A group of economists claim Sydney’s water is priced way too cheap and want big users to pay more:
“Water in NSW isn’t dirt cheap. It’s way cheaper,” said economist Richard Tooth, commenting on Sydney Water’s latest pricing proposals. “Water costs little than more than $2 a tonne delivered to your house to a quality you can drink.” (That is five litres of water for a cent.)
“Bulk soil costs 10 times that and you pay additional for delivery,” said Dr Tooth, a former president of the NSW branch of the Economics Society of Australia…
Public Interest Advocacy Centre (PIAC) policy analyst Douglas McCloskey said big residential users should be charged more to reflect that providing water during drought and climate change will require expensive investment in recycling and increased use of desalination…
Professor Grafton, who is also the UNESCO chair in water economics, says water prices should rise and fall along with dam levels. “This dynamic price premium promotes water conservation and allows water in dams to last longer than otherwise,” he said…
Mr McCloskey said: “We need to stop talking about drought as if it’s only an exceptional circumstance and more as if it’s a new reality.
“If you choose not to conserve, you pay,” he said.
The economists are correct that the current way water is priced sets the wrong incentives. The key problem is that around half of a typical family’s bill is fixed charges, meaning there is little financial incentive to curb water usage.
Therefore, there is merit in slashing fixed charges and shifting pricing towards actual usage. This would sharpen the price signal and incentivise households to conserve water usage.
That said, these economists have failed to mention the key reason why demand keeps rising and Sydney’s water supply is running out: mass immigration.
Sydney’s population has grown by around 1.3 million people (36%) since the Sydney Olympics, and it is projected to grow by another 4.5 million people over the next 48 years – all due to immigration:
This population explosion will necessarily require a battery of desalination plants to be built along Sydney’s coast. And given desalinated water is around four times as expensive as traditional dam water:
This necessarily means household water bills will rise dramatically, which will adversely impact lower income households in particular.
Here is another example of how running a mass immigration ‘Big Australia’ policy wrecks living standards of the working class.
