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Sydney's Groundhog Day water crisis returns

By Charles Essery - posted Monday, 9 September 2019

Here we go again…cries of "Sydney to suck more water from Shoalhaven River as dam levels dive" (2nd Sep 2019, SMH) are, like reports of Mark Twain's death, greatly exaggerated. This is only one example of a recent scattergun of media/Twitter comments about Tallowa Dam transfers, a small element of Sydney's large and complex water supply. Between 2004 and 2011, Sydney's water customers, the staff of Sydney Water Corporation (SWC) and other regional utilities were not served well by ill-informed but forceful public messages. We seem destined to face another Groundhog Day cycle of misinformation, and we customers will end up paying for it in our future water bills.

Water utilities seamlessly deliver water and wastewater services to millions of Australians. Unfortunately, the expertise of water professionals is of little interest to the elites in politics and the media. In the case of SWC, it pays NSW Treasury with circa $200 million per annum as dividends and a further equivalent amount in tax equivalents (all derived from our water rates!). And of course self-appointed quangos of scientists generate increasingly unnecessary regulations that strangle the industry through endless red tape that generates lucrative consultancies and grants for their pet research topics.

In principle, water supply is simple, yet in reality it is a complex industry. There are a number of significant points that arise from the recent political interference in the operational activities of SWC and Water NSW who run the Tallowa/Warragamba bulk water supply system. Simplistic "headline cries" are not helpful and indeed can result in expensive, environmentally detrimental outcomes. I trust these points will reduce the harm likely to occur from the forthcoming array of media misinformation, should this next water crisis continue to be promoted.


1. In 1970 when the then Sydney Water Board started its planning to meet future demand, three main options were available:

  • constructing Welcome Reef Dam, of which Tallowa was a key transfer element to Sydney
  • water recycling
  • desalination.

The latter two were ruled out (plausibly due to primitive technology, lack of social/community preparation and energy costs), while Welcome Reef Dam was stopped after significant environmental activism. Consequently, Sydney was destined from that time to have the so-called water crisis triggered by the 2002-05 drought.

2. Sydney's water per capita demand has not increased and indeed reduced significantly (about 25% over the last 15 years), but its population has grown significantly due to federally driven immigration policies. Tallowa transfers have been critical in maintaining Sydney's over-stretched water supply and the NSW Government's removal of the MWP "30%" restriction trigger is not only essential but sensible. Without the Tallowa transfers, the increase in use of the desalination plant capacity draws increasingly closer to becoming reality. Once that trigger occurs, there will be no going back as any contract to double desalination capacity will be for 25 years with an option for another 25-year continuation. Yet those same activists worry about climate change?

3. The Tallowa Dam transfer system to Warragamba Dam is operating as designed. These transfers from the Shoalhaven River Catchment were the norm and were ridiculously constrained when the NSW Labor government arranged their independent inquiry and their poorly developed "Metropolitan Water Plans" of 2007 onwards to introduce very low limits to allow pumping from the Shoalhaven when Warragamba reaches 30% capacity. The choice of this impractical restriction was interesting in that it supported the inquiry and subsequent Metropolitan Water Plan recommendation to build the Kurnell desalination plant that expensively lay idle until late 2018.

4. In the 1970s, transfers between Tallowa Dam and Wingacarrabee Dam (which sits in the upper catchments of Warragamba) were and should continue to be an important element in Sydney's increasingly demand for water which is solely driven by population growth.


5. Tallowa is also the bottom component of one of Sydney's only pumped storage schemes. Remember the Turnbull "innovative", environmentally unchallenged multibillion dollar Snowy 2.0 scheme? Well Tallowa was 40 years ahead and has been used seamlessly for decades.

6. Desalination was infamously declared as "bottled electricity" by the former environmentalist NSW Premier Bob Carr. Currently the Kurnell Plant is running at 50% of its ultimate design capacity. By overriding the MWP contrived 30% rule, the NSW Government is actually helping Sydney's strained water supply, by offering cheaper and more environmentally friendly water compared to the environmentally unfriendly desalination supply and, in particular, any move to double its capacity in near the future.

7. Sydney, Melbourne, Perth and Adelaide have expensive, energy intensive desalination water supplies and indirectly cause greater pollution in rivers, estuaries and oceans. The increased water supply from desalination plants ultimately needs to be collected/treated/disposed of into the existing Hawkesbury River and through our primitive coastal deep ocean outfalls.

8. The funding of the initial stage of the Kurnell desalination plant is rarely highlighted. The plant was initially to cost $1billion, and finally rose to $ 3.2 billion, excluding indirect additional costs such as electricity transmission line upgrades. Once built, SWC took on the debt of this asset (which must be paid via our increased water rates) and then its shareholder (NSW Treasury) leased this asset to a Canadian Funded Teacher Pension fund for and raised circa $2.5 billion of state revenue. SWC customers pay off that loan and we now must also pay for the operational fees to the same company owned by the Canadian pension fund. And we wonder why water costs have more than doubled? If the Tallowa restrictions had continued to remain at 30%, the desalination company would be lobbying in Macquarie Street's finest dining establishments (not Parramatta where SWCs Executive/Board is headquartered). And we the rich citizens of Sydney would be left paying that bill too, and probably twice over like we did for the first desalination "money factory".

The rationale of laying out this issue in these distinct, but interrelated, points is to highlight the complexity and often hidden side to water supply and its delivery within in a highly politicised arena, yet in an economical, socially equitable and environmentally beneficial way. Too often (just like the 2002-05 drought and subsequent investment in desalination in Sydney) single issue focused lobbyists, activists, politicians and indeed the media blunder around offering opportunities to "hidden players" who have preferred solutions in mind (financiers, NSW Treasury, consultants, environmentalists and international water infrastructure companies), namely building more lucrative desalination driven "money plants".

The Metropolitan Water Plans (MWP) instigated by the then NSW Labour government in 2006-07 were expensive, very stylised glossy but ineffective documents. It's still going with its own team of staff producing the least 2107 MWP last year. If Sydney is to continue to receive sustainable and reliable water supplies, we need to allow proper long-term planning, devoid of political and activist agendas, and definitely not driven by glib media headlines and Twitter feeds. Water Minister Melinda Pavey's decision to override the uncalled-for Metropolitan Water Plan 30% restriction is, in fact, a good decision and much needed correction of the initial and current 2017 MWP. Let's hope more decisive actions will follow, although from the past experiences of 2002-2011, we should not hold our breaths.

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About the Author

Charles Essery is an independent water consultant, who has been an Australia resident since 1990.

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