Water policy
David DAVIS (Southern Metropolitan) (12:14): (314) My question is for the Minister for Water. Minister in answer to my question yesterday you said:
… the payment of a dividend – and let us be really, really clear about this – does not result in increases to customer bills or reduced service outcomes for customers. Nor will it affect water corporations’ investments in capital projects.
However, South East Water says in its corporate plan – this is what it says – that its total borrowings will increase by approximately $1.4 billion from 2020–21 to 2026–27 to service dividends, capital repatriations and capital expenditure outlays. And I therefore ask: isn’t it a fact, Minister, that customers – ordinary Victorians – will pay for the additional $1.4 billion in borrowings through their bills because your government is robbing water authorities to hide the nature of its debt?
Harriet SHING (Eastern Victoria – Minister for Housing, Minister for Water, Minister for Equality) (12:15): Thanks, Mr Davis. No, it is not.
David Davis interjected.
Harriet SHING: All right. Let me again break it down for you. Water corporations use debt to fund capital investment, so over the period of 2020 to 2028 South East Water’s average annual increase in debt is $264 million and its average annual capital expenditure is $295 million, so the difference is funded through cash from revenue. Debt and expenditure do not match on an annual basis, so decisions to take on debt depend on external factors, Mr Davis, such as the cost of the debt outlook and the entity’s treasury management and the profile and timing of the capital program. So as debt funds capital works, the assets are added to the asset value of the business. For South East Water, the debt and asset value increase in lock step shows that debt is actually spent in the interests of customers and the service they receive. That is entirely consistent with the answer that I gave to you yesterday, and in fact when you look at the information on South East Water debt versus assets you can see that South East Water is not in the dire straits that you would represent to the world at large. We have got in fact a situation for South East Water that you would seek to undermine, that you would seek to scaremonger on.
Mr Davis, just to be really, really clear – and I went through this yesterday – prices are determined by the Essential Services Commission, and they are set for a pricing period. I have outlined the operation of the debt and the capital investment overlay and the way in which they interact. I will keep telling you this as you need to hear this information, but, again, the assets are added to the asset value of the business. That debt and asset values increase in lock step shows that debt is spent, as I said, in the interests of customers and the service they receive. This does not result in increase to prices, and nor does it affect a water authority’s capacity to deliver on infrastructure.
David DAVIS (Southern Metropolitan) (12:18): It is clear the minister is in fantasy land. Let me just say: it is clear that, just like the Cain–Kirner government, the Andrews–Allan government is raiding so-called hollow logs through increasing dividends and capital repatriations on water authorities. And I ask, therefore, Minister: how much will families pay, under cost-of-living pressure, to service the interest on the debt of South East Water, or will the banks and international financiers loan the money for free?
The PRESIDENT: There were two questions, Minister.
Harriet SHING (Eastern Victoria – Minister for Housing, Minister for Water, Minister for Equality) (12:19): Okay. All right.
David Davis interjected.
Harriet SHING: If this hurts my head, Mr Davis, I can only imagine how everybody else is feeling, because I have answered this question on numerous occasions now. If you think about prices as being set by the Essential Services Commission and you think about the fact that dividends and capital repatriations do not affect prices, nor do they affect metropolitan water authorities’ ability to deliver on capital infrastructure investment, and you think about the fact that we have the cheapest water bills in the country –
Members interjecting.
Sheena Watt: On a point of order, President, it is very hard to hear the minister from this side of the chamber. Can I ask that that be addressed by your good self.
The PRESIDENT: I uphold the point of order. The minister will be heard in silence.
Harriet SHING: Mr Davis, it is like rhetorical question time with you, because you do not actually want to hear the answers. If you have a look at the South East Water debt versus asset comparators, you will see that the basis for your question and your theory is entirely misplaced. (Time expired)