CASE PROGRAM 2010-65.3

Queensland’s Home WaterWise Rebate Scheme (Epilogue)

Would South East ’s “world-class water-savers” stay true to their conservation ideals when storage dams were overflowing? This was a key question for Queensland Premier Anna Bligh and her Government as they contemplated the latest version of the 50- year strategy for the state’s water supply security. The strategy was first drafted during the record-setting “Millennium Drought” and at a time of healthy budget surplus. It was prepared by the Queensland Water Commission (QWC), the independent statutory authority established in 2006 to carry out radical reform of water supply and distribution in . The QWC took control of water supply systems previously owned by 18 different local governments, and committed the state to fast-tracking the $9 billion development of a new “water grid” of pipelines to link existing and new dams with plants to manufacture water by recycling and desalination. It also launched the highly successful “Target 140” which more than halved the pre-drought daily water consumption, with a combination of usage restrictions and the promotion of water-efficient and water-storage appliances through the Home WaterWise Rebate Scheme (HWWRS). Water consumption continued at low levels even after the drought was declared officially over in May 2009, and above-average rainfall drenched the region. By May 2010, most of the dams in South East Queensland were full to overflowing, while the recycling and desalination plants continued to pump out product. However, the state budget was $2 billion in deficit. There were suggestions that the water grid was a “white elephant” which was loading residents with excessive costs for what had been a low-priced commodity delivered locally. The grid had been designed to ensure the state’s growing population could expect access to 230 litres per person a day, with greater restrictions a once in 25-year occurrence. One third

This case was written by Janet Tyson, Australia and New Zealand School of Government, for Dr Anne Tiernan, Griffith University, as an epilogue to the case studies 2008-65.1 and 2008-65.2 which detail the policy development and implementation of the Home WaterWise Rebate Scheme. Cases are not necessarily intended as a complete account of the events described. While every reasonable effort has been made to ensure accuracy at the time of publication, subsequent developments may mean that certain details have since changed. This work is licensed under Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International Licence, except for logos, trademarks, photographs and other content marked as supplied by third parties. No licence is given in relation to third party material. Version 17-05-2010. Distributed by the Case Program, The Australia and New Zealand School of Government, www.anzsog.edu.au.

of all water would be supplied by recycling and desalination, with power stations and major industry routinely using recycled water.1 By 2010, over half of the planned 450 km of pipeline had been built to enable water to be transferred anywhere within the South East Queensland network. The $2.4 billion Western Corridor Recycling Project was in action, though as yet contributing little to overall supply. Only one of four originally proposed desalination plants had been built, yet the need for them had increased after the Federal Government vetoed construction of a major new dam at Traveston Crossing on the Mary River, on environmental grounds. However, the concept of desalination had become “deeply unpopular” with concerns over energy consumption and efficiency. The State Government had refused to take ownership of the $1.2 billion desalination plant at Tugun on the Gold Coast until problems including rusting pipes and faulty valves had been fixed to its satisfaction. More than a year after the plant began producing water, the contractors admitted they would not meet the June 2010 deadline for repairs to be completed: their best estimate was “before the end of 2010.” 2 The best way to delay further construction of desalination plants, residents were told, was to maintain their WaterWise ways.

Water wise and water wary The Queensland Water Commission had borne the brunt of criticism about the water reform program, from difficulties with construction to concerns about the new governance of water distribution and retail. Changes to bulk distribution, now under the control of a water grid manager, were introduced from 1 July 2008, while changes that would confine the retail sale of water to three local government groups were to be introduced from July 2010 – along with further, and very unpopular, increases in the costs to users. By contrast, there was almost universal community acceptance and support for the QWC’s demand management program, “Target 140 (litres per day)”, reducing daily per person water consumption to less than half its pre-2006 levels of 300 litres or more. Residents had rushed to take advantage of subsidies available through the Home WaterWise Rebate Scheme (HWWRS), to install water-efficient home appliances, and water storage tanks, sales of which had soared. The Department of Natural Resources and Water, administering the HWWRS, had been almost overwhelmed by initial demand for rebates. From March 2008, following a departmental review, the scheme was fine-tuned to restrict subsidies to plumbed- in tanks. However demand for water-saving devices remained steady while daily personal use – at times a matter of civic pride - often dipped as low as 128 litres. Consumption stayed low when the region began to get significant rain in June and July 2008, with many residents resisting the opportunity to splash out after the QWC lifted restrictions from the extreme level 6 of 140 litres per person per day to the “high level” of 150 litres per person per day. At the same time, people continued to express suspicion about the processes and quality control for water at the $2.5 billion Western Corridor Recycling Plant, due to open on 3 December 2008. Two years earlier, 62 percent of residents had voted to reject

1 Australian Associated Press: Main points in South East Qld Water strategy 26-03-2008, accessed Australia/New Zealand Reference Centre (ANZRC) 3-5-10 Accession no:74C1176866032 2 Ardern,L, ‘No end to desal dramas’, Gold Coast Bulletin, 24-03-2010, accessed ANZRC 28-4-2010, Accession number 20100324B007658222 2

“poo water” being added to their water supply.3 The recycling system was designed to treat sewage and waste water to levels of purity that would allow it to be used to top up dams in the region, and therefore become drinking water – although its primary purpose was to supply industry such the power generation plants at Swanbank and Tarong. Premier Anna Bligh was a very visible promoter of the development, paying “countless hard-hat visits”, while her deputy Paul Lucas, had publicly toasted the future of recycled water “like it was sweet nectar.”4 But opposition politicians and others continued to highlight concerns, helped by problems with spillage and leaks.5 In November, as the region continued to get significant rain, and dams continued to fill, Anna Bligh assured voters that plans to mix recycled water into dam supplies would only proceed if storage levels again fell below the critical 40 percent level. She rejected opposition claims that this made the pipeline a waste of money and said its use by industry vindicated the project. “$2.5 billion in our major recycled water project is money well spent,” she said. “All of that adds up to good sense, good policy.”6 On 9 December 2008, Bligh announced that the Home WaterWise Rebate Scheme would end on 31 December, six months early, and despite some complaints about lack of consultation, particularly from water tank suppliers, the decision stood. In the mid-year Fiscal and Economic Review it was reasoned the scheme had run its course, and successfully achieved its outcomes. As well as the newly opened recycling plant, other supply sources such as desalinated water from the Tugun plant were about to come onstream, the government argued. Water storage tanks had been installed in 36 percent of houses in the region, and 237,000 rebates had been paid out. Few of the proud owners of new storage tanks, thanks to the HWWRS remembered that, back in the 1960’s, water tanks had often been forcibly removed as a health hazard, the breeding grounds for mosquitos carrying diseases like malaria and dengue fever. While most of today’s tanks incorporated mosquito-proof valves, there were still issues about keeping long- term water storage clean, and tanks continued to be promoted for water storage. All new houses were required to have internally plumbed storage for 70,000 litres of water.

Water surplus and budget deficit Axing the HWWRS scheme early would save an estimated $18 million. This was an important consideration as the global financial crisis had already whittled down the government’s June budget surplus prediction from $809m to $54 million. By early 2009, in the wake of the global crisis, the state was looking at a deficit of $1.6 billion. It was, however, still raining, and over the catchments of South East Queensland’s dams. When Premier Bligh called an early election, after the state’s credit rating was downgraded, the opposition made much of the troubles with new water infrastructure. “This government can’t do a project without it breaking down…The water grid is in tatters: they’ve got a rusting desalination plant on the Gold Coast, and now they’ve got a leaking recycled water pipeline,” a spokesperson declared, suggesting this raised “real questions about the safety of the

3 Chambers, G ‘Mayor supports “poo water”plan’, Gold Coast Bulletin 16-12-2009, accessed from ANZRC 28/04/2010, accession number 20091216B002463127 4 Johnstone, C, ‘Costs cloud clear water enterprise’, Courier-Mail, 30-04-2010. 5 ABC Premium News, ‘Western Corridor spills under investigation’, 30-1-2009 accessed ANZRC 3-5-2010 Accession number P6S031052475409 6 ABC Premium News, Bligh rejects recycled water pipeline a waste of money, 01-12-2008 accessed ANZRC 3-5-10. Accession number P6S134214590008 3

project”7 and calling for the Queensland Water Commission to be abolished. Despite these controversies, Anna Bligh’s Labor government was re-elected, by a comfortable margin, on 21 March, 2009. On 20 May 2009, Premier Bligh announced that South East Queensland’s worst ever drought was officially over. The region’s storage dams, 50 percent full by April, were now 75 percent filled. At the same time, the premier announced a major restructuring of the QWC, which would be reduced from three commissioners to one. It would remain an independent statutory authority, but the majority of its work would be subsumed into the newly amalgamated Department of Environment and Resource Management where the former Chief Executive of the QWC, John Bradley, was now acting Director-General. Importantly, given the still-growing budget deficit, the changes would save an estimated $21 million over the next four years. Restrictions on water use had been lifted from “high” to the “medium” level of 200 litres per person per day from April. Rather than being a cause for celebration, a number of letters to the paper asked whether this was going too far, too fast, despite the welcome “big Wet.” Health authorities meanwhile were noting with alarm the rising number of dengue fever cases being reported in , in the worst outbreak for 50 years.8

Protecting the lungfish The most immediate concern for the state government was the 11 November 2009 announcement from the Federal Environment Minister Peter Garrett. He had ruled that the proposed new dam at Traveston Crossing on the Mary River could not proceed, as it would have too much impact on rare fauna like the Mary River cod, the Mary River turtle and the lungfish, a prehistoric survivor. This component of the water grid had been controversial from the outset with many Sunshine Coast groups protesting against it. However Premier Anna Bligh declared herself “profoundly disagreeing” with the Minister, who she accused of selectively accepting the views of some scientists, while ignoring the social impact on south-east Queensland.

“The people who are moving here need to drink water, their families need water to bathe, the industries that employ them need water to operate.”9 The state government had already spent $600 million to acquire the necessary land, which it would now have to sell back; it would be estimated that the protracted dam decision process had cost Queensland taxpayers $256 million, and helped explode the budget deficit out to $2.35 million. 10

7 ABC Premium News, ‘Western Corridor spills under investigation’, 30-1-2009 accessed ANZRC Accession number P6S031052475409 8 The tropical virus, which causes headaches, extreme fatigue, nausea and vomiting, and swelling in the joints is spread by mosquitos that breed in standing water. Queensland Health reported 1025 cases in the calendar year 2009 in North Queensland, with authorities forced to change their control strategies. 9 Wardill,S, with R Viellaris and B Williams, ‘Water prices set to rise rapidly’, Courier-Mail, 12-11-2009 accessed Factiva. 10 Fraser, A, ‘Dam decision blows state’s budget’ The Australian, 5-12-2009 p10, accessed ANZRC 30-04-210. 4

The next day, Premier Bligh announced that, without the Traveston Dam, plans for at least two more desalination plants would be fast-tracked; “The Federal Government’s decision means South East Queenslanders will have to pay more for their water sooner.”11 Opponents of desalination began to gather, establishing amongst other things the Communities Against Desalination website. The protesters called for a better rainwater tank roll-out program, stormwater capture from properties, recycled water and small privately run dams to boost supply, although they did acknowledge desalination “has a role if there’s a crisis.”12

Demand restriction vs desalination plants A week later, on 21 November, Natural Resources Minister Stephen Robertson said that if residents could permanently limit their water use to 200 litres per person, per day it would mean that the government could delay any more construction of desalination plants for at least 12 years. Sunshine Coast residents, already using 226 litres a day, would have to “end their splash- happy days”13 and cut back their consumption. However, other residents of the south-east such as those living in Brisbane and Ipswich communities (using an average of 138 litres per day) would be “rewarded” by being allowed to return to watering their lawns with hoses. The dramatic impact of holding consumption at 200 rather than 230 litres per day was shown in graphs (Exhibit 3) included in the QWC’s revision of its 50-year strategy following the Traveston Dam decision. Local government and local residents were invited to comment on the new strategy over the next two months, before a final version could be prepared in April 2010. Although it acknowledged the changed circumstances and the end to the Millennium Drought, the strategy cautioned against relying on residents to maintain strict controls on consumption for the long term.

“The 230 litres per person per day planning assumption is less than the average residential consumption prior to the Millennium Drought of about 300 litres per person per day. The commission believes this is a prudent approach in the face of certain population growth and probably climate change impacts. The commission has taken into account a range of factors in reaching this decision, including the fact that rainfall has been higher than average in 2008 and 2009, and that demand has generally rebounded to within 10 percent of pre-drought levels following severe droughts in other Australian capital cities.14 Regardless of water conservation efforts, new facilities would eventually be needed. Consumer savings could postpone, but not preclude further development – and if certain areas, like the Sunshine Coast, continued to use well above average quantities of water, construction of a desalination plant in the area would have to be brought forward.

11 Hon Anna Bligh, Media Statement, ‘More desal only option without Traveston’ 11-11-2009 downloaded 14- 5-2020 http:www.cabinet.qld.gov.au/MMS/StatementDisplaySingle.aspx?id+67350 t 12 ‘An ocean of trouble; communities earmarked for desalination fight back’, Courier Mail 4-12-2009 13 Johnstone C and Heger U, ‘No desal plans but target of 200 litres,’ Courier- Mail, 21-11-2009. 14 South East Queensland Water Strategy – Executive Summary, p4, Queensland Water Commission, 2009. 5

From drought to flood As 2010 arrived, most of Queensland was awash with rainwater, with some inland towns being flooded – and finding snakes swimming along the streets. But the rain had bypassed Toowoomba, where the Cressbrook dam dangerously low at 7.4 percent full, so there were celebrations when Premier Anna Bligh officially opened the $187 million, 38km pipeline that connected the city with the well-filled and thus the whole Water Grid. It was highly unlikely – QWC calculations suggested a one in a thousand chance – that the dams of the main water grid would fall below the 40 percent level, at which recycled “poo water” would be used to boost supply.15 By early March, dams across the state were “holding the most water ever recorded in Queensland’s history.”16 In seven days, storage in Brisbane’s dams had increased by 20 percent to 96.9 percent, ensuring at least 18 months of drinking water supplies.17 As the Courier-Mail editorialised,

“Three years ago the very real concern was that we would run out of water unless drastic action was taken. Today, now that the Government’s water grid is in place, one of the key challenges is how to handle an excess of water.”18 With further capacity close to completion, including the raising of the by the end of the year and the Northern pipeline connector by the end of 2011, questions were being raised about the scale of the infrastructure. “For the first time, the words ‘water grid’ and ‘white elephant’ were being uttered in the same sentence.”19 The full-to-overflowing state of the dams drew out a range of responses, including frustration at discovering it was technically difficult to “turn off” the desalination and recycling plants, which were still pumping into the grid. On 8 March Natural Resources Minister Stephen Robertson said that dam levels would be considered when the 50-year strategy was finalised, along with the continuing low water usage, “but it is the long term that we will have a focus on in determining the final strategy.”20 For the two months to 26 March 2010, average per person per day water consumption throughout south-east Queensland remained below the 200 litre target. Two hundred Sunshine Coast residents, meeting to protest the possibility of a desalination plant in the “environmentally sensitive” coastal area of Marcoola, protested against being labeled “water guzzlers” and blamed usage blowouts on holiday visitors. Toby Hutcheon of the Queensland Conservation Council asked Premier Bligh to stand firm on maintaining water restrictions,21 a message that was repeated in blogs and comments, from the Brisbane area. At least one Brisbane resident expressed concern about possible mosquito-borne disease, after news of a new outbreak in the lower North Queensland town of Tully, the first for 20 years. Adding new cause for caution was a Bureau of Meteorology warning that despite the heavy rain, much of the South East of Australia remained in

15 ’Qld:City thrown a water lifeline’ AAP Australian National News Wire 28-01-2010 accessed ANZRC, accession number 74C0985481276 16 Williams, B ‘Our dams runneth over’, Courier-Mail, 5-03-2010. 17 Williams, B ‘Fast-filling dams near capacity’, Courier Mail, 10-03-2010, accessed DowJones Factiva. 18 ‘Cool heads called for on excess water’, Courier-Mail, 11-03-2010, accessed ANZRC 28-4-2010, accession number 201003111034549705 19 Dams brimming after Queensland deluge,’ Courier-Mail 8-03-2010. 20 ibid‘ 21 Williams, B ‘Fast-filling dams near capacity’, Courier Mail, 10-03-2010. 6

“hydrological drought” with deficits in soil moisture and river levels that would take much longer to overcome. The evidence was still of climate change that would lead to increased and more frequent dry spells.22 In April it was announced that instead of building new plants in what the Sunday Mail called “voter hotspots”23, there were plans to triple the size of the existing Tugun plant, at a cost of $1.26 million. This did not please Gold Coast voters, with the Gold Coast City Council “threatening to launch at $15 million compensation claim.”24 “The very residents who had to put up with the construction of this project and the problems caused by this plant are getting no benefit,” grumbled the Gold Coast Sun.25 Others said the QWC had seized their water facilities for “bargain-basement prices”26 and were now gouging residents for the privilege of getting water from facilities they had had the foresight to build and maintain “because wasters were in a panic at their emptying dams.”27 Gold Coast mayor Ron Clarke was already engaged in public battle with Anna Bligh about the current and future charges for bulk water supply which, he claimed, would ultimately represent a 250 percent increase with massive profit to the government, over the amount charged when the city owned and distributed its own water supply. In reply, the Premier pointed out that the state would for some years be subsidising the supply and distribution of water across the region.28 With reform of the retailing of water to come on 1 July, this was a topic unlikely to go away. Writing in the Courier-Mail29 on 30 April, Craig Johnstone said

“Once the government walked away from its original plan it condemned the water grid to never paying its way and sentenced households to punishingly high water bills. So go the effects of succumbing to short term politics.” A final version of the QWC’s revised 50-year water supply strategy, incorporating public comment, was promised for April 2010, but by mid-May had not yet appeared. The drought was well and truly over, but the decisions on future water supply were not.

22 ’Wet times don’t dent long term drought’, PM, ABC Radio, 10-05-2010. 23 Weston, P, ‘Triple trouble – desal plant to avoid voter pain’, The Sunday Mail (Brisbane), 04-04-2010, ANZRC Accession number 20100404021678416 24 ibid 25 Gold Coast Sun, 14 January 2010. 26 Gold Coast Bulletin, 10 March 2010. 27 Lappeman, S ‘Sold down drain by water wasters’, Gold Coast Bulletin, 13-03-2010, accessed ANZRC acc.no 20100313B031621412. 28 Gold Coast Bulletin, 11 March 2010. 29 Johnstone, C, ‘Costs cloud clear water enterprise’, Courier-Mail 30-4-2010. 7

8

Original source: QWC Home Page from http://www.qwc.qld.gov.au/ accessed 15 May 2010

Exhibits 1 (above) Queensland Water Commission’s Water Restrictions Meter and 2 (below): Dam levels to April 2010

Original source: Bradley, J. 2009. ‘Queensland’s Water Reform Agenda – Policy Network Forum’ ANZSOG presentation, 13 May, available at http://www.anzsog.edu.au/userfiles/files/ANZSOG_13%20May%202009%20Bradley_pptx.pdf.

Dam levels updated by Gregory Bourke, Griffith University, from Queensland Water Commission, ‘Latest dam levels – ’ from http://seqwater.com.au/public/dam-levels’ accessed 14 May 2010

SEQWATER

100.00% 90.00%

80.00% 70.00% 60.00% 50.00%

% Full 40.00%

30.00% 20.00% 10.00% 0.00%

Jul-09 Jul-08 Jul-07 Jul-06 Jul-05 Jan-10 Jan-09 Jan-08 Jan-07 Jan-06 Jan-05 Oct-09 Oct-08 Oct-07 Oct-06 Oct-05 Apr-10 Apr-09 Apr-08 Apr-07 Apr-06 Apr-05

Total System Wivenhoe Somerset North Pine 9

Exhibit 3: Impact of changed consumption on new infrastructure needs

Source: South East Queensland Water Strategy 2009, Executive Summary

10