am quite happy to not drink industrial waste water.
Can I ask, then, because I am just looking at this now and it seems like an obvious way to be proceeding, what is the likely time frame before you are looking at the maximum of six gigalitres use? You are saying that it is on track.
Mrs Murphy: We need customers.
Hon ALISON XAMON: Sorry?
Mrs Murphy: For the six gigalitres we are selling now.
Hon ALISON XAMON: The six gigalitres you are selling now.
Mrs Murphy: The original six gigalitres we are selling now, yes.
Hon ALISON XAMON: What is the maximum amount that you are foreseeing you could use as part of this scheme? Mr Werner: The existing plant of six gigalitres, as Sue said, the major customer closed down, and we are in the process of reselling that water, and customers are taking that. We think we have pretty much got the existing plant set up. It is actually going to the next expansion. I think there is another four gigalitres—it is in that order.
Hon ALISON XAMON: What is the time frame for that?
Mr Werner: We need to get customers signed up to do that. One of the problems with recycled water is, if HIsmelt closes down, you cannot just say, “I will just sell it to another customer.”
Hon ALISON XAMON: Hon Ken Travers suggests selling it to the Greens.
Mr Werner: There are different sets of customer risks associated with recycled water. It is a different proposition. You have to have dedicated pipes. It is actually very expensive to distribute it around. The existing customers are actually quite close to the plant. It is not like there is a broad spectrum of customers out there that you can address. The problem of expanding it is finding the customers who are willing to commit to paying for the expansion.
Hon ALISON XAMON: Certainly. I picked up on it because it was cited as a potential future water source, so that is why I was particularly interested. Can I also just ask: you are indicating now that the second stage of the desal will be pumping into the system around August or September. Referring back to the ERA principles in relation to costreflective pricing, are you anticipating, then, that people are going to see an increase in their water charges, or are you thinking that that has already been absorbed? The reason I say that is because, as we know, it is more expensive than drawing from the Gnangara or from our dams. People are going to start using this water. Are their bills going to go up as a result?
[5.10 pm]
Mr Werner: The cost of that desalination plant is factored into the existing price path that the ERA recommended in its 2009 inquiry, so that has already been included in those price increases.
Hon ALISON XAMON: So that is —
Hon HELEN MORTON: The answer is no.
Hon ALISON XAMON: Thank you; that is what I was trying to ascertain. Are customers effectively already paying for the cost of that infrastructure?
Hon HELEN MORTON: I think the response was that the costs have already been incorporated into the price range that the ERA has recommended.
Mrs Murphy: Going forward.
Hon KEN TRAVERS: The other desal plants, like the second stage of Binningup, or even your reinjection on a larger scale, are they factored in or would they need to be factored in in terms of future price rises?
Mr Werner: The second stage of Binningup is not in the capital program at the moment; it is not in those price paths.
Hon ALISON XAMON: I turn to the budget papers —
Hon HELEN MORTON: This would be a first for the afternoon, I think!
Hon ALISON XAMON: I am sorry—I am out of order! On page 876 under “Regulated Program Future Estimates Global Allocations — Regulated Business”, why is that figure so low compared to the figures on either side? Could you just explain?
Mr Moore: I will comment without providing detail because the detail is miles long. It is an eon of very small projects. What we have tried to do is document—they are pretty large chunks of money, granted—the bigger projects where we have made some commentary on it. Where we have got a global allocation like that, it is the vast amount of small projects we do. We have at any one time some 2 000 capital projects on the go. We do not try to document all of those in budget papers of this nature. That global allocation is to cover a lot of that sort of work.
Hon ALISON XAMON: Is that the sorts of things like pipe repair and minor —
Mr Moore: Pipeline extensions, it covers our IT budget, other budgets within the organisation that go with that—so, some sort of corporate-type budgets, vehicles and things of that nature—but pipelines and pumped extensions around different areas, yes. There is a whole vast amount of stuff that goes into that sort of $200 million.
Hon ALISON XAMON: No worries. The next question is: why is it so low for the coming year? It seems like it is actually quite out of sync with what appear to be ongoing costs.
Mrs Murphy: It is because it is a catch-up number, so if in other years specific line items have been mentioned—you will see that the “Country Water Sources and Distribution” number goes up, and that is because we have some large projects in the Pilbara that are going into that bucket, so it is a whole bucket of things. What we are saying is, “Okay, these are the ones we’re specifying and these are the odds and sods on the end.” It is not like it is a thing that has gone down; it is a descriptor and more things are in a different descriptor.
Hon ALISON XAMON: That is fine; that explains it. Also, “Support Programs — Capital Overheads Capital Support Cost” on the same page, I was just wondering if you could explain what that money is for. What are those programs?
Mr Moore: That money is to pay people like me.
Hon ALISON XAMON: So you want a wage!
Mr Moore: I need to be paid.
Hon KEN TRAVERS: You are doing all right there!
Mr Moore: I wish I was, Ken; that would solve a lot of things like retirement! But that money is basically the overhead that works on the capital program, so it is a portion of our overhead costs in the business that we cannot directly attribute to projects that support the capital program.
Hon ALISON XAMON: I want to ask another question as well. About an hour and a half ago, you were answering a question for Hon Ken Travers and you mentioned something about an additional water source that was up north.
Mrs Murphy: At Eglinton?
Hon ALISON XAMON: No. You actually said there were potential sources up north, and then you basically indicated that you might not be able to speak further about it. I got the impression that it might have been commercial-inconfidence, but I want to know whether by any chance it referred to the tapping of the northern Yarragadee.
Mrs Murphy: We already tap parts of it. It depends on your definition of the northern Yarragadee.
Hon ALISON XAMON: I actually mean the very north part or the north portion.
Mrs Murphy: That is always a possibility. I think in our “Water Forever” document, which lists most of our future sources, that is in there on the 20-year horizon, but there are also ground —
Hon ALISON XAMON: Can I ask what sort of pool you are talking about from there? I was under the impression that it could be anything up to 50 gigs, but is that what is on the table?
Mrs Murphy: The analysis, the drilling and the research is not complete by any means. There is still a lot of work to be done on that.
Hon ALISON XAMON: I would agree.
Mrs Murphy: I do not know off the top of my head what it is. My sense is that it is 20 or 30 gigalitres that is in the “Water Forever” document, but obviously if it is in a 20-year source, a lot of work has to be done in the next 20 years before you can make that call.
Hon ALISON XAMON: So, at this point would you say that the groundwork has not been done and it is not something that is on the table in the immediate future?
Mrs Murphy: No, but we would welcome the drilling to be done and anyone who wants to progress that. I think the Department of Water is looking at some options in that space to better understand the aquifer and what the water quality is. There are some areas that are quite salty and areas that are quite hot; and from where you would actually extract it, a whole lot of work would have to be done.
Hon ALISON XAMON: We have had a lot of discussions about water recycling, and we have been mainly focusing on the aquifer reinjection trial, but obviously there are other forms of water recycling as well. Is there any initiative in place to increase fit-for-purpose water recycling? For example, I am thinking of ovals. A lot of country towns are doing this ordinarily as a matter of course. I do not think that we do it anywhere near enough in the metropolitan area. We could learn from their example, but is there anything on the cards in order to increase the proportion of fit-for-purpose recycling?
Mrs Murphy: As you rightly point out, it is done in most country areas for a number of reasons. One is that there is no other disposal mechanism; and, two, it is a beneficial disposal mechanism, so it is a win–win. In Perth, one of the limitations is that we rely on groundwater quite heavily for drinking-water purposes. Putting very lightly treated waste water, which is what tends to happen in country areas, onto the ground could compromise your drinking water source.
There is a different set of groundwater conditions that we are operating in; so, that has to be borne in mind. The biggest competitor to using recycled water for those sorts of purposes is the availability of cheap groundwater. And if a council or anyone has access to cheap groundwater of their own, then for them to buy waste water from us—our policy is to make treated waste water available at the plant at no cost for public good—a council would be then expected to move that water to where they needed it and that generally would have a cost that is greater than groundwater. So, there is no incentive —
Hon ALISON XAMON: To protect our groundwater supply?
Mrs Murphy: Yes, although it may not protect them if only partially treated or lightly treated waste water is being put on them. So, it is not a simple kind of argument; there also needs to be analysis done of what the costs are. Our view is that there already is a reticulated sewerage system, which already takes waste water to the waste water treatment plants.
As the Water Corporation, we add most value recycling at the big end of town in using the existing infrastructure in an efficient way; so, to run duplicate reticulation systems across Perth is not an efficient use of resources. However, smaller, more local recycling schemes do make sense. They are not normally through the Water Corporation. So, sewer mining is available; people are welcome to access the sewers and use that water if they can make it stack up for their own purposes. But there are two inhibitors. One is the use of the cheap, abundant local groundwater; and the second is the fact that there are protection requirements on those areas. So, it is never a simple black-and-white solution. If there were easy ways to cheaply recycle and displace scheme water, we would do them in a flash.
[5.20 pm]
Hon ALISON XAMON: While I am on water recycling, there is also, of course, the ultimate form of localised water recycling, which is backyard grey water recycling. I have already asked a question about the cost per kilolitre associated with the subsidising of backyard grey water systems. Is that information likely to be included in the data that I asked for earlier?
Mrs Murphy: It could be. We have had done the cost per kilolitre for backyard grey water recycling systems. All of this data—one year out-of-date costs—are in our “Water Forever” document, which is very much in the public domain. That is always an option for people.
Hon ALISON XAMON: It is an option for people, but that means that individuals are assuming that cost, in the same way that people now have to assume the cost of photovoltaics if they want to go down that path. I am aware that the federal government recently axed the grey water subsidies federally. So, at this point, there is no suggestion that the subsidisation of backyard grey water systems is an initiative that is on the cards. Mrs Murphy: No. There was a subsidy some years back, but very few people took it up. I cannot remember the number, but it was about 20; it was a very small number. The analysis that was done on those customers was that their actual scheme water use went up. Some of the results that came out of Queensland during the dry period in southern Queensland indicated that people felt they had a social licence to use water more prolifically in their house, because they were using that water twice. From our point of view, it is not in our suite of recommended options, for a variety of reasons. We believe, as I said, that we add value at the big end of town. If individuals want to do it, fantastic. But the cost–benefit analysis, on our numbers, does not stack up.
Hon ALISON XAMON: As we go into summer, with the ever-increasing prospect of complete water restrictions, I suspect that it is an option that will become more appealing for Perth people.
I now want to ask about a specific issue to do with my region. I am in the East Metropolitan Region. Developments are proposed in Stoneville and Parkerville, and also potentially around Wattle Grove. Looking again at “Works in Progress”, there is not anything in the budget to indicate whether there will be an upgrade of water infrastructure in those areas. I am thinking particularly of Stoneville and Parkerville. A lot of the residents in that area are very concerned about whether an upgrade of water infrastructure will be required to facilitate those developments. Part of that—Mrs Murphy touched on this a bit earlier in answer to the questions from Hon Sally Talbot—is whether the developers will be expected to chip in for the upgrades that will be required to facilitate those new developments.
Hon HELEN MORTON: Mr Moore will answer that question.
Mr Moore: I think the areas the member is referring to are Stoneville, Parkerville and parts of Gidgegannup.
Hon ALISON XAMON: Yes, I am, but I have also been speaking to residents, particularly around the Mundaring region, who are concerned, firstly, about the development occurring at all; and who are concerned, secondly, about the associated upgrading of infrastructure that will be required. I am not talking about the water treatment plant; I am talking about waste water treatment plants and the like. I notice that this is not mentioned as part of any future works in progress or anything like that.
Mrs Murphy: Is the member’s question asking for confirmation that it is not in the budget papers?
Hon ALISON XAMON: Yes, and whether it is anticipated that the Water Corporation will be involved in the development of that in the future; and, if so, when. I also want to know whether the developers will be required to chip in for that. I am asking the same question for Wattle Grove.
Mr Moore: For the area that the member is referring to, there is no allocation of money for that. The discussion that we have had with the developers thus far has been around whether the developers will develop their own waste water treatment plant. Water is not the major issue. The issue is waste water. At the moment, that is resting with the developers and discussions that they are having with the Department of Planning about the necessity for sewerage systems in those development areas.
Hon ALISON XAMON: Are you anticipating that if that development were to proceed, the developers would be responsible for incurring the cost for that additional infrastructure? If the WAPC determines that it is necessary in order for the subdivision to proceed, the Water Corporation would not incur that cost?
Mr Moore: For those particular areas, they are not anywhere near the currently available sewerage schemes, and they would probably require their own waste water scheme. We have said that, as far as we are concerned, we do not have the capital to put that in. The developments are somewhat isolated, and if they are of sufficient scale that they can justify putting their own scheme in, we have indicated that we are not even necessarily chasing the operating licence for it. They are within our operating licences areas, from that point of view, and we are quite happy if the developers want to put a scheme in and run it as their own scheme, but they are not anywhere near the frontal development for waste water.
Hon ALISON XAMON: Would the same apply for Wattle Grove? My understanding is that proposals around development at Wattle Grove are nowhere near as advanced as they are with the Stoneville development, but it is still potentially there. Again, I am raising these questions in response to issues that have been raised with me repeatedly by local residents in both those areas. That is why I am bringing it to estimates.
Mr Moore: I am not quite as familiar with the Wattle Grove area; some of that is industrial land, but —
Hon ALISON XAMON: No, we are actually talking about semi-rural that is potentially going to be rezoned into various types of residential.
Mr Moore: Okay; then I am not in a position to comment on that.
Hon ALISON XAMON: Okay.
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Hon KEN TRAVERS: I think Hon Alison Xamon asked a question earlier about the other options in the north. I thought I heard Ms Murphy refer to other sites for desalination.
Mrs Murphy: Yes.
Hon KEN TRAVERS: Where is the Water Corporation looking for other desal plants in the north metropolitan area?
Mr Moore: I do not think we are in a position to divulge that.
Mrs Murphy: We are still doing a lot of planning work on that. We have a linear scheme at the moment, and Perth is a kind of linear city. We want to balance our infrastructure with sources at the ends, if we can possibly do that.
Hon KEN TRAVERS: It is not cheap to shift water.
Mrs Murphy: No. As Perth grows north, the concept of having a water source north of Perth is sensible planning. Obviously putting a desal plant north of Perth feeding in to balance it out makes perfect sense. We do not own a site, and we have looked at a number of options for where they could possibly go. There are myriad sites. Our Water Forever document has a whole heap of areas that are laid out as possibilities, but we do not have it. I cannot give the member a specific answer to that.
Hon ALISON XAMON: The Water Corporation does not own land yet.
Mrs Murphy: This is not in the estimates period by any stretch of the imagination.
Hon ALISON XAMON: We should focus on demand reduction again.
Mrs Murphy: Sure. The cheapest water we supply is the water that we do not supply.
Hon ALISON XAMON: I could not agree more. If only we had the bill to deal with that!
Hon KEN TRAVERS: It will be interesting to see the bill. I think that the bill the minister was promising last year has finally got into the other place, or is that the one that is still coming?
Hon HELEN MORTON: I do remember the bill, but I do not know if it has been tabled in the other place yet.
Hon KEN TRAVERS: The minister kept telling us that was going to cover all the issues around demand reduction.
Hon ALISON XAMON: Which it does not, by the way.
Hon HELEN MORTON: Hon Alison Xamon should just wait and see. It will do everything I said it would do.
The DEPUTY CHAIR: What is the question?
Hon KEN TRAVERS: The issue was raised and Ms Murphy is absolutely right: the water we do not use is the cheapest water. I asked a policy question of the minister about when we would see the legislative framework to back that up to support the Water Corporation in its budget. I suspect I saw a bit of play across the room that suggests there may be some commercial negotiations going on about some of those things, and the Water Corporation is not necessarily able to divulge them completely to us. The Mundaring treatment plant was done as a public–private partnership. Is the Water Corporation considering doing any of the projects in the budget as a PPP, privatisation, contracting out or whatever? I am aware of the desal plant and the structure there. Are there any in which the corporation is looking at the option of public–private partnerships in any of their various forms? I am talking about the major projects.
[6.00 pm]
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Hon KEN TRAVERS: Is the Water Corporation continuing to do any work on accessing the south west Yarragadee for the public water supply?
Mrs Murphy: The public water supply for Perth? No. But we are already using the south west Yarragadee for the public supply in some towns in the South West. Bunbury and Busselton use it for the supply of the Aqwest–Bunbury Water Board.
Hon KEN TRAVERS: People are still constantly suggesting that it is a future source.
Hon ALISON XAMON: One person!
Hon KEN TRAVERS: One person; that is fine. I am just asking the question. Do not get me wrong; I am not proposing that it be used as a source.
Hon HELEN MORTON: Are you that one person?
Hon ALISON XAMON: No.
Hon KEN TRAVERS: It is someone I have quite a bit of respect for, not that I always agree with him on everything he says and does. There is certainly no doubt that I have an awful lot of respect for that person, so I am not going to trash his reputation even when I do not agree with him. There is that constant suggestion that it is still a future source for Perth’s water supply. Is the Water Corporation considering that as a future source for Perth’s water supply?
Mrs Murphy: No.
Hon ALISON XAMON: Good.
Hon KEN TRAVERS: That is good. I wanted to hear it from them, not from you, Hon Alison Xamon! We talked about the northern Yarragadee, but are you doing any hydrological work at the moment in that area to the north of Perth around Gingin and further north?
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Mr Moore: Are we confident in groundwater modelling is always a challenging question. I think between ourselves and DOW there is a reasonable confidence on the modelling, yes.
Hon ALISON XAMON: On that note, though, are you suggesting that the Water Corporation may still be going in and applying for the full extraction of 145 gigalitres for the coming summer months?
Mr Moore: Sorry; for 145 gigalitres?
Hon ALISON XAMON: Because you would have to think that that is going to kill the mound.
Mr Moore: Sorry; did you say 145 gigalitres?
Hon ALISON XAMON: Yes. What I am hearing you say is that once Binningup is actually producing you are hoping to even it out at about 120 gigalitres—I hear that—but it sounds like there still might be an option to go for the full 145- gigalitre extraction in the coming year.
Mr Moore: Yes, absolutely.
Mrs Murphy: It has been an exceptionally dry year, yes.
Hon ALISON XAMON: The trouble is of course that we, potentially, are going to have an exceptionally dry winter again; that is always a risk, and it is not looking particularly flash at the moment. The trouble is then, of course, we are going to have a mound that is going to be once again compounded by the double whammy of minimal rainfall and what I would argue is an unsustainable extraction.
The DEPUTY CHAIR: What is the question?
Hon ALISON XAMON: Is it looking at this point like you are actually going to be going in and asking for 145 gigalitres?
Mr Moore: For the coming extraction year, if the winter is as it is, and bearing in mind that Binningup does not come on until the end of the year, we quite likely will be asking for 145 gigalitres or more again.
Hon ALISON XAMON: I think a lot of people were hoping that Binningup coming on board would actually mean that that would not happen for quite a while.
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Hearing concluded at 6.16 pm