The Wonthaggi desalination plant will cost Victorians $15.8 billion over the next three decades, departmental figures show, leading the state opposition to accuse the government of hiding the project’s true cost.
The opposition says the figure, contained in the Department of Sustainability and Environment (DSE) annual report released this week, is well above the cost spruiked by the government.
But Premier John Brumby argues the $15.8 billion figure is misleading.
He says the more meaningful way to express the cost of assets is net present cost, which in the case of the Wonthaggi plant is $5.72 billion over the life of the 28-year contract.
The $5.72 billion includes $3.5 billion in construction costs, with the remainder covering things like maintenance, operations and payments to Aquasure for a maximum allocation of 150 billion litres of water each year.
The $15.8 billion DSE figure is based on a range of assumptions about the future state of the economy, including factors such as inflation and interest rates, Mr Brumby said.
“That’s like saying, you know, what’s … going to be the price of a bottle of beer, or a bottle of wine, or a litre of milk or a Holden Commodore in 20 years,” he told reporters on Friday.
“If you buy a house for $500,000, you don’t go and tell your wife: `Well, we’ve just bought a house for, you know, $2 million,’ which might be the sum total of the repayments that you would make over 27 or 30 years. You say you’ve bought a half-a-million-dollar house because that’s the present value.”
The desalination plant controversy comes at a bad time for the government, just over two months out from the state election and at a time when Victoria’s reservoirs have risen to more than 45 per cent full.
Water Minister Tim Holding said he expected the government would order water from the desalination plant when it starts operating next year, unless the state experiences rain of “biblical proportions”.
Nationals Leader Peter Ryan repeated his call for the government to release the full desalination plant contract.
He said Mr Brumby should reveal the cost of the water security payment, which is an annual sum paid to Aquasure to keep the plant in a condition capable of delivering water at any time, even if none was ordered.
“John Brumby has to come clean with Victorians,” Mr Ryan told reporters.
“He owes them a detailed explanation as to the facts and figures underpinning the desalination deal.”
Mr Ryan said the coalition supported a desalination plant in Victoria but one of more modest proportions.
“We support a desalination plant being used to provide last resort water as opposed to what the Brumby government has done, which is to sign us up to an extraordinarily wide commitment financially supplying water as a first resort.”
Mr Brumby said the government had been open about the fact water bills would on average double over the next five years to pay for the desalination plant.
“It’s a small cost indeed to pay for that (water) security for decades to come,” he said.
Meanwhile, the premier on Friday turned the first sod for the Melbourne to Geelong pipeline.
The 59km pipeline will link Barwon Water’s Lovely Banks Basins in Geelong with the Melbourne system at Cowies Hill, near Werribee.
The government has committed $20 million, with Barwon Water funding the balance of the $137.9 million project.
