This page contains often-asked questions and answers related to local management.
What is Local Management
Local Management refers to transferring ownership and management of an irrigation distribution scheme from Government to a private-sector entity that is owned and controlled by water users within the system.
What areas are included?
There are eight distribution schemes that are owned and supplied water by SunWater and make up about 30 per cent of the irrigated land in Queensland.
The schemes are:
• Bundaberg Distribution System
• Burdekin-Haughton Distribution System
• Emerald Distribution System
• Eton Distribution System
• Lower Mary Distribution System
• Mareeba-Dimbulah Distribution System
• St George Distribution System
• Theodore Distribution System.
What water assets are included? Does it include the dams?
Local management only relates to the transfer of assets associated with SunWater’s distribution schemes, such as pump stations, channels, pipes and drains. Local management will not consider bulk water supply assets, such as major dams.
What is the process for determining if local management is achievable?
In 2014 each distribution scheme provided the state government with a business proposal that outlined how irrigators would run its scheme under local management. In response the government established companies and appointed boards to represent the interests of customers, undertake further investigation of the option and negotiate terms of the transfer with government on their behalf.
Transition companies were formed for schemes at Emerald, Eton, St George and Theodore, where a strong commitment to the concept of local management had been demonstrated and where government has determined that the schemes can be financially viable under local management.
Investigation boards were set up for schemes in Bundaberg, the Burdekin-Haughton, Mareeba-Dimbulah and the Lower Mary, to allow further investigation on how local management could operate in these areas and prepare updated business proposals for their schemes.
What is the process for transition schemes?
The transition companies have been negotiating the terms of a transfer agreement with Government. Once signed customers who hold a water allocation in the scheme will receive an offer in the mail and be asked if asked if they support a move to local management under the terms of the offer, and secondly, if they wish to become a shareholder or member of the entity taking over the scheme. If supported, preparation for transfer of the scheme will commence in 2018.
What happens for investigation schemes?
Investigation boards have undertaken further investigation into local management. Schemes in the Burdekin and Mareeba have decided to proceed and submitted an updated business proposals in December 2017. Government is considering the proposals and will decide whether offers to transition to local management will be made. Schemes opting not to pursue local management, such as Bundaberg and Lower Mary, will remain with SunWater.
Will Government continue to subsidise the scheme under local management?
There will be no ongoing subsidy, but the Government will pay schemes electing to go to local management a one-off separation payment. The payment is to support the financial viability of the future local entity. In most cases, the price currently paid by water users for use of the distribution schemes does not cover the scheme costs. The gap between the cost to operate and maintain, and the distribution charges paid by scheme customers is currently met through Government subsidies. The separation payment is effectively a lump-sum subsidy, to support a transition to cost-reflective pricing.
What would local management mean for irrigators and their communities?
If local management proceeds, this will mean water will continue to be delivered to the channel scheme by SunWater. From there, its distribution would be the responsibility of the new local entity. With management no longer based in Brisbane, there will be closer links between the local owners, the customers and employees of the scheme.
What are the potential benefits of local management?
Reasons why scheme customers may wish to support the move to local management include:
- a more flexible and responsive business with a customer-elected board
- greater transparency
- not-for-profit entity with a sole focus on local customers
- greater control over distribution prices.
Supporting local management may also result in more functions undertaken locally, with a benefit flowing through to the local economy.
How will future prices be determined?
Prices for each distribution scheme will be determined by the local Board, and will be based on the Board’s assessment of the revenue required to operate and maintain the scheme. The entities will be not-for-profit businesses, so all revenue will be used in operating and maintaining the schemes.
Bulk prices, however, will continue to be set under the existing arrangements, which currently include reviews by the Queensland Competition Authority (QCA) with prices set by Government based on the QCA recommendations.
Will prices under Local Management be lower than under SunWater?
The future price of channel irrigation water supply will depend on how the local entity operates the distribution scheme given the costs and the proposed level of service. Currently, future SunWater prices have been set by the State Government until 1 July 2019. Beyond that time there is no certainty as to what the Government regulated price would be for the distribution of water under SunWater. Bulk water will continue to be supplied by SunWater, with bulk water prices set by the Queensland Competition Authority.
Will the Government continue to subsidise water distribution prices under Local Management?
No. A Separation Payment will be paid on or before the Transfer Date, which is a one-off lump sum to assist with the transition of the Irrigation Distribution Network to Cost-reflective Pricing. The Government has stated that no further subsidies will be paid by the Government.
What about management of the environment?
Locally managed operations will remain subject to government environmental safeguards and compliance and the interim boards will have to address this matter in their proposals.
When will the transition schemes be locally owned and operated?
Subject to reaching final agreement on the terms of the transfer, and there being sufficient support from irrigators, local management will be implemented in each transition scheme in mid-2018. Investigation schemes in the Burdekin and Mareeba who have submitted a proposal await a decision by Government on whether to proceed, before a timetable to transition is determined.
What happens if irrigators take over the scheme and local management fails?
Once a distribution scheme has moved to local management it will be the responsibility of the local entity to ensure that the scheme remains viable over the long term. Government has stated that there will be no recourse to Government once local management is implemented.
What is SunWater’s role?
SunWater is the current owner and operator of the distribution schemes, and will continue to run and maintain the schemes until they transfer to local management. SunWater’s participation in the project is regulated by the “Direction to SunWater Limited”. This means that SunWater will provide information and assistance to the Government to assist with the project in accordance with the Direction.
SunWater is committed to ensuring the long-term success and sustainability of all of the schemes and will be assisting the transition companies to build their knowledge and capacity to operate and manage the schemes effectively and efficiently through the transition process.
What happens to existing SunWater employees?
Local SunWater staff who work on the distribution schemes will transfer to the relevant transition companies with their existing rights and entitlements. This will assist in ensuring that the knowledge and experience of local staff is not lost to the scheme.
Is the Local Management Proposal compulsory?
No. Local management will only proceed if customers, customers representing a majority of the water allocations (by volume) supplied by a scheme support the move to local management if a majority of customers in a scheme choose not to progress to local management, then that scheme will remain with SunWater.
What happens if a scheme opts not to proceed with local management?
SunWater will continue to own and manage the scheme.
I am a scheme customer and how will I know if an offer has been made to irrigators on my scheme?
Once your local board has signed a transfer agreement with government, offers will be mailed to each customer with a water allocation on the scheme. A follow-up SMS message will be sent a week later to check the offer has been received. The Boards are planning to hold information sessions to facilitate discussions about the offer.
The local boards are leading the consultation with the customers and the key stakeholders of each scheme. For contact details for your local representatives contact the project team by emailing firstname.lastname@example.org.