Cone of silence

The announcement of an additional $126.6 million for Emu Swamp Dam from the Federal government confirms the rumoured price tag of over $200 million.  It seems that POW! gave you this news a good 4 months before GBIP, SDRC or State or Federal government.  How amazing!  Perhaps it should be us that has the line “committed to keeping you informed” on our website?  

Now the cat’s out of the bag, why isn’t SDRC telling us what the blowout in estimated costs, from $84m to over $200m, will mean for Council?  Or more importantly, for ratepayers?

Let’s do some maths.  As an example, if this cost blowout had happened during construction (and without a generous Federal government to step in and contribute more), then Council’s $3.5m cost would have gone up to $20m.  A small farmer buying 10ML would have gone from $60,000 to $360,000.  Why is this way more than double?  Because while investors only currently pay 11% of the construction costs, they pay 100% of any cost overruns.  No government, State or Federal, has agreed to fund cost overruns. 

Even with this new government money, a further small cost overrun of 10% on the total construction cost would now double the contributions required from Council and irrigators.  With dam projects, the one thing that’s close to a certainty is further cost overruns.

Also bear in mind that under GBIP’s Water Sales Documents if any single irrigator is unable to pay these additional costs, the others are all liable for that shortfall.  So the amounts payable by Council (and irrigators) could be eyewatering.  No wonder irrigators are rumoured to be pulling out of the project now that more accurate costs are known.

Silence just isn’t going to cut it.  The Council needs to be open and transparent, and answer the questions about SDRC’s and ratepayers’ exposure to cost overruns in this project, where we all now know that the costs have gone off the rails.  And given that capital costs have increased by a whopping 250% Council should also be getting an update on estimated annual costs before any commitment is made.  Because ratepayers across the Southern Downs will be on the hook for these costs, whether or not a drop of water is taken from Emu Swamp Dam.