THE Industry Commission has said ACT water charges would have to rise by 63 per cent if ACT Electricity and Water is to meet return rates high enough to meet future capital costs. It criticised pricing systems, like that in the ACT, which provide a “”free” basic allowance and charges for amounts used above that. It thought every litre should be charged as an efficiency and conservation measure.
At present ACT residents pay a basic allowance of $208 for up to the first 350 kilolitres and 56c for every kilolitre thereafter. Schools and churches pay 28c.
The chief executive of ACTEW, Dr Mike Sargeant, says he agrees with the commission. The Minister for Urban Services, Terry Connolly, has reservations.
Mr Connolly says the big winners in a total user-pays system are “”yuppie couples in upmarket townhouses who use little water and the loser is the single mum on a comparatively large block in the outer suburbs.” He preferred education, rather than strict pricing, to encourage conservation.
Mr Connolly has laudable social objectives in this, but they are misdirected. If his government wants to help single mums and other disadvantaged people, a water subsidy is not the way to do it. The trouble with the present system is that it does not encourage conservation. Canberra has the highest water use of the mainland capitals (other than Darwin). It also has the cheapest. Experience in the Hunter and elsewhere show that consumption is very price sensitive. If the price goes up, consumption falls. And Canberra must reduce its consumption if it is to put off building an expensive new dam before the end of the decade.
The longer the dam is put off, the more money is saved. If it can be put off indefinitely, so much the better.
The important point is that if the dam is put off, the Government and ACTEW will not have to spend so much to provide water. There will be more money for other things _ such as direct help to single mums, schools, churches and the like.
In the long run social equity demands everyone pays for every litre at the same rate. If charities, schools and disadvantaged groups need help, they should be given it directly. Giving it indirectly through water subsidies encourages prolificacy which will cost us all, including the disadvantaged more.
Mr Connolly is right in saying education is effective. It is more effective, however, if it is telling people that prudent use of water will result in a personal financial bonus.