Ken Henry (CT March 5th) puts the case for a realistic price for water. Most would agree with his article.
Unfortunately it will not happen in the ACT because ACT Treasury supported by all political parties are not willing to give up the taxes that come from being a monopoly water supplier. The arguments against a free market in water are that it is efficient to have a single supplier, restrictions are socially equitable and that the extra money we get from the scarcity value of water is spent on socially desirable services like hospitals and schools. ACT water restrictions can be removed tomorrow if we increased the price of water to high consumers, give all the extra money collected to low water users and require the money they receive to be spent on water supply infrastructure as a surrogate market for water. This would be socially equitable, would get wide spread support, is simple and cheap to introduce. It does not happen because all political parties are unwilling to give up monopoly taxes. In a true market the money collected from the scarcity value of water would go to increasing the supply of water but the ACT Treasury calls this hypothecation and does not let it happen. So Ken Henry’s call for a market based water supply system will remain just a call while his State Colleagues continue to believe taxing water is better government policy than a free market in water or the surrogate water infrastructure market.