weekly hansard - Queensland Parliament - Queensland Government

2598 Queensland Competition Authority Amendment Bill 23 Aug 2005
is going to cost quite a bit of money to upgrade the line and get more coal going out through Abbot Point
to relieve some of the pressure on Dalrymple Bay.
With respect to the bill, I think some opportunities have been missed. Take as an example the
contract signed with Prime Infrastructure that did not give it the opportunity to increase the price to the
extent that it was able to upgrade the infrastructure. I think it is a sad indictment on the government that
it was not able to foresee the amount of coal that would be required to go out of that port in a short
period of time. With those few comments, I support the bill.
Mrs MENKENS (Burdekin—NPA) (3.31 pm): I rise to speak to the Queensland Competition
Authority Amendment Bill 2005. The strength of the Queensland Competition Authority lies in its
independence. To quote from the QCA’s own literature, the QCA seeks to provide a recognised avenue
whereby both government and third parties can rely on an independent, objective appraisal of the issues
that are subject to its review. It also seeks to produce sensible, forward-looking solutions and
recommendations which are capable of practical implementation and which would also facilitate
compliance within Queensland with the principles of national competition policy.
The amendments contained within this bill should, I believe, further strengthen the QCA’s power
and enhance its role as an independent arbitrator. It is important that the QCA continues to fulfil its main
responsibilities of ensuring that third party access to essential infrastructure is maintained; that when
government business competes with the private sector it does so fairly; and that private and public
monopolies do not abuse their market power.
Most major infrastructure development has a significant and necessary government component.
The provision of rail and port facilities is of paramount importance in Queensland, especially in the north
of the state, and cannot be left entirely to purely commercial interests. As the member for Gregory rightly
described, transportation of the huge tapped and untapped resources of coal is paramount and very
important to the state economy, as is the public and private transport structure that has come into place
within the railways.
The member for Mirani has also described the problems associated with Dalrymple Bay and the
transport of this coal. Most major infrastructure development has a significant and necessary
government component. Likewise, the provision and delivery of essential services such as power and
water are directed by more than just expected rates of return.
The Premier referred to the Dalrymple Bay coal terminal to illustrate the importance of the
proposed amendments and what benefits will accrue from them. He could equally have used the QCA’s
2003 assessment of the services provided by SunWater to irrigators in the Burdekin River irrigation area
within the Burdekin Haughton Water Supply Scheme as an example of how the authority operates.
Mr Deputy Speaker, as you are no doubt aware, the Burdekin Haughton Water Supply Scheme
has supplied water to irrigators and other users in the Burdekin region, which of course is south of
Townsville, and this has been happening since the 1950s. Scheme infrastructure includes the Burdekin
Falls Dam, which was completed in 1987, a number of weirs on the Burdekin and Haughton rivers and
three major distribution channel systems including pumping stations and a drainage network. The
scheme supplies the Burdekin River irrigation area, the north and south Burdekin water boards and NQ
Water.
In October 2000 dollar terms, actual capital expenditure on the scheme was approximately
$587 million. Water is currently provided to over 400 farms covering 50,000 hectares in the BRIA. In
addition, water is provided to the north and south Burdekin water boards, which service 500 water users
on more than 55,000 hectares. On 17 January 2002, the Premier and the Treasurer, under section 10(e)
of the Queensland Competition Authority Act 1997, directed the Queensland Competition Authority to
assess gazetted prices for channel and river irrigators receiving water infrastructure services, which
includes harvesting, storage, distribution and reticulation provided by SunWater within the Burdekin
Haughton Water Supply Scheme.
The four criteria were to determine the capital contributions made by each, if any, of the irrigators,
the Commonwealth, state governments or other parties; to determine the appropriate weighted average
cost of capital, WACC, that could be incorporated in the price of providing those water infrastructure
services; to determine whether the current price paths incorporate any excess return on capital based
on the above analysis; and to advise under what circumstances it would be appropriate for an entity to
charge a positive rate of return on scheme assets.
The final report was delivered in April 2003 and it is a comprehensive analysis of this scheme, but
the report did not find favour in all quarters. This dissatisfaction was recognised by the authority and was
attributed by the authority to being a consequence of the ministerially dictated limited terms of reference.
The report stated—
It is important for all stakeholders to recognize that the Authority may only respond to the terms of the Direction given to it. In light
of that, it is important to outline two particularly important matters which lie outside the Authority’s remit and thus are not
addressed in the Report. The Authority is unable to address the validity of lower bound costs. The Ministerial Direction expressly
directs the Authority to accept the lower bound costs included in the relevant prices. This also precluded the Authority from
assessing whether local management would result in a decrease in lower bound costs.