SEQ Water Assets Valuation Finalised, Water Grid Another Step Closer: Fraser

A valuation of water assets in South East Queensland will go a long way towards erasing a $2.4 billion Council debt to the State Government, Treasurer Andrew Fraser said today.

Mr Fraser said SEQ councils would receive a $1.9 billion compensation cash windfall for 18 per cent of their total water assets which are being transferred to form the new South East Queensland Bulk Water Supply entity.

The final figure has been determined based on a valuation produced by reputable international accounting and advisory firm KPMG.

“Nearly $2 billion of debt is being wiped out – its akin to someone paying off your mortgage for you.

“Councils won’t just save the money on interest payments – the compensation figure is enough to nearly repay their entire debt to the State.”

“In addition, Councils will continue to be entitled to the dividends from their water businesses which account for 82 per cent of the water assets.

Mr Fraser added the final assets transfer does not include Waste Water Treatment Plants, which will remain in Council ownership.

“In the end we accepted advice about the Waste Water Treatment Plants and this means more of the assets remain with Councils,” he said.

Mr Fraser said the State Government has made a major concession to accommodate Councils’ position on the compensation package.

As Chairman of the Council of Mayors for South-east Queensland, Lord Mayor Campbell Newman advised the Treasurer in a letter dated 27 November 2007 that “full compensation for tax equivalent revenue … is the major outstanding issue on obtaining fair compensation for council owned bulk water assets”.

“As Councils are income tax exempt, their claim for compensation of tax receipts could be justly considered double-dipping,” Mr Fraser said.

“KPMG advised us to not cover these costs, however the government is proposing to provide this compensation in a major concession to Councils.

“We are making this decision in the interests of completing this important reform to unravel the spaghetti mess that is SEQ’s water supply arrangements which sees 25 owners in charge of 17 retail businesses.”

Last November Parliament passed the South East Queensland Water (Restructuring) Act 2007.

The Bill gives effect to Stage 1 of the Government’s urban water supply reforms by facilitating bulk water supply and transport business restructure in SEQ.

The water restructure will deliver significant benefits to the community including:

Improved regional co-ordination and management of water;
More efficient delivery of water services in SEQ;
Enhanced customer service for consumers across the region; and
A clearer accountability framework for water supply security.

Councils and organisations to be compensated (including their shares in SEQWater) under the package include:

Aquagen - $118.406 million
Esk-Gatton-Laidley Water Board - $8.788 million
Brisbane City Council - $880.773 million
Beaudesert Shire Council - $17.224 million
Boonah Shire Council - $0.513 million
Caboolture Shire Council - $39.921 million
Caloundra Shire Council - $34.819 million
Esk Shire Council - $9.332 million
Gatton Shire Council - $3.365 million
Gold Coast City Council - $512.001 million
Ipswich City Council - $46.210 million
Kilcoy Shire Council - $7.180 million
Laidley Shire Council - $3.365 million
Logan City Council - $61.240 million
Maroochy City Council - $21.600 million
Noosa Shire Council - $23.345 million
Pine Rivers Shire Council - $65.798 million
Redcliffe City Council - $8.973 million
Redland Shire Council - $72.930 million

The KPMG valuation reports for each council have today been couriered and supplied electronically to Councils.

Due to confidentiality undertakings by the State to Councils, it is up to each council to release their report and any supporting information such as flagged water price increases

“I have no objection to the reports being released and I encourage each council to publish the report provided to them in full,” Mr Fraser said.

Media Contact: Chris Ward 0418 424 654 or Chris Taylor 0419 710 874