The cost of indigenous benchmarks

Maybe an Australian Government is not too concerned about setting specific “benchmarks” in indigenous affairs, because who will change their vote if the benchmarks are not met?

The benchmarks set by Prime Minister Kevin Rudd this month were ambitious. But it is hard to see how they can possibly be met without a wholesale change in indigenous lives – a change that must amount to almost total assimilation with only token observance of indigenous cultural practices. Continue reading “The cost of indigenous benchmarks”

ACT insurance worth keeping

Compulsory third party motor insurance in the ACT is about $100 a year higher than in other jurisdictions.

The trouble with such simplistic comparisons is that they can be politically unpalatable for Governments. Voters hate high taxes and charges. Hence the Government’s announcement this week that it had done something about it. Continue reading “ACT insurance worth keeping”

Nelson’s back flip

At last, a genuine political back-flip.

We have Opposition Leader Brendan Nelson to thank for it. You see, most political writers and broadcasters misuse the phrase “back-flip”. They really mean a reversal, an about face or a change of mind. But those expressions are not dramatic enough, so someone used the word “back-flip”. It has now become a cliché, and an incorrect one at that. Continue reading “Nelson’s back flip”

Water Tanks

I went to my financial planner this week to tell him about the results of a marvellous money-saving scheme.

It was a do-it-yourself scheme to replace at least part of the costly commercial supply of a scarce household item with my own “free” supply. Everyone should do it. I am talking about water, of course.

Why pay Actew $2.57 per thousand litres for water that falls free from the sky?

Then my financial planner pointed out some pertinent facts.

Canberra averages 600mm of rain. If you put that on a 200 square metre roof and allow for overflow waste and evaporation you get about 100,000 litres of water.

To collect that amount of water without wasting too much on overflow you would need at least a 4000-litre tank and associated plumbing from the gutters to the tank. You would also need a $600 pump. Total cost: around $3500.

You could buy the 100,000 litres of water from Actew for just $257.00.

So, the financial planner said, the $3500 spent on a rain-water tank is not an investment but a foolish act of consumption. You could put the $3500 to the mortgage and save about $300 a year tax-free and use the money to pay Actew and have some money left over.

So why do people bother with rain-water tanks? Why does the Government encourage people to put them in and, indeed, insist on it with new houses?

We put a tank in for two reasons. In the unlikely event we get to Stage 4 restrictions we want to save valuable plants, particularly irreplaceable mature ones. Secondly, you are not allowed to fill a swimming pool except by bucket unless you get an exemption. You can only get an exemption if you put an ugly, inconvenient “blanket” on the pool. This is irrespective of how low your other water consumption might be.

The swimming pool rules do not bear scrutiny. Swimming pools do not use very much water. Rather the water is being constantly treated and recycled. A pool will use much less water than lawn and about the same as an equivalent sized garden. Pools, particularly lap pools, are good for your health. But prejudice and the politics of envy demand strict rules.

As for government encouragement of tanks, it is more noise than reality. The ACT rebate scheme is pitiful compared to other jurisdictions. You only get a rebate if your tank is connected to a toilet or laundry inside the house. The cost of connection is not worth the rebate. In other jurisdictions, logic is applied. They say that any use of tank water will cut consumption of potable water so they give a rebate for tanks used solely for outside water.

In fact, it is precisely because tank water can be a substitute for potable water on gardens and to fill pools as well as in loos and laundries that tanks could be economic, despite the grim figures quoted above.

Those figures show a return of around 7 per cent for the tank, given that without the tank you would have to buy potable water. The return would be higher for tanks constructed more cheaply at the time the house is built.

Actew, on the other hand, aims for a return on capital of about 7.5%, so it is a fairly even field. ActewAGL has about $14 billion in assets and aims for a profit of $105 million. No doubt there are variations between its water, sewerage, electricity and communications arms, but they are not significant here.

But if demand for water required an expensive new dam, the profit level would fall. So it is in Actew’s interests (and the interests of the environment and the Government’s political interests) to put that day off for as long as possible, if not indefinitely.

Actew is in the odd position for a business: it wants customers to buy less of its product.

Actew has managed ACT’s water supplies pretty well through this drought. Unlike NSW it has exercised prudence rather than panic. NSW committed itself to an energy-guzzling desalination plant for Sydney in the middle of the crisis when dams were at 30 per cent and looks a bit silly now the dams are at 60 per cent. Rather than the grand gesture driven by a looming election, Actew has tweaked the supply with some clever, less expensive engineering and cut demand with some effective educational pressure to comply with some not-too-onerous water restrictions.

Unlike most other businesses, Actew has to deal with major public health and environmental matters as well as securing supply of an essential. Unlike a Mars Bar manufacturer it cannot put a sign up saying “Out of stock.”

Commercially, it means that when (and let’s hope it is not if) steadier rainfall returns and dams fill regularly, Actew will not make as much money as it did pre-drought. More people will have tanks and most people’s water-consumption habits will have fallen permanently.

Even so, Canberrans are still massive consumers of water on a world scale. And on world standards it is very cheap here – still too cheap for price to affect consumption. Consumption reductions have been achieved by education and force.

Water is charged at 77.5 cents for the first 100,000 litres; $1.67 for each of the next 100,000 litres and $2.57 for every 100,000 litres thereafter.

But if the $2.57 rate kicked in 100,000 litres earlier and a higher price was charged after 300,000 litres, the tank would become an economic proposition. New dams could be put off. Water security would improve and Actew’s revenues would rise and could be applied to reducing other rates.

In the meantime, tanks are simply not worth it unless you have a pool which the law prohibits you from filling from the tap.