Page 2530 - Week 08 - Thursday, 30 August 2007
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the handling of complaints and the level of satisfaction, but in the constrained time that we have I will not get into those areas.
I would also like to make some mention of the ICRC. Compared to previous years when I had always been impressed by its performance, I was pretty bewildered by its incapacity to answer a number of questions that were asked by the committee, in particular in areas such as the impact of the utilities tax on utility providers. According to the Attorney-General, the ICRC played no role in analysing the impact of this tax, but then I saw a decision where it was authorised as a pass-through by ActewAGL. I find that intriguing, especially when we see in a question on notice to the Treasurer on 31 May 2006 that the average 18-month impact of the utilities tax is estimated to be $131 per household in the form of higher prices for water, sewerage, gas, electricity and telecommunications—courtesy of the Stanhope government.
Talking about the ICRC, the government’s policy on water pricing continues to leave a lot to be desired. The government commissioned a report into pricing elasticity which was undertaken in 2005 by Graham Barnett of the University of Canberra. This report drew attention to the economic efficiency of the law of one price, and stated that a single volumetric price would result in the most economically efficient outcome. It went on to state that stepped pricing was instead used to achieve the government’s target of water reductions, with minimal impact on government revenue.
The report in fact recommended a two-step pricing system to discourage discretionary water use. The report determines this pricing system on the basis of average consumption per household, and the ICRC adopts a similar pricing system, although it has three steps instead of two. The stepped pricing system operates on a household basis. However, in response to a question on notice, the Attorney-General stated that studies have shown that 57 kilolitres per year per person is an average efficient level of internal household usage and that the ICRC considers 300 kilolitres to be the usage level at which the price should begin to rise steeply.
This means, of course, that a household with more than five members will face high marginal price levels even when they are using an average efficient level of water. Conversely, a small household of two members could use almost three times the average efficient level before facing the same high marginal prices. A household with a single member could use more than five times the average efficient level before facing the same high marginal prices. The Chief Minister continues to talk away and to ignore all this, but water bills are an important factor in many households.
Mr Stanhope: This is repeating the third speech that you gave on Tuesday night.
MR MULCAHY: Water bills are an important factor in the cost of living for Canberra families. I know that they do not matter to the Chief Minister but they are worth putting on the record because this is an issue of considerable concern. Clearly, the impact of doing things on a household basis rather than an individual basis is that it provides virtually no incentive for water conservation for small households.
Mr Stanhope: Poppycock!
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