The great water debacle

Furthermore, the number of residents per household is on a downward trend so a shift from the present 2.6 people to 2.5 people per house will require another 55,400 houses over the next 20 years. These extra 2,770 new houses with tanks each year will reduce mains water demand by another 600Ml a year or 1.65Ml a day.

And all this is before the wider community begins to recognise and respond to the ecological, economic and reliability advantages of tank water by retrofitting to their existing house. They are already a distinct selling advantage when trading up and the market will certainly respond as mains water prices go up. A very conservative estimate of only 1 per cent of existing houses buying water tanks each year will mean 10,000 new tanks and an annual reduction in mains water demand of 2,162Ml or 5.95Ml a day.

When all these factors are considered we get:

• increased water demand from new arrivals of 735Ml a year or only 2.015Ml a day.

Offset by:

• decreased water demand from replacement houses of 4,335Ml a year or 11.9Ml a day;
• decreased water demand from density changes of 600Ml a year or 1.65Ml a day; and
• decreased water demand from retro-fitted tanks of 2,162Ml a year or 5.95Ml a day.

To produce a net reduction in mains water demand of 6,362Ml a year or 17.35Ml a day.

So we have a situation where the Premier is signing off on infrastructure based on an assumption of increased water demand over the next 20 years of 98,000Ml a year or 268Ml a day while the actual demand is likely to decrease by 127,240Ml a year or 347Ml a day. Current use is 255,000Ml a year or 700Ml a day. The market for household mains water is likely to halve by 2026 before any of the additional measures even bite.

So what does this mean for the “Great Fixer” and his $2.2 billion legacy?

It means that the Premier, in his ill-considered haste, has failed to distinguish between urgent short term measures, like depleting aquifers, that will augment supply in response to the current circumstances and long term structural measures, like recycling pipelines and desalination plants, that substantially increase supply to a declining market. The latter measures require continuous operation to cover capital costs and are effectively rendering the existing dams redundant and extinguishing their asset value.

It means that by the time the new dams are brought on line there will be no market for their water. Any water sales from these dams will come at the expense of reduced sales from the existing dams. That may make sense when those dams are empty but sooner or later they will be full again. And when that happens they will be forced to operate at a level that is significantly below current efficiencies.

The combined storage volumes of the existing dams is 1.76 million Ml which is seven years supply. The new dams will take this volume to 2.6 million Ml. But in 20 years time demand will have declined to such an extent that the dams will hold at least 20 years supply. And this will mean that annual evaporation when the dams are full will be more than three times the amount that is used by the city each year. This will be a substantial reduction in storage efficiency.

In the long term this will mean that not only the new dams but also the existing dams will be operating at a loss that will need to be covered by either: all Queensland taxpayers including those who get no water from the system; or a dwindling customer base confronted by continually escalating costs.

When looked at another way, the new dams will never have sufficient water sales in their own right to cover anywhere near the annual interest on $2.2 billion. So without an immediate and continuous bail out from consolidated revenue funds, this interest will compound over time to a point where other key government services, like health, transport and education will suffer.

It seems there are few things more dangerous or more costly than fools in a hurry.