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SA Water told to fund $200m plan to deliver safe water to remote communities

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An SA Water proposal to make its customers across the state pay what is estimated to cost up to $200 million to provide safe drinking water to remote communities “cannot be justified”, an independent committee has found, as one outback town remains exposed to potentially fatal bore water.

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InDaily revealed in December that households in Oodnadatta – a remote, predominantly Aboriginal town about 1000-kilometres north of Adelaide – were each being charged more than $300 a year to use what SA Water warned was non-drinkable and potentially fatal bore water.

SA Water told residents that they should never drink it, use it to brush teeth, wash food or get it up their nose as it could contain a parasite that causes the rapid destruction of brain tissue.

There are 650 properties across 19 communities in regional South Australia without a drinkable water supply, with Oodnadatta prioritised by SA Water as the first to receive upgraded water treatment infrastructure.

But an independent report suggests it could cost up to $200 million to provide drinking water to all 650 properties – a massive bill likely to be paid by SA Water customers, not the Government, if SA Water’s 2020-24 regulatory business proposal is approved.

“Our customers have a strong sense of fairness, consistently telling us they value safe, clean water for all South Australians and are prepared to pay for providing drinking water to these 650 regional properties that currently receive a non-drinking water supply,” the SA Water proposal states.

“In determining the best solution and approach, we will work together with each affected community to understand what they want, and how this can be sustainably and cost effectively achieved. For example, installing a pipeline, treatment plant, point of use treatment or carting water.”

The proposal suggests staging the works over several regulatory periods to “contain the impact of this investment on customer bills”.

It recommends charging customers $37 million in 2020-24 for infrastructure on top of $1.2 million each year for operating costs.

Our customers have a strong sense of fairness, consistently telling us they value safe, clean water for all South Australians and are prepared to pay for providing drinking water to these 650 regional properties that currently receive a non-drinking water supply

In his report assessing SA Water’s proposal, Customer Negotiation Committee chair John Hill, a former Treasury and Finance Dept deputy chief executive, wrote that once completed the project would likely cost in the order of $100 million to implement, and $5 million per year to maintain.

“In very rough terms these costs have a net present value in the order of $200 million,” Hill wrote.

“The business case for replacing these systems with drinking water systems states that the proposal is driven solely by customer priorities and cannot otherwise be justified.

“The committee suggests that what is required is a considered approach by the Government to this issue and an orderly set of priorities, rather than for SA Water to be pushing ahead with a partial solution at a very considerable aggregate cost to its customers and at no cost to the Government.

“A better approach would be for… the cost of supplying them to be met, not by SA Water customers, but by SA Water and ultimately its owner, the South Australian Government.”

Oodnadatta’s main street. Photo: Stephanie Richards/InDaily

Social service organisations were equally critical of the proposal in their submissions to the Essential Services Commission of South Australia (ESCOSA) – the authority in charge of assessing SA Water’s business proposal.

The South Australian Council of Social Service wrote that it was concerned that SA Water was presenting a “partial solution” to a “broader complex issue”.

It wrote that while the proposal sought to address a “pressing issue” of water quality in remote towns, the suggested $200 million solution “may lead to further inequalities in water supply in regional and remote South Australia”.

Uniting Communities wrote that the proposal “appears to be a very high cost per improvement, notwithstanding the relative remoteness of the properties involved” and it therefore “cannot support this proposal as presented”.

Business SA said there was “significant uncertainty regarding customer’s willingness to subsidise this project”.

“While there may be merit in reducing prices to customers who are not receiving potable quality water, expenditure of this quantum may not be the most efficient way to achieve the desired result,” its submission states.

A SA Water spokesperson told InDaily if the proposal were accepted by ESCOSA, customer bills would not increase as the business case puts forward broader price reductions of 1.8 per cent for water and 3.2 per cent for sewerage.

“The proposed upgrade to some regional non-drinking supplies was overwhelmingly supported as the top ranking priority in an engagement process that heard from more than 12,000 people across the state,” the spokesperson said.

“Should ESCOSA’s final determination not support this initiative we will assess what options are available.”

Meanwhile, Oodnadatta residents remain exposed to potentially toxic non-drinking bore water.

Water testing data obtained by InDaily through a freedom of information request last year showed the town’s mains water had, over the past decade, consistently exceeded national drinking water guidelines for recommended chloride, sodium, sulphate and total dissolved solid levels.

The SA Housing Authority has also warned Oodnadatta residents against drinking what it calls “undrinkable” and “unfiltered” rainwater, as the tanks provided at its leased properties are not intended to supply drinking water.

Video footage taken in Oodnadatta last week and obtained by InDaily shows an air-conditioning unit encrusted with a white salt-like substance from the bore water.

Dunjiba Community Council chair Maria Stewart said “nothing had been done” to improve water quality issues in Oodnadatta since last year.

“We’re not giving up with this, we’ll keep trying to get some action,” she said.

“People are still drinking the water as far as I know.”

ESCOSA is expected to release its draft determination on SA Water’s business proposal by early next month.

A final decision is expected in May.

Shadow Regional Development Minister Eddie Hughes told InDaily he was considering launching a parliamentary inquiry into water availability and quality in remote South Australia.

He also wrote to SA Water Minister David Speirs on Wednesday urging him to take “urgent action… to ensure that this matter is addressed as soon as possible”.

“To me, every South Australian irrespective of what community they’re in should have access to safe… potable water,” he said.

“I think it’s a pretty fundamental right.”

Hughes said the State Government – not SA Water customers – should foot the bill to provide drinking water to remote communities.

“To expect – especially some of these really small communities – to foot the bill, how are they going to do that?,” he said.

In statement, Speirs said SA Water undertook extensive consultation as part of its regulatory business proposal “to ensure it reflects the wants and needs of South Australian water users”.

“Our Plan 2020-24 is currently being reviewed by ESCOSA and I look forward to the determination,” he said.

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