Idle desalination plants built by Labor cost $1bn

Four desalination plants built by former state Labor governments that have since been mothballed will cost taxpayers nearly $1 billion this year alone, with no plans for their use.

Rebecca Puddy, Jacon Polychronis | The Australian | September 12, 2015 | Access Original

South Australia’s water corporation this week quietly applied to keep the state’s $1.8bn desalin­ation plant operating at a minimum production level until at least 2020, at a cost of more than $200 million to taxpayers.

Figures provided to The Weekend Australian show the plant costs South Australians $41m a year — up $11m from the Weatherill Labor government’s 2013 forecast.

The plant was mothballed after testing was completed in January.

Victoria’s desalination plant is forecast to cost taxpayers $2bn by the end of the year, yet has produced no water since it opened in 2012. The Sydney Kurnell desalin­ation plant has cost consumers $200m a year for zero output since 2012.

Queensland’s Tugun plant, which began operating in February 2009, was moved into “standby mode” in 2010, costing taxpayers $15m a year to sit idle. The facility this month won a brief reprieve and will produce up to 80 megalitres a day for six weeks while a nearby waste treatment plant is upgraded.

The desal plants in Adelaide, Sydney, the Gold Coast and Melbourne were announced by state Labor governments with much fanfare in 2006-07 as the nation was in the grip of drought.

They cost more than $10bn to build, but when the drought broke in 2010 dam levels and river flows across the country increased, ­resulting in the effective mothballing of the facilities producing ­higher-cost desalinated water, ­except in Western Australia.

In Perth, the Kwinana desalin­ation plant delivers above its “nameplate capacity” of 45 billion litres a year while the Southern Sea­water desalination plant produces more water for Perth households, depending on freshwater supply and demand.

The Victorian government has ruled out production at its desalin­ation plant until at least July while Sydney’s plant will remain in “mothball” mode until dam levels drop below 70 per cent. Dam levels are at 98.1 per cent.

While the desalination plants sit idle, water users have been hit with bill increases to cover the cost of running the plants. Under a deal struck by Labor, Melbourne households pay $620m in an ­annual holding charge, regardless of whether water is taken.

Even if no water is ever prod­uced, the plant will cost Victorians $18bn by 2040.

Victorian Liberal water spokesman Peter Walsh said yesterday that households were paying about $500 more a year for water.

“Labor’s desal plant is costing Melbourne households about $1.8m a day for 27 years,” Mr Walsh said. “The reality is that Labor’s desal plant is too big, it’s too expensive, and it is costing Melbourne households dearly.”

In July, Melbourne Water proposed to increase the contract with the AquaSure consortium by 33 years to allow a short-term drop in water bill prices. A decision will be made on October 30.

South Australia’s Essential Services Commission will hand down a decision in February in response to SA Water’s request to keep the desalination plant operating at its minimum level to July 2020.

Liberal Opposition Leader ­Steven Marshall said the plant was a “scandalous waste of money”.

Authors: Rebecca Puddy, Jacob Polychronis