34
Wednesday, February 24, 1971
He noted that though it was not the Government's reason for
proposing higher charges, the increased rates should bring in about $700
million to $750 million net in terms of cash flow during the period 1971/72
and 1975/76. Of that, about half would come from the increase in charges.
During the same period, capital expenditure on waterworks was
estimated at $1,350 million, of which the Government would have to find
nearly half from other sources.
Sir John then said it had also become necessary to consider the
level of charges for salt water for flushing purposes. The present rate
was 40 cents per thousand gallons, and had been since a supply was first
given in 1959.
As salt water could not be metered in the normal way, because of
corrosion, the application of that price for bulk consumers depended on
periodic assessment based on test metering, and in the case of domestic
premises, on an arbitrarily assumed ratio between fresh and salt water
consumption.
Originally, the rate was fixed on a rather arbitrary assessment of
costs at a time when the Government had no experience of salt water supply.
The assessment erred on the conservative side, as the Government did not wish
to discourage the adoption of what was then an unfamiliar system.
There was no danger of discouragement now, but Sir John said it had
been clear for some time that the system was losing heavily. The annual
deficit was now of the order of $7 million to $8 million, and increasing each
year.
/Accordingly,