Throwing out the baby water business — and CWMS with the bathwater

Written by Don Chapman, June 2022

INTRODUCTION

Once upon a time in Onkaparinga and South Australia, droughts were so bad we built a desalination plant to ween ourselves off the dwindling flows of the Murray, and Council began to waterproof the South.

That was around ten years ago. Assisted by Federal and State funding, Council designed and built wetlands and dams to harvest stormwater at Happy Valley, Reynella, Wilfred Taylor Reserve, along Christies Creek, Seaford Rise and Aldinga. We developed three aquifer recharge schemes and the Willunga Effluent Reuse Scheme. 90 wineries, local schools, clubs, and council’s parks and gardens use the recycled water supplied by 42 kilometres of mains. It was an innovative and ambitious project and the benefits to the community were wide-ranging. The whole lot has an estimated capital value of $54million.

But, Council’s vision and commitment have changed, for the worse, in my opinion. Now, it is consulting its community, for the last time, through a survey and strategic review, about divesting the Water Business and Community Waste Water Scheme. Divesting? You know, selling off the assets to make a lot of bucks so it can reinvest the money in other community assets or services, presumably more important than water and sewerage.

The Council says that divestment can mean sale or lease of assets, joint or part ownership, joint or part operation, or a combination of these approaches. Yet it never proposes a range of options in the survey or review.

MISLEADING STATEMENTS ABOUT FINANCIAL VIABILITY

Council says that the Water Business operates at a cash operating loss and is a significant financial liability for Council. Yet, the only figures provided show there was an operating profit of $458,463 over the years 2014 to 2017. How is a failing business attractive to the market? It doesn’t say.

REASONS FOR DIVESTMENT

When explaining the reason for divestment the Council says, “Most metropolitan councils do not manage wastewater.” This is true, but misleading because Onkaparinga is not like most metropolitan councils. It is a combination of old metro, semi-rural and rural. Most of its growth areas are in semi-rural areas, which it so happens is where much of its CWMS and Water Business are located.

Further, Council laments that “Across our seven networks we don’t have the same economies of scale of the SA Water sewer network and our service charges are higher by comparison.” That’s understandable. But, the inference here is that Council’s CWMS needs to be connected with SA Water, or an equivalent private provider, in order to bring down service charges. This is misleading and false and there is no evidence to support it.

So, what direct negotiations has Council had with SA Water regarding transferring our current CWMS to them? It says it’s had discussions but no details are forthcoming. In August 2020, Peter Malinauskus pledged that all CWMS Tea Tree Gully residents would be connected to SA Water. As Premier apparently he is going to live up to that promise. Why didn’t our Council seek the same sort of pledge for Onkaparinga?

Another Council statement says, “The full divestment of these assets could further reduce risk and allow financial resources to be directed into other activities and services for the community.” Oh really? This is a pointless argument because most assets and services of Council – recreation centres, pools, community halls and centres, recycling, health, garbage collection, etc, can by the same argument, be divested. Why isn’t Council advocating selling these other assets and services? This is a policy of robbing Peter to pay Paul. Besides, there are no compelling new projects and services proposed by Council.

PROTECTION FROM RISING PRICES

How will CWMS customers be protected from rising prices? To soften the blow, Council has floated the sweetener that all future operators, if not the Council, will have to give a 5-year guarantee to hold prices at current levels. But, this is cold comfort to CWMS customers who have invested in their homes for life. Also, it smells of fear-mongering, designed to seduce unsuspecting CWMS respondents and panic the non-CWMS survey respondent, into electing to dispose of the asset in the survey. Where is the financial modelling of prices into the future?

SETTING CWMS RESIDENTS AGAINST THE REST OF THE CITY

The most objectionable question in the survey places CWMS residents against SA Water residents. It asks, do people want to continue paying for CWMS through their rates? This is a loaded question. It sets up the survey to get the results the Council wants. There are some 75,000 dwellings in Onkaparinga and only 4,350 of them are on the CWMS system. Naturally, if you ask the other 70,000 or so, if they want their rates increased to pay for the CWMS, they’re going to say no. By this same line of questioning, should people in new growth areas have their rates used to pay for ageing infrastructure renewal in old metropolitan areas, and so on?

UNINFORMED STRATEGIC REVIEW

The survey creators have failed to inform respondents what a Council’s functions are. They didn’t explain the difficult balancing act of pooling resources through the rate process and funding for the good of us all. To just pick out these assets or services shows bias towards selling the asset, rather than careful consideration of the whole of the community. Also, they failed to inform us how the Water Business and the CWMS are performing in comparison to other Council assets and services.

OUR FUTURE WITH CLIMATE CHANGE

Further, the survey ignores how important it is for a Council to own and manage these assets on behalf of our community for an uncertain future. There is no analysis or modelling of where climate change is going in terms of rising temperature, floods, etc, and the impact on available water in the future. Short-term gains for long-term fails seem the most likely prediction.

HOW HAVE OTHER COUNCILS MANAGED CWMS AND WATER BUSINESS?

What were the results of testing the market that Council put out in a consortium with Adelaide Hills and Murray Bridge Councils in September 2020? In 2018, research I did showed Barossa Valley and Mt Barker Councils run better and much cheaper systems than Onkaparinga. Why? What other Councils in Australia have sold their CWMS and how are they performing under private providers? Again, there’s not a word in Council’s review.

LACK OF UP-TO-DATE AND EASY-TO-READ INFORMATION

Council has had four years to implement a detailed condition assessment and revaluation of all readily accessible infrastructure to confirm the Remaining Useful Lives of its CWMS assets. So, why wasn’t that information included in this survey? The Council should be able to say in simple language, what exactly is broken and what needs fixing? What is Council going to get for these assets, in the best and worst cases? And why can’t we have figures that are more recent than 2016-2017? Why couldn’t the Council supply information that is easy to understand, instead of over 40 pages of over-technical tender documents?

A COMMITMENT TO INNOVATION IS MISSING

Perhaps the greatest failure in this strategic review is the lack of innovation. Council has a Water Divestment Team Leader, presumably with a staff of qualified technical people, good at selling off our assets. But, where are the highly-skilled technical staff, good at finding innovative and lateral ways to solve the wastewater problems Council is currently facing?

The Arts Eco Village example has been ignored. It currently has 181 dwellings, a village farm, a sewage treatment plant for irrigation, with a stormwater system. This is a fantastic, innovative model that has existed in our Council since the 1980s, but we seem to have learnt nothing from it.

Given Council seems to have dropped the ball, there are now innovative companies such as Water Sensitive SA, that offer capacity-building programs that can provide communities with the support they need to achieve outstanding urban water design. Why aren’t we applying these kinds of principles to problem areas such as Sellicks?

Or, why not subsidise or provide interest-free loans to assist residents to purchase stand-alone, aerobic, permeable pipe, biogas, bioloo or worm farm waste systems, to name a few? Technology has improved enormously and prices have come down. Yes, they require maintenance but not nearly as much as the old-fashioned septic tank. Why not, over a 10- or 20-year period, build community capacity by converting all our CWMS to innovative in-home wastewater systems? Why not call a tender for this kind of solution? This could solve the problem of replacing ageing infrastructure and avoid the kind of expensive piping and pumping the old systems need. Residents could be encouraged to purchase new systems designed for their blocks and pockets. Council only has to facilitate and build community capacity.

Australia has the highest rate of residential solar panel installations worldwide, according to the Energy Supply Association of Australia. South Australia has the highest in the country. So, Onkaparinga Council could claim the title of one of the exciting Councils with the highest number of home wastewater systems.

A FAIR AND BALANCED INDEPENDENT STRATEGIC REVIEW

It appears that Council may have little incentive to subsidise and encourage CWMS users to go offline. If residents install home systems the value of Council’s assets is reduced. There goes the divestment sale. It’s the same with energy companies who have no incentive to encourage domestic wind or solar because they lose customers. Short-sighted given the state of our environment.

Elected councillors need to take off their blinkers and have a hard look at this survey and strategic review and ask themselves if it is sufficient for a final community say on such an important issue? This divestment was the brainchild of the former disgraced CEO who thought Kooyonga was a legitimate part of his workplace. He had dollar signs in his eyes and hoodwinked the councillors that big bucks would come.

If Council insists on proceeding, with an election in November of this year, it needs to defer this survey and its decision, and commission an independent review of the CWMS and the Water Business that is fair and balanced. Anything less is irresponsible and indicates a lack of care and due diligence towards its communities.

THE COMMUNITY CONSULTATION IS INSUFFICIENT

Council’s consultation appears minimal. Four information sessions and an online survey do not serve the importance and long-term impact of this divestment. There have been no banners on busy street corners. What was the extent of Council’s direct mailing of businesses, community organisations and clubs? I only got a letter on 24 June. No information was included in the latest rate round. No public meetings are being held in every ward, where councillors can hear the full force of community feeling on these subjects. These kinds of careful and considered consultation strategies should be the minimum for such an important decision.

SURVEY AND STRATEGIC REVIEW NEEDS TO BE REJECTED

To conclude, the community is sick and tired of Councils and State Governments telling us that private companies can do things better. Frankly, I think it’s a sign of incompetence. Fobbing off our failing CWMS assets is an admission that Council has managed them badly and has no ideas for how to fix or improve them. In 2013, the Ombudsman found the Council guilty of failing to report a wastewater spill at Sellicks for fifteen months. Four years later selling the CWMS was the only proposal on the table. Council’s blinkered, short-sighted view applies equally to the Water Business. It is a don’t solve it, dump it solution.

Finally, why should residents be forced to put their faith in a private company that is responsible to its shareholders and not its customers? Why is Council shifting future risk to its residents and wanting to walk away? Why wasn’t SA Water proposed as an option in the survey? That would have given us confidence. At least with Council or SA Water running the show, we are the shareholders.

To ensure that our Water Business and CWMS don’t become relics of the past and get turned into quick bucks, please go to Your Say at the following link and fill out a survey up until 13 July 2022: https://yoursay.onkaparinga.sa.gov.au/water-assets…