Joined: May 10 2002 Posts: 47951 Location: Die Metropole
To add, if I remember correctly, water was sold off at a knock-down price to start with, in recognition of the fact that much needed doing on the infrastructure, so that excuse won't wash (so to speak).
"You are working for Satan." Kirkstaller
"Dare to know!" Immanuel Kant
"Do not take life too seriously. You will never get out of it alive" Elbert Hubbard
"We are all in the gutter, but some of us are looking at the stars." Oscar Wilde
Joined: Mar 08 2002 Posts: 26578 Location: On the set of NEDS...
Ferocious Aardvark wrote:You click on a twart's Profile and add them as a foe. Then you no longer have to read their drivel, as by default it is removed.
Mmm shame, moderators have to read everyone's drivel.
Joined: May 08 2002 Posts: 9565 Location: 10 mins walk from Suncorp Stadium
Using terms like 'ripping off' shows a lack of understanding as to how monopoly businesses are regulated. The regulations are highly formulaic and based on agreed allowances for operating costs and acceptable rates of return for investent in capital. These rules in turn enable the company to raise both equity and debt finance.
Increased capital spend leads to higher prices - otherwise the investment simply won't happen. Delaying necessary investment simply leads to a more significant price shock further down the track. Would you rather a 30% increase in three years time than 8% today (together with deteriorating services in the meantime)? That tends to be what happens when you delay investment in asset-intensive industries.
That's even before you get to the multiplier effect of the investments being made (especially important in times of recession when investment elsewhere is subdued) and the fact that anyone with a pension fund indirectly owns shares in a number of such utlities.
Joined: May 10 2002 Posts: 47951 Location: Die Metropole
BrisbaneRhino wrote:... Increased capital spend leads to higher prices - otherwise the investment simply won't happen. Delaying necessary investment simply leads to a more significant price shock further down the track...
Indeed. Water was sold off at a reduced price in recognition of the investment in infrastructure that would be needed. That was around 23 years ago. So yes, it's quite clear what happens when a private monopoly decides to delay investment – we get to foot the bill. Just as we all face above-inflation price hikes for other utilities (and transport etc). Because they are no longer run as important services, but as ways of making as much profit as possible.
"You are working for Satan." Kirkstaller
"Dare to know!" Immanuel Kant
"Do not take life too seriously. You will never get out of it alive" Elbert Hubbard
"We are all in the gutter, but some of us are looking at the stars." Oscar Wilde
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