So I had settled back with a nice cuppa to read through this week’s edition of Stanthorpe Today (10 June 2021).  An article by local reporter (and now editor) Jess Baker “New Dam Wait on Decision” was, as usual, thorough and very informative about the status of the project.

Towards the end it got more interesting for us here at POW!, covering the SDRC involvement in the dam.  As you’ll know if you’ve been reading our questions and blogs, cost overruns are one of the big issues that Council needs to address as part of its participation.  POW! maintains that it is not appropriate for Council to have unlimited liability for cost overruns either at the construction or the operation phases.

And here we had the Mayor talking about cost overruns.  Excellent, we thought.  And what did the Mayor say?

Mayor Vic Pennisi said it was important not to assume that there will be overrun costs, as ...

(drum roll .....)

there “may not be”.

What?  That’s like saying it’s important not to assume that there won’t be another drought, because there “may not be”.  Or to assume there might be snow this year, as there “may not be”.

I don’t know about you, but I prefer my elected representatives to be a little more in control of a situation.  To be prudent.  To plan.  So here’s what the Mayor could have said instead:

... Council are ensuring that its liability is capped at an acceptable amount.

... GBIP has agreed that Council will not have to pay for any cost overruns over and above its commitment.

... the Project will not proceed unless cost overruns are being covered by the State or Federal governments.

Take your pick, but any of these would show that Council is taking this risk seriously, and negotiating an acceptable position.  Cost overruns in a private infrastructure project are serious issues.  Council could be exposed to millions of dollars more than its $3.5m commitment.  And every dollar of cost overrun payable by the Council will have an impact on rates.  And here’s some of the cost overruns that Council would have to pay its 15% share of:

• The dam costs more than the budgeted amount to construct

• The pipeline and distribution network cost more than the budgeted amount to construct

• It costs more to acquire the land needed for the dam and pipeline easements

• It costs more to acquire the land needed for environmental offsets

• It costs more to rehabilitate land for the buffer zone in accordance with the project approvals

• It costs more to acquire the water allocations necessary for the project to be approved

• It costs more to insure the dam and pipeline each year than original estimates

• It costs more to operate the dam and pipeline each year than original estimates

• It costs more to do the revegetation and rehabilitation each year, or for a longer time, than originally estimated

• The project needs to buy further water allocations than originally budgeted, to ensure reliability (as recommended by GBIP’s own report on its website, but not currently included in the budget)

• A significant claim is made against GBIP (think Wivenhoe Dam) which is not covered by insurance

• There is a problem with the dam (think Paradise Dam) which is not covered by insurance

• Insurance costs increase signficantly

So “cost overruns” is not some theoretical idea that doesn’t need to be addressed.  They’re real, they’re potentially very expensive, and while it’s true that they may not happen, no prudent Council would proceed on that vague hope.  They’d make sure they were contractually accepted by another party with sufficient financial backing to cover the cost overruns.