Water and Sewerage Tasmania Bill No. 41 of 2017

Ms Armitage (Launceston) - Mr President, first I would like to thank the Parliament for approving the select committee inquiry into this proposed takeover. I take this opportunity to thank the members of the committee - Tania Rattray, Rob Armstrong, Craig Farrell, Mike Gaffney and Rob Valentine, and Kerry Finch for a short time - for all their hard work and time given, particularly given the demands of other committee work and time restraints. Many thanks also to our committee secretary, Natasha Exel, who worked tirelessly, and Julie Thompson and the Legislative Council secretariat for their support throughout the course of the inquiry as we could not have completed our work without them, particularly given the tight time frames.

Some were concerned we were working to the Government's time constraints, given the upcoming election, but it was important for councils and TasWater management and staff in particular not to have this issue hanging over their heads for many months to come. Had there been more time, there were areas that could have been examined more forensically, particularly financials with regard to the proposed takeover. I sincerely thank all the organisations and individuals who put in submissions and took time to address and provide evidence at hearings. Fifty-four submissions were received, many of them substantial, from both sides of the argument from right across the state. The availability of TasWater, LGAT and the Treasurer was never in doubt, and they readily responded to any queries and came back before the committee on request.

Like the member for Windermere, I, too, was on local council when many years ago the state government and Mr Aird thought state ownership was something that should be looked at. I notice he has come out recently saying he does not think it is the best way. Like the member for Windermere, I was on the Launceston City Council and we fought very hard to stop government ownership. We were part of the council and the real worry we had was this was the first of many things council might lose. We thought, 'If they are taking our sewer and water, what are they going to take next? Are they going to take planning? Before we know it councils will not be viable'. It was a real concern.

Mr Dean - Roads, dogs and rubbish was all we would finish up with, wasn't it?

Ms Armitage - Roads, rates and rubbish might well be all we had if they took some of these different areas. It was concerning.

As to the bill, it is not all doom and gloom from either perspective. I, too, did a survey and discovered most people did not know who owned TasWater and, in all honesty, did not really care. All they cared about was that they had clean water. A lot of them, mainly in the Launceston and Meander Valley areas, were concerned about the Tamar River and the fact there was raw sewage. After the floods, it came to the fore for them and they became more aware when they saw on the front page of the paper sewage in a variety of businesses. The main area they complained about, and the member for Windermere read out a letter from Mr Bullock, had many people saying the cost was so expensive they might use $19 worth of water but their account was $260. That was an issue that came up.

I felt guilty in some ways. I do not know about the member for Windermere, but when I was on council and people asked what the changes were going to be, I would say, 'Look, there will not be any changes; the service will be the same but you will just pay a different entity'. We did that. We told people that is what the situation would be. Would it have been different under state ownership? I, like many other aldermen, believed and told people there would not be any other changes; it would be the same but you would be paying someone different out of your rates.

Ms Rattray - It was suggested to members of the Legislative Council at the time that it would be in the order of a 10 per cent increase.

Ms Armitage- We have all heard those figures from time to time.

There have been many positives from our select committee. One is that upper management is now more aware of some of the problems existing in the lower and middle management with regard to customer complaints and issues. I have to put on record how good Michael Brewster has been. I am sure other members have found the same. I have taken many issues to him over the last weeks and months. Without fail, he has come back to me quickly and when he could not resolve the issue he has advised why. I have an email from a staff member of TasWater saying -

We apologise for the fact that you had to get involved to have this matter resolved.

That was something for TasWater to admit that it took a member's office getting involved in a complaint or in a concern for it to be resolved. It was good that they admitted that.

Many concerns were raised in submissions and via members and constituents. Most of the concerns opposed to the takeover of TasWater were in regard to councils and the inability of some to manage without current dividends. This is understandable as many councils use their dividends for community and other essential areas that would not receiving funding. If there is no profit after 2025, half of nothing is still nothing. It is a lack of certainty that is the real problem for many.

The question was raised, is there a crisis? It depends on who you ask; it is as simple as that. One media release of 20 November I had to point out was not quite true. I was disappointed not to receive something back. Mr Hampton put out a media release saying -

… it is not that simple to counter the findings of three independent expert bodies and particularly as the Legislative Council Select Committee correctly pointed out, there is no crisis ...

I found it disappointing to cherrypick because I pointed out that the media release was incorrect. Our finding was there was no consensus of a crisis. That is very different from the committee finding there was no crisis - saying that there was no consensus of a crisis. Even though I sent an email pointing that out I did not receive anything to say the media release had been retracted or changed. That is worth mentioning.

The priority in the TasWater discussions must be the delivery of the best outcomes for all Tasmanians, and especially those on low incomes.

In the 2016-17 annual report of TasWater, and I appreciate, as other members have said, it is rare to see a bad report, it was good to see TasWater was awarded WorkSafe Awards for Health and Safety - that is important - plus permanent boiled water alerts from Scamander after 10 years of alerts make it first in TasWater's 24glasses project. There are some gains and positives when it comes down to the Tasmanian WorkSafe Awards. The WorkSafe Tasmania Awards recognise Tasmanian businesses, organisations and individuals leading the way in work health and safety, health and wellbeing, and return to work.

It was good to see Health and Safety Representative of the Year was Nigel Cure of Remote Networks; Best Individual Contribution to Work, Health and Safety was Martin Judd, Health and Safety Service Delivery North; and Darren Ward was a finalist in the Best Solution to a Work Health and Safety Issue Award and in the Best Work Health and Safety Management System Award, TasWater Fatal Risk Program. It is good to see because the health and safety areas are extremely important.

I have raised many concerns directly with TasWater over the past few years and it would be remiss of me not to put them on the record. Regardless of what happens today, it is important that changes in culture are made. One of the main issues is to do with tendering.

I have had a few confidential briefings from people who said, 'We cannot come and see you' or, 'We cannot come on the record and see you, we cannot come before your committee because we will not get any more work from TasWater'.

I found it disappointing they were concerned that if they gave their names, their work would be stopped. The comment was that 'Those who have poked the bear no longer get work'. It is a good thing to bring these issues out and have this committee raise matters that upper management might not be aware of.

They said that sometimes contracts were made bigger to attract massive firms to the tender process. The disadvantage is that small local firms are tendering for jobs but are being overlooked. I am concerned this has happened on tenders to fix water problems in small towns. The comment from one engineer was, 'You don't need a brain surgeon to sweep the floors'.

I have been assured in the past that locals are being used to do local work. It appears that if you have a local office, even if you are a mainland company, that makes you local.

When we asked questions, they were about building capability and building up our workforce. It is sad our engineers feel they need to tie up with a mainland company. One local contractor who was sick of being overlooked for contracts has teamed up with a mainland company so it has a chance of winning contracts. The local contractor fills in the required tender paperwork and emails it to the mainland company. The mainland company then copies and pastes the information to one of its letterheads, adds another 50 per cent to the tender quote and submits it to TasWater. If it wins contracts, the mainland company uses the local contractor to carry out the work. The local contractor makes its money by doing the job. The mainland company makes its money by sending in a few documents and overseeing the project. TasWater, or the public, the community, is paying 50 per cent more than it needs to get the job done.

It needs to be pointed out to TasWater that many people in Tasmania can do the work just as well as mainland companies. I hope that the process we have gone through with the committee makes them realise we have some really good people here and they do not need to, as he said, get a brain surgeon to sweep the floors.

Mr Hall - Quite a few disgruntled individuals and smaller firms spoke to me about the operations of TasWater, but they were loathe to make, as you say, public comment because they would lose their contracts. That was a real concern.

Ms Rattray - Let us hope that if upskilling is to be done, TasWater looks at letting Tasmanians undertake the work.

Mr Dean - That in the monopoly position they hold is not good enough.

Ms Forrest - A state-owned company is a monopoly position.

Ms Armitage - I am not speaking about the state-owned companies - I am talking about TasWater. The comment was that State Growth is much better at using evidence-based selection. Mainland companies are more likely to win tenders in the current TasWater thought process. They also pointed out that using smaller local firms keeps the money here. The feeling from the people who came to see me - they refused to allow me to use their names and they were very careful when they made appointments - is that TasWater goes to mates to do jobs. TasWater is doing lots with their own contractors. I asked TasWater and they did not want to know. These are comments I have received from people who came to see me. I am not saying a GBE would be any better. I am simply pointing out what has actually happened here with TasWater. The same person said -

The Government does not understand there is a massive amount of work involved in accelerating the timeframe for fixing TasWater under a Government takeover. TasWater would end up giving it to big companies like John Holland, given the scale and the time pressures. TasWater is using some fly-in, fly-out workers. TasWater has a pipeline of projects under a 10-year plan but does not follow the timeline.

He also mentions -

The Infrastructure Tasmania report underestimates the capacity in Tasmania for local firms to take on big projects. The industry could handle growth.

Another point raised with me was TasWater needs to stick to time lines for releasing tenders. They were saying that often a tender will go out and they will not know they have the job. They are waiting to see if they get the job, so they take on another job, only to find out a few months later that they have the job. All of a sudden they either have to put people off because they did not get the job, or have taken on other jobs and then do not have the capacity to do the job.

They were really concerned about how it worked and the decisions that were made. This was not just one engineer; several came in. They also said they believed that a lot of the staff were change-weary and people were retiring early. Change all the time is a concern in that situation. There was a culture problem at upper management level.

They said that there was a horrendous waste of money and indecision was a huge problem. TasWater told me what had happened at Bridport. I think it was 14 000 -

Ms Rattray - There were a lot of pipes.

Ms Armitage - It was a lot of pipes. I do have the amount here somewhere. A lot of pipe was purchased for the Bridport sewage treatment plant. The project fell over and all of a sudden there was a lot of pipe sitting there. I believe the pipe is now being used. According to the people who came to see me, the pipe was purchased, the job was on, and all of a sudden it did not measure up, the job was gone, but the pipe was still there.

I have a response from TasWater. It is only fair, when I come across it, to get their response. I was also advised that some senior TasWater engineers are fly-in, fly-out. They had some compliments, and I think it is worth mentioning some names. They said that Ray Wright is a brilliant senior engineer in TasWater. When people get credit, it is important to mention it.

They were concerned that no-one is scrutinising the decisions. A concern of Brett Woolcott from Woolcott Surveys concerned developers -

Developers being asked to locate and identify Tas. Water's own existing assets at the developers expense due to lack or inaccuracy of data in Tas. Waters own GIS systems.

He goes on. He raises many different points -

Launceston Combined Drainage System no longer able to accept any more stormwater into the combined system. Despite pre planning discussions with TAS Water this has not been brought to the general development community or general community knowledge. No further development allowed in the combined system area until there is onsite stormwater detention.

Black and White Implementation of policy and standards without regard to context, situation or discretion.

Increasing paperwork, forms and fees charged by TAS Water which has increased development time by months for standard projects. Extreme levels of red tape and bureaucracy.

There are a lot more issues there. It is available in the submission if anyone wants to read it. I will just read out the one out I mentioned earlier from TasWater. I will not say who it was from, but I thought it was really good. I had a constituent with an issue that had been going on for a considerable time. I sent it off to Mike Brewster. Give Mike his due, I have to say he has been excellent. I really cannot complain. He has taken them on. He has dealt with the issues and he has got back to me in a timely manner. I have been very impressed with Mike.

This came from someone at TasWater -

Thank you for sending this through. We have contacted [your constituent] directly and have confirmed that we will reimburse reasonable costs associated with the rectification works. That it took your escalation of the issue to our CEO is something from which I will take learnings and ensure these are conveyed to my team and more broadly as required.

Hopefully from our committee that is the type of thing that has gone through to TasWater. There are community concerns and if we can get some improvement and an email like this admitting it should not have happened was very good. I was impressed the person had the courage to write an email and say, 'We should have been better'.

With tenders, mainland firms are still doing the contacts, we are not buying Tasmanian. I have been told there is a chaotic tender process for the potable water towns. They would like to make sure the local industry do not get locked out. Stay local. The Kingborough sewerage at Blackmans Bay had 28 people flown in. I wonder about things like this. There are things I have received lately that I could not ask during the committee process, otherwise I would have. The comment was, if possible make sure local people do the work. Have a pipeline of work we can build up and give confidence so people can grow. In the industry, they say there is no confidence that TasWater will give locals work.

I was annoyed to read in the Brighton Community News, 'Legislative Council must do the right thing by Tasmanians'. That is insinuating that we might not be doing the right thing. Whether we vote something in or vote something out, we always try to do what we believe is in the best interests of the people of Tasmania. Just because someone does not agree with us, to say if we don't agree with them we are not doing the right thing - I do take offence at articles such as that.

There were many interesting comments made on both sides of the argument. The Government is saying they will get the work done cheaper and faster but did not say how much they would reduce management costs under a government takeover. Evidence from the Government and TasWater presented to this inquiry makes it hard to know whether TasWater would be more successful by paying for capital works through a higher amount of borrowing. Yet, the Government says mainland utilities like TasWater carry a much higher level of debt, 60 per cent. TasWater says it is trying to live within its means.

The member for Windermere made comment with regard to whether we should be looking to fund it now or people in the future to pay.

A developer who gave evidence said they need to upgrade existing infrastructure which is in perfectly good working order because it does not meet today's TasWater standards, adding thousands of dollars to development and making many developments unviable.

There was a good quote from the Master Builders' Association and it said -

MBT's only real concern with the government's proposal takeover of TasWater is that is if it is not handled properly, there may be no material change to the culture of the entity at the Board level and that decision making will be conservative, staid and relatively undynamic.

Boiled water alerts will come off in August 2018. I am not sure what other KPIs would clearly demonstrate one ownership model is superior to the other on the basis of evidence. It is hard for the public to know how one model is going to work better than the other. I do not know whether that was proven to us.

Hobart City Council in its submission quoted the state Government has assumed there will be a smooth transition to a government‑owned entity. This is a fair point; it is something we do not know. The Government was unable to show that it had models or could provide evidence for how it would manage a transition that did not meet its own time frames or expectations.

The Meander Valley Council commented -

These claims have not yet been backed by rigorous financial modelling. However, what has been clearly articulated is that it will cost $160M from consolidated revenue to support the proposed change.

...

This proposal must be evidenced by something more than just 'high‑level financial modelling from treasury'.

We also mentioned that the Economic Regulator said the Tasmanian Government was unable to provide evidence that there would not be potential for government interference. That came back to the Economic Regulator when we were discussing the fact that while the Government would take and listen to advice from the Economic Regulator, it was not going to be -

Ms Forrest - Sounds right.

Ms Armitage- Exactly. That was an important matter to remember.

Peter McGlone was very interesting; he was one of the people who came to see us at our hearings and provided a lot of interesting information.

Mr Valentine - He had an opinion.

Ms Armitage - He did. I have some comments from Peter McGlone. I will read out the answer from TasWater because it is only fair. I mentioned it had purchased 12 000 metres of pipes. It is important to read the answer out, what it was doing with the pipes. I mentioned the pipes from Bridport -

The pipes purchased for Bridport were for use in a recycled water scheme. The pipes were purchased on an approved business case, ready for project delivery at the time of the order. When final prices were received from tenderers for the construction of the reuse scheme, the prices exceeded the business case and it was not viewed as viable to progress the project.

Pipes can be reused on a variety of different projects. To date, out of the 12000 metres of pipes purchased, 3430 metres have been used on a variety of projects, 5000 metres have been allocated for the Wynyard Fonterra transfer pipeline, and TasWater has an opportunity to use the remaining pipes within the Regional Towns Water Quality Program.

While I am very pleased they are re‑using them, I take on board the comments from the person who made the complaint that they were purchased and set aside, and then the project did not proceed.

LGAT and the Treasurer have been covered by many people.

The Property Council was very interesting. Mr Rockefeller was quite entertaining at the committee. He and Mr Wightman provided a lot of information. They were very good and obviously in favour. They quote their submission that -

Holistic, strategic water management for the state is the highest priority. It is also essential that regional and remote communities are not left behind by present and prospective TasWater ownership models.

This prospective ownership model presents clear opportunities for these communities to be protected. It is critical that the reform of TasWater is not halted and it becomes a GBE sooner rather than later, and we look forward to the future.

Ms Forrest - Mr Rockefeller also said in a briefing that the more interference in pricing by the government, the better. I cannot say I agree with him on that.

Ms Armitage - The raw sewage problem in Launceston has been mentioned by several members. I am not saying it is a crisis but I believe the matter is urgent and that we have Third World conditions with our river at flood times when raw sewage enters the Tamar River.

Time is of the essence. It is my belief we can have a good river in time if this work can proceed. The Tamar River is critical to the destination appeal of northern Tasmania - not only the quality of the river, but also visitor and local access to the river via the foreshore.

I am sure many of you read Jim Collier's letters to the editor. He sent us a letter yesterday and I have received another one today. It says -

Good Elected Representatives of the People!

You are aware of the serious and devastating environmental degradation of the Tamar River.

You are also aware that a significant contributor to the River's demise, but not the only one, is the totally inadequate and archaic sewage infrastructure of Launceston.

TasWater has been aware of this for many, many years but have failed to act to rectify this totally unacceptable and deplorable situation.

Treasurer Peter Gutwein has 'promised' to address the problem within a significantly shorter time frame than that given by TasWater IF the state government assumes their control.

I also ask you to consider what has to be the most efficient organisation, one with just one single owner or 29 all with their own agenda?

For the sake of the Tamar and what could, and should be, the pride and joy of Launceston, as well as the whole of Tasmania, I urge you to support the governments proposed takeover of TasWater!

I have a letter from another resident of Launceston -