Townsville City Council desperately needs some hard-headed economic advice, not just on the unwise Super Stadium project, but on water pricing, too. It is reported in today’s Townsville Bulletin that “TOWNSVILLE residents must dramatically reduce their water use if the city is to avoid hefty costs to pump water from the Burdekin Dam.” Townsville is again facing the prospect of strict water restrictions, not just because of a lack of rainfall, but also because the Council has failed to manage the demand for water through appropriate water pricing. As the Council notes on its website:
Townsville residents consume approximately 4 times more water per person than in most major cities.
The Council blames the climate, which certainly would be part of the explanation for the extremely high water use, but low water prices are another obvious contributor. In Townsville, the standard water plan is 772kL of water for $739 per year (see water billing). This is a huge quantity of water for a very low price. A Brisbane family is typically assumed to consume 155kL per year. Based on Queensland Urban Utilities’ water charges, a Brisbane family that consumed 772kL of water per year would have to pay over $3,000 per year. It seems obvious that Townsville City Council should seriously review its water prices and investigate whether it can manage demand through a better pricing system rather than by imposing water restrictions on a recurring basis.
Finally, I’d note that the failure to manage demand through appropriate pricing is responsible for another major policy challenge faced by the community: traffic congestion (see today’s Courier-Mail report Brisbane traffic: Worst roads in city for commuter congestion). It is time for Councils to inject some basic economic logic into their policies.