The state government will take control of TasWater from next year but will not stop councils from receiving up to $20 million in dividend payments each year.
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Premier Will Hodgman made the announcement in his Premier’s Address to Parliament, criticising the 2008 water and sewerage reform, which bore TasWater, for not fixing the problems it set out to do.
“Tasmania is a world-class destination with third-world water and sewerage services,” he said in his speech.
Under the plan, the government would bring forward the water corporation’s 10-year, $1.5 billion capital works expenditure program by five years.
The program sets out a plan to take all towns of boil-water alerts and upgrade ageing infrastructure.
Mr Hodgman said the government would use TasWater’s strong balance sheet borrow money at a low cost, and that future state budget money could be used.
Under TasWater’s current pricing model, bills were expected to increase by up to five per cent each year but the government has committed to cap bill increases at 3.5 per cent.
It committed to keep paying councils dividends until 2024-25, even though they would no longer be shareholders in the corporation.
“After that, councils will get half of all future returns so there is absolutely no reason for councils to increase rates,” Mr Hodgman said.
He denied the move was one towards council amalgamations.
He said legislation would prevent the privatisation of TasWater, and that the takeover decision would not result in job losses or loss of concessions for low-income earners.
TasWater council owners representative David Downie said councils would need time to analyse the government’s plan after the shock announcement to see how it would impact them.
“But at the end of the day, we’ve got to support these assets being improved in a way that Tasmanians can afford to pay for them,” he said.
Labor Leader Bryan Green said the government had ignored advice from TasWater chairman Miles Hampton that the capital expenditure program could not be completed in five years.
Local Government Association of Tasmania president Doug Chipman said councils would be keen to hear alternative proposals from the state Opposition.
Local Government Minister Peter Gutwein will provide more detail on the plan in Parliament on Wednesday.
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