It’s academic, economic and ideological -and it’s why your water bills are so high.

The recent departure of Essential Services Commission of SA (ESCOSA) chief executive Paul Kerin and the non-renewal of two commission members’ appointments point to a major divide between the State Government and those who believe water charges should reflect cost of supply and not be a tax base.

One of those departed commission members, Professor Dick Blandy of Uni SA’s School of Management, explained the numbers and ideology behind water charges during an extensive radio interview today, boiling it all down to a matter of some $275 million per year – or around $400 per household.

Blandy says that Treasury has inflated the valuation of SA Water’s infrastructure in a way that forces ESCOSA, under its defined pricing formula, to set a price that reflects that over-valuation.

“The real value of SA Water (infrastructure) is about half what the SA Government says it is,” he told 891ABC’s breakfast program.

“That’s the size of the tax that the SA Government is making you pay.

“They should have a competitive price for water and then charge a $275 million tax in an open and accountable way.

“The regulator (ESCOSA) is being used to disguise the fact that the government is taxing water users.”

This then, is the ideological difference between the State Government and Kerin, who resigned in March this year, Blandy and Barbara Rajkowska, who also resigned from the commission after the March 2014 State election.

The three all believe that an independent regulator such as ESCOSA should set water and energy prices based on actual costs.

The Commission, they say, was hamstrung by a false valuation of those costs by Treasury as it sought to increase the revenue take.

Treasurer Tom Koutsantonis wasn’t hiding the fact when asked in parliament yesterday about the valuation that results in SA Water making such a big profit that it pays a dividend to the State Government every year.

“Do they return a dividend to the government? Yes, they do,” the Treasurer told parliament Tuesday.

“What do we do with that dividend? We spend it on our hospitals, we spend it on our schools, we spend it on our institutions and on our roads and on our police. We spend it on the essential services.”

And therein lies the political and ideological divide.

The State Government uses its water billing of every SA household to raise extra revenue which it spends on general government activities.

Blandy, Kerin and Rajkowska believe that water bills should reflect water costs and if the State needs an extra $275 million a year, it should be raised separately, not under the cover of water charges.

Ideologically, we can only assume that Labor is attracted to a water charges-based tax that is imposed on property owners, and not the 30 per cent of householders who rent and therefore only pay excess water useage charges.

It’s a property tax.

It can be efficiently raised through the existing billing system.

The alternative to the raising of $400 per year per household – a total of $275 million – via water charges is to either cut government costs by that amount, or raise it some other way.

That, no doubt, will be food for thought for the voters in the Fisher and Davenport by-elections.