Water

VFF says water pricing unfair

by
December 28, 2017

The VFF has objected to a pricing system which apparently shows irrigators having to pay higher water storage fees than water entitlement holders who are speculators or government environmental water holders.

The VFF has objected to a pricing system which apparently shows irrigators having to pay higher water storage fees than water entitlement holders who are speculators or government environmental water holders.

But Goulburn-Murray Water says the pricing and the descriptions have their roots in history and the differences are not as simple as might appear.

The VFF says the non-water users are paying less for the entitlement storage than water users.

‘‘In effect, the differential has the irrigators subsidising non-water users such as environmental water holders and investors.

‘‘In these larger systems, all water is unbundled from the land so the differential makes little sense. Add to that the fact that regardless of whether the water is used or not, the water needs to be stored.

‘‘The fact there is a difference between pricing is unusual and ought to be rectified to create a more equitable market,’’ the VFF statement to a parliamentary inquiry on environmental water said.

G-MW’s customer operations general manager Scott Barber said the categorisation of water users and non-water users was more complex than was apparent at first glance.

‘‘Water user and non-water user are legacy terms from when water was semi-unbundled (meaning that the entitlements had been unbundled but there were restrictions on ownership of water shares, allocation and participation in the water market). While the categories were created to manage those restrictions, the restrictions are now gone.’’

G-MW said after unbundling, all water shares were owned by water users. Now a significant volume of water share owners hold their water shares in the non-water user category.

Mr Barber said all G-MW water users could choose to vary their water shares to become non-water users.

Similarly, non-water users can become water users.

This means irrigators holding disassociated water shares (non-water users) can simply trade allocation from these shares to an allocation account linked to land, to permit use of their allocation.

‘‘The price difference is correct for the Goulburn and Murray systems, because the cost of operating the smaller basins is added across each of the Goulburn and Murray larger systems to which those basins are situated for water users.

‘‘Water users pay the price calculated for the cost of operating the larger Goulburn or Murray system, as all system users contribute to overall cost. Water users support the cost of all water users across all of these sources of supply.’’

Non-water users pay the price calculated for the cost of operating only the basin in which they are served. Therefore non-water users pay significantly more in the smaller basins.

‘‘It should be noted that all water shares are unbundled; all water shares can be disassociated from land (but not all have).’’

G-MW announced last month it was reviewing service standards. This includes the 25-year Goulburn-Murray Irrigation District Asset Strategy and a Tariff and Pricing Review.

Information from other relevant reviews will feed into G-MW’s review, including the Parliamentary Inquiry into Environmental Water.

G-MW’s services and prices are independently reviewed and regulated by the Essential Services Commission, and the next regulatory period commences in July 2020.

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