Disclosures over Hunter Water's dividend policy raise many questions

Labor calls for clarity on Hunter Water
Labor calls for clarity on Hunter Water

NO matter what Treasurer Dominic Perrottet says about Hunter Water and the size of its dividend back to the state government, there is little doubt that Labor has found the Coalition hoping to put its hand into a handy Hunter honey jar.

And while Hunter Water’s likely dividend this year might have fallen from a projected 271 per cent of profits to the normal 70 per cent, the commentary out of Macquarie Street indicates the government still intends to get a larger share of the pie, but over a longer time frame.

Some background is necessary. In November last year, Hunter Water tabled its annual Statement of Corporate Intent, which showed it expected to make a profit of $47 million for the 2017-18 financial year, but pay almost three times that amount, or $134.8 million, as a dividend to the government. This disclosure had gone largely unnoticed until Labor’s opposition water spokesperson, Chris Minns, contacted the Newcastle Herald about it this week. But when we inquired about the situation, Hunter Water said the situation had changed, and that the dividend was back to the usual 70 per cent.

Speaking publicly on Wednesday, Mr Minns wondered whether the backdown was a result of an independent Hunter Water board standing up to a voracious government. But in a statement issued later in the day, Mr Perrottet said: “The change was made to better allocate dividends over coming years.”

In other words, the Coalition government – should it be returned to power next March – still intends to draw a larger return from Hunter Water. The question that the Herald asks on behalf of Hunter Water customers is why? On one hand, the government claims to be in rude financial health, with a surplus in the financial year just gone of $3.9 billion. On that reading, it doesn’t need the extra money, especially as it says it has state debt under control.

Mr Perrottet praises Hunter Water, saying its prices are 1.7 per cent lower in real terms than they were in 2011 during the last year of the Labor government. But its liabilities have risen noticeably since then, and its most recent annual report shows it has borrowings in excess of $1.1 billion. Given Hunter Water’s role in this community, the opposition is right when it says it’s time for the government to explain what’s going on.

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