Before you dance at (the thought of) lower water prices

A week and a half ago, Premier Anna Bligh came out with the statement that the water distribution / retail companies would be restricted to increasing their charges in line with CPI.

Now, if you are a Queenslander paying water charges, who will be affected by this announcement, you may be wanting to dance at the thought of lower water charges. Before you do, consider the following:

1) The state government can still increase their charges for bulk water above the CPI. If your council / water retailer is not allowed to charge a corresponding increase to the consumer, guess what goes up - that's right, general rates paid relatively evenly by all ratepayers rather than those who use more water than others.

2) Some councils invested significantly in their water infrastructure prior to the start of water 'reform'. With the creation of the retailing entities forced by the state government, some of these councils took a hit on the return they had budgeted for but worked out that their investment could eventually be repaid over a much longer period. Now their investment may not only not be repaid through dividends from the water retailers but may indeed be an ongoing loss.

This leads to the council following these courses of action:

a) Reducing expenditure on goods and services
b) Deferring projects
c) Increasing rates
d) Reducing staff numbers, starting with not renewing contracts for temporary and casual employees.

d) particularly affects me as I'm a contractor with Redland City Council; my contract finishes at the end of April. That's less than a fortnight away...and I don't get paid for the three public holidays in that time.

However, d) also affects everyone else. Apart from the work not being done in as timely a fashion, here's what happens, using me as a representative* example:

I no longer spend money in your take-away store.
I no longer buy clothes from your shop. Where's the need when I'm out of work?
I no longer donate to your charity.
I put off replacing dying furniture and appliances.
I buy less luxury groceries (confectionery, off season fruit and veg, fish...) from your supermarket.
I delay getting a hair cut in your salon, or get my mother to do it for free.
I spend less on transport - one, to save on petrol and two, because I have no job to go to.
I cut activities such as going to the movies with you. (Anyone want to join me for a bicycle ride? You'll have to come to me because the price of petrol prohibits my coming to you and I'm not yet fit enough to ride to your place.)
I don't buy the paper or anything else from a news agency.
I put off buying a house for another 5 years because now the house deposit will be going down instead of up.
And on it goes.

And that means that you who depend on my spending money with you or your employer will also feel the pinch. If enough of us lose our jobs, eventually your hours are cut or you lose your job and that makes paying your rates or rent (plus your water bill) that much harder.

Don't dance too soon.


* Please note that I'm not having a whinge for myself here - I have other activities I want to spend some time on before getting another job so I'm fairly calm about my personal situation. (Having an employed spouse and some savings also helps.)

However, those cuts in expenditure will still apply to me and most other contractors losing their jobs, particularly if they, like I, have had only a few weeks notice that their contracts won't be renewed.