$50m of desal costs 'hidden'

The Age
Written by: PETER KER

April 2, 2010

The Brumby government has been accused of hiding $50 million of extra desalination costs, after major works linked to the Wonthaggi plant were not included in the official $3.5 billion construction price tag.

Water from the desalination plant will be stored at Melbourne's Cardinia Reservoir, and water authorities will spend $50 million upgrading the reservoir to ensure it can properly receive, manage and distribute the massive flows that will start arriving in December next year.

The works would not be required if the desalination plant were not being connected to Cardinia. The $50 million will be spent on a connection between the dam and the 84-kilometre water pipe from the Wonthaggi plant, as well as new pumping equipment to share the excess desalinated water with nearby Silvan Reservoir.

Despite the clear link to the desalination project, Melbourne Water and the Brumby government confirmed the works would not be included in the official desalination costs.

Department of Sustainability and Environment spokeswoman Mandi Zonneveldt said the $50 million was excluded because it was a ''completely separate project''. ''Melbourne Water is best placed to manage the integration of desalinated water into Melbourne's water supplies,'' she said.

In a statement, Melbourne Water conceded the works were associated with desalination, but said they would remain separate in a budgetary sense.

''Work at Cardinia Reservoir is obviously related to desalination, but it is regarded as a separate project.''

Opposition Leader Ted Baillieu said the revelation was the latest instance of the government deceiving Victorians over the desalination project.

''This $50 million hidden cost will be paid for through increased water bills for families. John Brumby has blown so much money in mismanaged projects that every Victorian household is being hit by bigger and bigger taxes and charges,'' he said.

The exact cost of the project has long been contested. Originally described as a $3.1 billion project, the government upgraded that price to $3.5 billion when it signed its public private partnership contract with builder Aquasure.

But those sums represent the capital cost of building the factory and associated infrastructure. The actual cost after lending and other costs is closer to $5 billion.

The claims of financial trickery in Victoria comes as a new international report revealed the amount of drinking water sourced globally from desalination has hit a new high.

A report by British group Global Water Intelligence says that close to 10 per cent of global drinking supplies are now sourced from desalination and other forms of purification.