Spending on Dam Safety Upgrades Slashed By O’Farrell

State Water will slash its capital expenditure on dam safety upgrades in order to meet the O’Farrell Government’s dividend requirements, the NSW Labor Opposition has revealed.
 
The government owned State Water Corporation operates 21 dams in rural NSW, and its 2011/12 Statement of Corporate Intent reveals dam safety spending will be $120 million lower than previously budgeted over the next decade because of the O’Farrell Government’s dividend policy.
 
The drastic cuts will occur despite the report warning that many of State Water’s dams no longer comply with the NSW Dam Safety Committee’s (DSC) standards and guidelines for extreme floods and earthquakes”.*
 
The Statement of Corporate Intent has been personally signed off by Treasurer Mike Baird and Finance Minister Greg Pearce, and was tabled in the State Parliament late last month
 
“The Statement of Corporate Intent notes State Water has been forced to develop a ‘more fiscally efficient dam safety upgrade program’ in order to meet O’Farrell Government dividend requirements,” Shadow Water Minister, Luke Foley said today.**
 
“State Water has revised its 10 year business forecasts to defer Stage 2 dam safety upgrade works – designed to reduce safety risks in accordance with Dam Safety Committee requirements – across all 21 of State Water’s dams.
 
“The O’Farrell Government is budgeting for an extra $260 million in dividends from State Water over the next 10 years.
 
“This means tens of millions of dollars that State Water could and should spend on upgrading dam safety will instead be paid to the O’Farrell Government as dividend payments.”
 
State Water is subject to a Government dividend policy of 70 per cent of net profit after tax. It admits that it cannot meet that level of dividend payments and continue with the scheduled Dam Safety Program:
 
“State Water can sustain a dividend payout ratio in the range of 35 per cent to 50 per cent, but not as high as 70 per cent, if water sales are less than the 20 year average and if debt continues to increase as a result of the Stage 2 Dam Safety Upgrade Program.” ***
 
“A government that cuts back on dam safety upgrades at a time when people across NSW are battling flood waters is a government with the wrong priorities,” Mr Foley said.
 
“There can be no excuse for the O’Farrell Government putting dividend gouging ahead of dam safety in NSW.”
 
 
*Source: State Water Corporation Statement of Corporate Intent 2011-12, page 17.
**Source: State Water Corporation Statement of Corporate Intent 2011-12, page 19.
***Source: State Water Corporation Statement of Corporate Intent 2011-12, page 23

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