New Water Minister to review SunWater’s $38m cost blowout

Queensland’s new government promises to investigate SunWater’s $38 million IT project blowout, with new Water Minister Ann Leahy signalling a review into project delays, staffing, and costs.

The state’s new Water Minister Ann Leahy did not comment on whether it was fair to pass the expected $38 million cost blowout onto farmers.

The new state government has promised to review ongoing delays and mismanagement concerns surrounding SunWater’s IT billing project and expected $38 million cost blowout.

The government’s position on SunWater’s massive costs came after this week’s Reserve Bank of Australia decision not to reduce interest rates due to persistent inflation caused by massive government spending.

Although the state’s new Water Minister Ann Leahy refused to comment on whether it was fair to pass the expected $38 million cost blowout on to farmers, she said the matter would be investigated.

But despite concerns over the water provider’s efficiency and management and reports it planned to hire an additional 100 staff, the new government said it would wait until a final Queensland Competition Authority report next year before investigating any increase in water prices.

The new minister was also unable to speculate whether the state would intervene to stop SunWater from hiring any more staff or implement stricter accountability measures to avoid further cost blowouts.

Burdekin River cane grower and chair of the Burdekin River Irrigation Area Mario Barbagallo has lodged a complaint about SunWater which the state government said it will investigate – next year. Picture: Supplied

But she said her newly established department would review every regional water plan to identify unallocated water supply in an effort to reduce costs.

“We will review the final report and take the QCA’s recommendations into consideration,” Ms Leahy said.

“Reducing cost pressures on families and farmers is a priority, particularly after Queensland experienced some of the largest price rises in water costs of any state.”

In the past five years, according to Sunwater’s annual reports, its revenue rose from $304 million in 2019 to $371 million in 2024, a 22 per cent increase over the five-year period, with the increase attributed to increases in water prices.

While the number of customers served remained steady at 5000, and the number of dams managed was also static at 19, the most notable change was the sharp rise in workforce numbers.

The company’s full-time employee base nearly doubled from 384 in 2019 to 759 in 2024, pointing to a major expansion in staff.

Additionally, contractor numbers grew substantially, from 33 in 2019 to 103 in 2024, a 212 per cent increase, reflecting Sunwater’s strategy to leverage third-party expertise and resources, particularly for large-scale projects.

Over the same period, government employee pay packets also increased while many parts of the economy had wages frozen.

The company’s 2019 Annual Report, employee benefits equated to $40.2 million with the CEO salary package at $699,000 and the CFO salary package at $312,000

According to the 2024 Annual Report, employee benefits rose to $79.5 million with the CEO salary package at $845,000 and the CFO salary package at $519,000.

SunWater’s chief information officer Steve Somerville. Picture: LinkedIn

The final QCA report is expected in early 2025, with the new department set to review any recommendations and consider feedback from key stakeholders before setting future prices due to apply from July 1, 2025.

Queensland Farmers Federation was scathing of the cost blowout after it was publicised last week and said Reserve Bank interest rates could only do so much to stem inflation when the public service was “spending like there is no tomorrow”.

“The QFF does not support the cost of $18 million for the CASPr customer billing system,” a spokesman said.

Cotton Australia general manager Michael Murray has also lodged a submission with the Queensland Competition Authority, which has reported on SunWater. Picture: Cotton Australia

“The federation is concerned about the high cost to establish and operate this proposed system and the risk of future non-described additional cost investments to maintain and upgrade the project.

“We are concerned at the further increases to Sunwater’s overheads through an increase in full-time equivalent staff.

“We advocate for the competition authority to further investigate and identify areas for cost savings.

“In the private sector, every penny is being watched but in the government sector it is an alternative universe where spending is free and unvetted.”