Why Water Futures is a dead duck ...

From WIN News last evening:

Councillors to put forward motion

1 February 2007

In a major announcement tonight, Toowoomba councillors will put forward a motion to reinstate the water recycling project rejected in the Water Futures referendum.

This is despite recommendations from the city's Water Taskforce, that support the State Government pledge for a Wivenhoe pipeline.

See - WIN News - Thorley attempts resurrection of biblical proportions.

Just when you thought you had seen it all in the world of Toowoomba local government politics, there's one more surprise.

Mayor Thorley has decided to override the vote of 62% of Toowoomba's voters to try to force her ill-conceived and ill-fated recycled water plant back on Toowoomba.

Not to mention forcing it back onto neighbouring shires which take water from Toowoomba.

Forget that the project would most likely have bankrupted the city.

Forget that the State government says it's dead as a dodo.

This is Thorley world - where reality and her perspective on it seldom meet.

We all know that she still controls the Council chamber and can pass any resolution she wants.

But imagine the public outcry if she decides to pass a resolution to try to revive the recycled water project.

Now she has $22 million in the budget for Water Futures related spending. But, with State government funding off the table and Federal funding unlikely in the wake of the July 2006 referendum, it looks like Mayor Thorley will have to look elsewhere for funding - perhaps CH2M Hill would like to pony up the difference.

And what a difference it will be.

Mayor Thorley's main claim on why Water Futures should proceed is that it is the cheapest option.

But is it (and was it ever the cheapest)?

In the Council's NWC funding application, the cost was ball parked at $68 million (assuming no evaporation ponds were required).

No-one has ever confirmed these numbers. In the Parsons Brinkerhoff review of several water source options, they ASSUMED the Council's numbers were accurate and just added 10% on top.

So no-one has ever independently verified the cost of the recycled water plant proposal.

Mayor Thorley says $68 million (or $73 million with 10% loaded on top).

What might others say?

Let's see:

Assuming the numbers ARE accurate (big assumption!) and no evaporation ponds are required (also big assumption!), figure cost increases of around 20% per annum since the Water Futures numbers were ballparked.

(In the current construction and commodities boom, this is not unrealistic. Premier Beattie admitted to the Federal government in his recent request for $400 million for his recycled water project that he had NO idea what it would end up costing).

So that's just under $98 million (20% p.a. compounded).

Doesn't look so cheap anymore. And costs continue to increase (as Premier Beattie is finding out).

But wait, there's more.

We've assumed that the $68 million cost estimate was accurate. Most likely it was not. Mayor Thorley and Mr Flanagan were at pains to ensure that these costs were never independently verified. Why? What were they hiding?

And then there's the RO waste stream. Acland Coal may want something but have never committed to taking the RO waste stream. Any consultant preparing cost estimates would never assume they would. The evaporation pond cost was estimated at $70 million. Apply the 20% per annum cost increase and that comes to just over $100 million.

So Mayor Thorley's project has gone from being a $68 million pipe dream to a $198 million nightmare.

But wait, there's more.

Where will the money come from?

An amount of $22 million has been reserved in the Council budget for Water Futures related projects. So let's assume she gets her hands on that amount.

That leaves $76 million (without evaporation ponds) and $176 million (with evaporation ponds) to be found somewhere.

Now Toowoomba City Council has around $50 million in debt on its balance sheet (2005 figures). So that would mean more than doubling the city's debt to $126 million (without evaporation ponds) and more than quadrupling the debt to $226 million (with evaporation ponds).

Where will the funds come from?

Normally the Council borrows its funds from the Qld Investment Corp (QIC) at reasonable interest rates.

But if the State government says NO to Mayor Thorley reviving her recycled water project, it seems unlikely that QIC will provide funding.

It also seems unlikely that the Federal government will provide funding given the July 2006 poll result and the failure to comply with the other conditions set out in its conditional funding approval.

So that means outside funding (beginning to sound like the Khemlani Federal Labor loans affair of the 1970s isn't it?).

Meanwhile the clock is ticking on the next Council election, 62% of Toowoomba voters disagree with her and the irrigators who will lose their water under her scheme become madder than all heck.

And just how silly is Mayor Thorley going to look when her Water Futures project is properly costed and found to be far more expensive than she claims?

Get the picture ...