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'Dramatic' changes to water price proposal

The independent regulator has made dramatic changes to its latest proposal on Canberra water prices, Treasurer Andrew Barr says.

Mr Barr also told a select committee on estimates hearing on Monday that the Assembly could pass the 2013-14 budget before the effects of the the Independent Competition and Regulatory Commission’s determination became clear.

In February, regulator recommended steep cuts to water and sewerage charges that would reduce average household bills by $230 a year. But ACTEW argued aggressively against the cuts and called instead for a 6 per cent increase.

Mr Barr said the proposal the regulator had put to him last week had changed “dramatically” from its draft determination in February. He did not outline how it had changed, and this latest proposal could change yet again before the final determination is made.

"[The commission] sought feedback from the government in relation to some elements of the determination but did not give me time, in that instance, to seek advice from ACTEW and meet with them – I’ve now met with them twice – to understand why things have changed so dramatically between their draft determination and their proposed final [determination]," Mr Barr said.

"To better understand the changes that they’re proposing, I’ve sought advice and met with ACTEW and we will provide some advice back to the ICRC."


The regulator had been due to hand down its determination last week, but delayed it until the end of June after a request from the ACT government.

Opposition treasury spokesman Brendan Smyth warned last week that price cuts could jeopardise the surpluses the government has forecast for 2015-16 and 2016-17.

“If the outcome is, as Mark Sullivan predicted, that there will be no dividends for years, you don’t intend to modify your budget then?” he asked.

Mr Barr replied, “That’s a hypothetical question.”

He said there would be a subsequent review of water prices in two years that would affect the out years of the 2013-14 budget.

Mr Barr told the estimates hearing the ACT Auditor-General’s annual review of ACTEW’s finances would take place before the impact on the budget was known.

The Treasurer said it was “some months potentially” before the budget would be updated.

Mr Smyth asked, “So this committee won’t be able to get a full understanding from the government as to the impact?”

Mr Barr said, “We won’t know either.”

But Mr Barr said the government would not delay the passing of the budget in August until the impact of the commission’s determination was clear.