Productivity Commission report says Adelaide’s desal plant is too expensive

SOUTH Australian taxpayers could have saved as much as $1.6 billion by buying more water instead of building the desalination plant, the Productivity Commission says.

• Irrigators want desalination plant could pump 50GL into the Murray

SOUTH Australian taxpayers could have saved as much as $1.6 billion by buying more water instead of building the desalination plant, the Productivity Commission says.

The Commission released a report on Australia’s water resources yesterday and found that overall they are being well managed.

However, Adelaide’s $1.8 billion desal plant was singled out for criticism.

“Had Adelaide relied on purchasing water entitlements instead of building a large desalination plant this would have generated a capital saving of as much as $1.6 billion and produced substantial savings in operating costs,” the report states.

“The SA Government argued that purchasing water was not a viable alternative to desalination, pointing to short-term risks of relying on River Murray supplies.

“During a previous inquiry into urban water the Commission considered the short-term risks and concluded that they were management.”

The Productivity Commission said predictions of long-term water supply shortfalls did not warrant spend on the desal plant.

The Commission said predictions of long-term water supply shortfalls did not warrant the spend.

Electricity costs alone for running the plant in 2016/17 were $13.5 million, despite it producing about 2 per cent of SA’s water supply.

At the time of its construction about eight years ago, Labor said it was a necessary insurance policy in case of future droughts.

Total electricity costs since the plant became operational are about $120 million.

The Advertiser revealed yesterday that irrigators are keen to see if the plant can be ramped up to put more water into the River Murray.

The State Government said “significant work” would need to be done to ensure water bills did not increase significantly if the desalination plant was ramped up to reduce the reliance on the Murray. Overall the Commission recommended that states and territories keep improving their water management policies and that the National Water Initiative should be reviewed by 2020. Federal Water Minister David Littleproud said the NWI was an “excellent foundation”.

“But we now face new challenges and it makes sense for governments to think about how we can keep improving water management,” he said.