Irrigation changes could lead to price hikes, QFF warns

Queensland Farmers' Federation responds to QCA irrigation pricing review


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Queensland Farmers' Federation says some schemes could experience significant price increases.

Queensland Farmers' Federation says some schemes could experience significant price increases.

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Some schemes face significant hikes, QFF says

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At least six schemes face immediate price hikes of more than $8 for every mega litre of water under proposed irrigation changes, the Queensland Farmers' Federation says. 

The Queensland Competition Authority was directed to review the state's irrigation pricing structures in late October, with the deadline for initial submissions closing last Friday. 

In its submission, the QFF raised concerns about cost-reflective volumetric charges, which are expected to come into play from 2020. 

"It is estimated that up to 11 service contracts will face immediate increases in prices to implement volumetric cost reflective tariffs and at least six of these will have to face immediate increases of over $8 per ML," QFF's submission read. 

"These forecast prices will have impacts on the schemes and their customers."

QFF water policy adviser Ian Johnson said changes to annuity payments were the most significant factor across schemes in the irrigation pricing review. 

“The big item that has caused a fairly significant jump in costs is the annuity that pays for fixed assets over time,” he said.

QFF was also critical of a proposal that could bump up irrigation prices in some schemes by incorporating the cost of future dam safety upgrades. 

Irrigators were completely in the dark about the size of these costs and what they might cover, QFF said in its submission.

"Now they are being asked to provide comment on whether they should be responsible for bearing a portion of the costs," the submission read.

Instead of asking irrigators to foot the bill for dam safety upgrades, the QFF said the competition authority should also think about how such upgrades would impact local government customers and other parties. 

 "A process of consultation on apportioning the costs of dam safety for only the irrigation customers of the schemes is not acceptable."

Although some schemes would feel the pinch of proposed changes, Mr Johnson stressed that not everywhere would be as badly impacted and there were a number of schemes that looked OK. 

Insurance costs were another issued touched on in QFF's submission. 

"SunWater needs to provide evidence that their insurance program is delivering cost efficiencies," QFF wrote.

"For example, analysis to ensure only insurable assets are being insured. In addition, is action being taken to reduce the escalation in the costs of repairs as this would be driving up insurance costs."

The submission also signalled that the QFF would fight plans to make irrigators solely responsible for flood monitoring and reporting. 

“While it is recognised that these flood management requirements are in response to the Inspector-General Emergency Management report, QFF proposes to challenge the Queensland government’s decision to make irrigation customers fully responsible for these costs.

“QFF submits that these services are for the benefit of the wider community.” 

The irrigation pricing review was announced by Natural Resources Minister Dr Anthony Lynham in October, with Dr Lynham describing it as an opportunity to give irrigators more certainty. 

“The goal is for irrigators to have greater pricing certainty, simplicity and transparency to allow them to plan for future years,’’ Dr Lynham said at the time.

“As part of the review process, extensive consultation will be undertaken with stakeholders and water users to ensure we strike the right balance between the interests of customers and businesses.

“The QCA will be required to limit annual price increases similar to previous reviews.”

A draft report will be released in August 2019, with the current pricing structure rolled over until the review is completed.

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