MICHAEL SMYTH: … first to this report out today into Adelaide’s operational, controversial but soon-to-be-mothballed desal plant the federal Auditor-General critical of the decision to double the size of the plant and also the way that some of the funding was signed off. The report was initiated by Liberal Senator Simon Birmingham who joins us now. Hello, Senator. Welcome to Drive.
SIMON BIRMINGHAM: Good afternoon, Michael. Good afternoon to your listeners.
MICHAEL SMYTH: Perhaps if you could start by winding the clock back a bit. Why did you ask the Auditor-General to cast his ruler over this in the first place?
SIMON BIRMINGHAM: Well, Michael, I had pursued over a long period of time the processes around how these grants were allocated and was concerned that there didn’t appear to be any proper transparency of the decision making. It’s $328 million of federal money that went into the desal plant an initial grant of $100 million towards the 50-gigalitre plant and then a further $228 million towards the 100-gigalitre plant and I thought there seemed to be a lack of transparency and scrutiny and then in October last year, when it became clear that documents weren’t going to be released and we weren’t ever going to get satisfactory answers from the Government, I wrote to the Auditor-General requesting that he undertake this inquiry and I’m very pleased now that he has done so because he’s exposed some serious flaws in federal Labor’s handling of it.
MICHAEL SMYTH: The State Opposition has long argued that the plant doesn’t need to be as big as it is. This report also confirms that?
SIMON BIRMINGHAM: This report makes very clear that Infrastructure Australia, the federal body that Labor said it would judge all of its assessments by, looked at this, found that the doubling of the plant was not justified, found the cost-benefit analysis did not stack up and recommended against it and rejected it outright and yet a gang of four within the then Rudd Government but a gang that included Julia Gillard and Wayne Swan decided to proceed with this funding completely against the recommendations of Infrastructure Australia and the findings of the cost-benefit analysis.
MICHAEL SMYTH: What about this argument, though, that it’s better to have more capacity than is needed now rather than build the equivalent of the Southern Expressway that costs a lot more to duplicate in the future?
SIMON BIRMINGHAM: Michael, it is always possible to overinsure and that essentially is what seems to have occurred in this case. The Liberal Party and particularly the State Liberals initially called for the 50-gigalitre desal plant. They saw that as an appropriate and worthy insurance policy but what this report from the Auditor-General demonstrates is the decision to double it was nothing more than a political decision driven by a desire of federal and state Labor of the day to get some cheap headlines rather than any proper process or proper policy. All of the usual processes for following grants determinations and funding were abandoned and this was simply a political decision made by a gang of four Cabinet ministers looking for a cheap headline.
MICHAEL SMYTH: Greg’s given us a buzz from Redhill. Greg, you’ve got a question for Simon Birmingham?
CALLER, GREG: Yes. G’day. How are you? Simon, when John Howard and Peter Costello, the world’s greatest Treasurer… you sold Telstra to raise a billion dollars for the River Murray. What did you spend that on in South Australia? Could you give me one case of where that money was spent? I mean, you talk about [unclear] in advance, you know, so that you spent more than we needed to but what did you do with the money from Telstra in Adelaide, for the water?
SIMON BIRMINGHAM: Look… you’re going back a long way to 1996. The $1 billion you’re talking about was to establish the Natural Heritage Trust which was to fund environmental projects right across the country and many of those were, indeed, funded in South Australia but it certainly was not explicitly for the River Murray. What the Howard Government did for the River Murray was budget $10 billion in 2007, take over federal control essentially of the management of the river and give us a national Basin Plan we have today and, I assure you, all of those $10 billion that I’ve fought for since have been spent very much on the River Murray.
MICHAEL SMYTH: Greg, thank you for your call. Simon Birmingham, you’re obviously pretty pleased with the results of the Auditor-General’s report today but, as consumers, what does it mean at the end of the day? We’re all facing substantially higher water bills than we did even five years ago. Is there any room, should you win government … to put some sort of pressure on on what it means on the bottom line for all of us?
SIMON BIRMINGHAM: Well, Michael, I wouldn’t say I’m pleased with the report. The report sadly highlights a whole lot of failures and the report does, amongst those failures, demonstrate that the cost of the water produced from the desal plant was understated in the funding application and that obviously is a failure of the state Labor Government as much as it was a failure of federal Labor to go ahead and do so and that’s the real shame of it federal taxpayers and state taxpayers are lumbered with far bigger debt than was necessary because of this plant and, of course, state water users are lumbered with significantly higher water bills because of the excessive size of this plant. Now, obviously that’s a matter for my state colleagues as to how they address SA Water’s situation in future and work out how to try to get the cost of those water bills down but the tragedy here is federal taxpayers were gypped, state taxpayers were gypped and, in the end, as state water users, we’re all going to pay the price.
MICHAEL SMYTH: Thanks … Simon Birmingham, Coalition spokesman for the Murray-Darling Basin, Liberal Senator for South Australia.