In local papers, in Wonthaggi desalination plant territory, Minister for Rural and Regional, Peter Ryan, has recently enjoyed media attention to publicise that the Bass Coast Shire has won a grant from him for $30,000, for a project to collect storm water to store underground for later watering of the sports oval.
Another $30,000 comes out of ratepayers.
SUEZ -Aquasure still haven’t paid any rates at all, nor have they come good with an offer of a $40 million lump sum for a Cultural Centre.
The actual story about $30,000 doesn’t show up in a web search, but desal itself does. A reminder that a refinancing deal has been started, but no news just yet.
Previously, the project has always been fixed price $3.7 billion, to be paid off in annual fixed instalments of $600 million per year, for 30 years. Extra cost applies for whatever volume of water might be needed. Simple calculation of compound interest shows that, in lots of $600 million, effective interest on finance is 17 per cent.
While spruiking the prize of $30,000 for a storm water project, Mr Ryan doesn’t miss the opportunity to make the contrast with cost of desal, saying that it’s $24 billion over 28 years. This means annual slug is up from $600M to $860 million per year!
Quick compound interest arithmetic shows effective interest rate is now more than 23 per cent!
The financier is at no commercial risk from any misfortune of SUEZ-Aquasure, the whole thing being guaranteed by us taxpayers.
In the good old days, before free market economics, when governments were not afraid of being shouted down by mainstream press about mortgage scale levels of debt, large public works projects were financed by bonds, available to the public at modest interest rates less than five per cent but safe, no financial advisers or private super fees.
At five per cent, the annual cost would be $250 million per year and save $17 billion over 28 years.
How does our State Government(s) get away with claims that private sector is (always) so much more efficient?
Is foreign investment really the only way to get ahead with big infrastructure projects?
On strength of desal, it looks like biggest result is billions of dollars of profit exported to France, unless Peter Ryan can explain any error in calculations.
It looks like we should be telling them that we have no confidence in more than just The Speaker.
Beyond “expressions of interest”, it was just the two monster French water companies invited to final bid.
The winning bid was 12 times the price per gigalitre of water, compared with Ashkelon, Israel, on which it was based.
Surely, for a rip off as big as this, criminal prosecution should be possible?
But good to see a little harvesting of storm water. It would be good to see some more, thanks Peter.
Bernie McComb, Cowes.