DISALLOWANCE OF REGULATIONS TO INTRODUCE WATER LICENCE FEES

The Premier and the Minister for Water Resources have ignored requests to introduce a rational, equitable and fair water licence fee schedule. The Department of Water has begun serving invoices on farmers for the high fees applying from July 2007. The only action now open to farmers is to urge the Liberal Party, National Party and Greens to support a motion to disallow the regulation amendment required for the new fees under the Rights in Water and Irrigation Amendment Regulations 2007. If the regulation amendment is disallowed, the Government must then introduce an acceptable fee schedule which is rational, equitable and fair.


REASONS TO DISALLOW REGULATIONS FOR WATER LICENCE ADMINISTRATION FEES  

Background: $5.8 million annually to be raised for assessing water licence applications and renewals, checking compliance with licence conditions, maintaining licensing databases, management of appeals and community awareness. Proportion of application of fees below is based on answers to Parliamentary Questions. In July 2006 the $5.8 million was based on 18,674 water licences paying proposed Annual fees; in 2007 the $5.8 million is based on 10,841 licences (42% less), and there is now a $200 Application Fee in addition to Annual fees for existing licences. The Annual Fee Classes are $200, $325, $600, $1200, $1800, $2400 and $3000. Department of Water licensed 2,486 gigalitres of water in 2006-07, thus the cost of licence administration for a megalitre of water was $2.27 based on the $5.8 million estimate for administration. 'Self supply' water user farmers propose a licence application fee followed by a flat $222 fee for a 10 year duration licence, equivalent to a drivers licence fee. 

Fees Are Not Rational:   

1.     Minister for Water Resources (Question 2090) says “The water licence administration fee is based on recovering the $5.8M cost of administering water licences and is based on a seven tier structure that reflects the amount of effort required in administering licences. A water licence with a large entitlement requires more effort and time than one with a lesser water entitlement.”  However, in fact, large water entitlements such as water utilities, irrigation cooperatives and mining companies will pay only 14 cents per megalitre for their annual water licence while farmers will pay from $102 to $2.40 a megalitre annually (Question 4780).

2.     71% ($4,108,702) for assessing licence applications (licensing) and renewal. Minister for Water Resources (Question 4957) says “…the $200 application fee is to initiate the assessment process only. The remaining costs for the administration of licences with different annual water entitlements is recovered through the licensee paying the difference between the application fee and the annual fee in the first instance on grant of the water licence, and then annually (in accordance with the fee schedule).” Thus the cost of the assessment for a licence continues to be applied throughout the 10 year duration of a licence, exceeding the actual cost of assessment and becoming a tax. All bores and dams had been assessed prior to introduction of the fees on 1 July 2007, thus there is no case for applying assessment costs now to existing licences, annually and perpetually. There were 1140 applications for bore and dam licences in 2005-06 at an average of 14 hours per assessment (Question 4958),  by assigning $29.73/hour Department of Water internal cost to assessment, the actual cost would be $474,490. Renewal of water licences every 10 years is normally without change to allocation, and would be less cost to administer. The Auditor General should audit this fee which, with over
$3 million in excess of cost recovery for assessment of licence applications, constitutes a tax without legislative basis.

3.     14% ($810,166) for enforcement of compliance with the Rights in Water and Irrigation Act 1914 when businesses do not have to pay fees for checking compliance with the Occupational Safety and Health Act 1984, Minimum Conditions of Employment Act 1993 and other legislation applying to the same businesses? There were only three prosecutions during 2001-06 under the Rights in Water and Irrigation Act 1914 and the Department of Water has no Performance Indicators for compliance/enforcement to evaluate this revenue.

4.      7% ($405,083) for maintaining licensing databases. Farmers propose a $222 fee for a 10 year duration licence (equivalent to a drivers licence), which would presently raise $240,670 towards a licensing database.

5.      4% ($231,476) for management of appeals yet there has only been one decision of the State Administrative Tribunal since 2001 regarding the Rights in Water and Irrigation Act 1914, and is clearly excessive.

6.     4% ($231,476) for community awareness, which Minister for Water Resources says is mainly to run 10 advisory committees. Charging water stakeholders to provide advice will destroy the advisory process.

7.     In July 2006 the $5.8 million was based on 18,674 water licences, in 2007 there are now 10,841 water licences to support the same $5.8 million in revenue. The Auditor General should audit this base change, and whether $5.8 million revenue is still required with a 42% reduction in water licence customers in 12 months.

8.     Department of Water has a $67 million budget, discretionary funding should be redirected to support essential statutory services; core function licensing services should not be reliant on irrational fees.  

Fees Are Not Equitable and Fair:  

9.     Farmers totally ‘self supply’ water for their homes and for agricultural production; yet they will be charged water licence fees annually of $200 to $1800. Homes in Perth are supplied by the Water Corporation, yet they can have additional 50% subsidised garden bores without either licences or fees. 154,000 garden bores in Perth drawing 120 gigalitres of water will not be licenced, and are unsustainable, damaging wetlands.

10.   Self supply farming families will pay annual fees of from $200 to $1800, whereas irrigators within cooperatives receiving water from public dams will pay only a notional $13 annual licence fee, and water utilities and mining companies will pay only small fees of 14 cents per megalitre of water licensed. Farmers allocated 21% of the water will pay 86% of the annual licence fees, whereas corporations with large water allocations of more than a gigalitre and allocated 79% of the licensed water will only pay 14% of the revenue to be raised by water licence fees. There are also ‘un-proclaimed’ rural water areas with no licences nor fees, which is anti-competitive.

11.  The fees are neither equitable nor fair in their application to country WA compared to Perth, nor in application to farming families compared to large corporations and large water users, nor between rural areas.
 


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