Oasis Change report creates a stir

By Bob Wilson, 23rd June 2007

Our “Oasis Change” report on what might happen if home buyers start adding water security to their investment criteria released a flood of opinions. There was an amazing amount of media interest and subsequent feedback from readers who agreed or disagreed with our premise. It was a great starting point and brought some interesting leads from those who live in water-rich places we did not mention, like Wagga Wagga and Armidale. Bob Wilson reports.  

The weather is a moving target – write a front page story about the drought and for sure next morning bundles of papers will be lying in puddles of water outside newsagencies. 

Since we posted the “Oasis Change” editorial on hotspotting.com.au in early May, Sydney and Newcastle have weathered savage storms and staggering amounts of rainfall – Sydney had 90mm dumped on the city in just four hours. Brisbane had enough rain in May to encourage The Courier-Mail to employ the old page one “jumping for joy” trick (a smiling lad clad in gumbies and raincoat, leaping over a puddle). 

Puddles aside, the underlying drought persists, its impact varying from region to region and state to state. Tough water restrictions have focused people’s minds on spending less time in the shower and peeling their vegies in a bucket.  

Few Brisbane residents are unaware of the seriousness of the situation, which is chronicled in the local paper every day. How serious? Well, the Queensland Government has moved to seize control of water assets from councils, including the Gold Coast’s Tugun desalination plant, which is under construction. Regardless of how much rain falls on Brisbane in the next six to twelve months, its residents can get used to some level of permanent water restrictions. 

Our original report introduced the “Oasis Change” factor as being a consideration for baby boomers and property investors looking for a nice place to live, work or retire which had the added benefit of water security.

We do not expect the “Oasis Change” to replace the “Sea Change” or “Tree Change” housing phenomenon. But we do see the security of water supply given a special check box on the astute home buyer’s list of preferences. So what about the “water rich” areas and what is happening with real estate in towns and regions perceived to have plenty of water? 

Let us emphasise at this point the distinct difference between places which experience high rainfall and places which diligently capture, treat and distribute water. For example, Springbrook and Mount Tamborine in the Gold Coast hinterland receive abundant rain most years. But neither settlement has town water and the majority of the rain in this elevated catchment washes down the mountains to the rivers and dams which service the Gold Coast.  

And the “wet” zones can experience drought as unexpectedly as any other place, as the Sunshine Coast hinterland did in the spring of 2004, ushering in water restrictions. 

Our research suggests that governments looking for solutions to the water crisis could do worse than study the water-management systems of the towns and cities which we have identified as being relatively well-placed. We found places including Hobart, Port Macquarie, Taree, Queensland’s Sunshine Coast, Townsville, the Northern Rivers region of NSW and Diamantina Shire that have managed to avoid the worst of the situation because they have plentiful rain, and/or access to river water or underground aquifers.   Now we can add to that list Armidale, Wagga Wagga and Bathurst (NSW), Darwin (Northern Territory) and Victor Harbour/Strathalbyn (South Australia).  

Water positive areas 

Queensland

Townsville rates as a city where the town fathers have thought ahead and planned for times when the tropical north gets its customary deluge. Townsville is fed by the Ross River Dam, which is being upgraded and there is also a link to the Burdekin Falls Dam.  

Sadly, the Ross River dam was in the middle of that upgrade and only operating at 36% capacity when the February deluge hit Townsville, washing the equivalent of two years’ supply out to sea. However, once the $115 million upgrade is completed, storm water will be better controlled during seasonal floods, to keep the 219,000 megalitre dam at capacity.  

Townsville’s house and unit market is in a rising trend, with tightening rental vacancy rates, according to Herron Todd White’s May 2007 report. The far north Queensland towns on the Atherton Tablelands receive huge quantities of torrential rain in the wet season. This year Innisfail received 887mm of rain in February, 300mm above the average. In 2006, Innisfail received 3900mm of rain, 850mm more than in 2005 (850mm is more rain than Dubbo gets in a year). Water storage in Cairns is at healthy levels and gardeners there are allowed unlimited hand held hosing and sprinklers three times a week.   

Herron Todd White’s report had its own spin on the “Water Change” phenomenon, chronicling a move by farmers from drought-affected southern regions to the fertile Burdekin irrigation area.  “The water change is not limited to crop growers,” HTW observes. “Drought-affected grazier interest in secure rainfall areas along the coast is prevalent too.” While this has not yet translated into buying activity, it will provide a “floor” to irrigated farm values, HTW says. 

The 95,000 square kilometres contained within Diamantina Shire in far western Queensland (including the towns of Birdsville and Bedourie) has abundant water in the Artesian Basin beneath its seemingly parched surfaces.  

Diamantina Shire Council mayor Robbie Dare told the ABC recently he was considering bottling the water and putting it on supermarket shelves, revealing that one bore alone puts out six million litres a day.  However, it should be cautioned that most of the water was laid down hundreds of thousands of years ago, and only minor re-charge occurs along the western edge, so although reserves are vast, it is a finite resource.  

New South Wales

There are no water restrictions in Newcastle, which receives 1,100mm of rain per annum (almost double the New South Wales historical average). According to the Newcastle City Council website, the city implemented an urban water cycle policy some years ago.

As we saw in May, Newcastle lived up to its reputation, although the climate change-style storms wreaked some awful damage and resulted in stark human tragedies. 

The central western NSW town of Bathurst is on the banks of the Macquarie River in the Central Tablelands region, some 200km West of Sydney. The city is the site of Australia’s oldest inland European settlement, and home to some fine historic buildings.

Bathurst receives an annual rainfall averaging 630mm, with an emphasis on summer rainfall. The region is known for grazing, but education is now the city’s largest single industry.  The city gets its water supply from two dams, the Ben Chifley and Winburndale dams. Ben Chifley dam, located on the Campbell's River 17km upstream of Bathurst, is the major water storage facility.

Authorities planned ahead for Bathurst, spending $32 million to upgrade the dam in 1999. It is at 50% capacity, so there are no current water worries.  Even so, Bathurst Regional Council has been pro-active in developing a drought contingency plan.

The Council has not imposed water restrictions at this stage, but these will kick in if water levels drop to 40% of capacity or less. It must be clear to many that Bathurst is a ‘goer’ – the population increased there by 1.5% in 2005-06, compared to 0.8% for New South Wales as a whole. With a current population of just over 30,000, it is one of Australia’s fastest growing regional centres.

The median house price increased by 5% to $261,000 in the six months to May 2007, according to Australian Property Monitors. 

The NSW coastal communities of Taree, 300km north of Sydney, and Port Macquarie, an hour further north, seem to be doing OK storage-wise. Taree’s water restrictions are limited to common-sense prohibitions on watering during the heat of the day, while Port Macquarie allows hosing on alternate days (Brisbane residents might remember that luxury).

Wagga Wagga, located on the banks of the Murrumbidgee River, is in the centre of Australia’s major population triangle, roughly half way between Sydney and Victoria. Canberra is about 240km away. The 113-year average annual rainfall figure is 560mm, which is fairly evenly distributed throughout the year.

According to the Riverina Water County Council website, the underground sources (which supply 70% of the water) and the reliable resources of the Murrumbidgee River are said to ensure a plentiful supply of potable water.  However, Wagga Wagga is experiencing urban salinity due to vegetation removal and replacement with high water-using plants, stormwater draining into backyard rubble pits, leaking water pipes and over watering of gardens and public areas – an issue the Council is tackling. 

Wagga, as it’s known to the locals, has recently become a haven for first home buyers. Based on a NSW Office of State Revenue list of the top 20 postcodes for allocation of grants, the town was the most popular NSW regional area and fifth in the state overall. It was ranked 20^th in 2004. The town is now the 20^th fastest-growing centre in NSW, with a current population of 58,802. 

PRDnationwide says Wagga Wagga’s median house price increased 23.2% per annum, from $130,000 in 2001 to $243,000 in 2004, peaking at $283,000 in June 2006. 

Armidale is an attractive city on the New England Highway halfway between Sydney and Brisbane. With its distinctive seasons and reliable water supply, Armidale may well replace drought-affected Toowoomba as the “Garden City”. The city was identified by demographer Bernard Salt as one of NSW’s two “Green Change” centres, experienced an 8% rise in the median house price, from $230,000 to $248,000 between November 2006 and May 2007. Unit prices, however, dropped 13% to $188,000 from $215,000, according to Australian Property Monitors.  

Armidale is served by the Malpas Dam, currently at 89% capacity and the delightfully named Puddleduck Dam, at 98%. The city’s algal bloom problem, which resulted in an unpleasant taste in the water, was ‘fixed’ late last year. A council spokesperson confirmed that there are no water restrictions in place. Water tanks are allowed, but are meant to be used for toilets, washing machines and garden irrigation rather than drinking water.  

The beautiful (and wet) Northern Rivers region of New South Wales is another area which could draw water-divining investors. Clearly, the Federal Government’s Water Minister Malcolm Turnbull believes there is abundant water in the Northern Rivers region; hence his recently-announced proposal to dam upper reaches of the Clarence River in NSW to supply water to drought-stricken South East Queensland.

Turnbull also unveiled an option to dam the Tweed River and divert water to the Nerang River (to feed Queensland’s fast-expanding northern Gold Coast residential belt). Predictably, these announcements (seen by many as pre-election kite-flying) raised local ire and created colourful headlines (”Howard backs river raid”).  

The NSW Government has put limits on growth in its Far North Coast planning strategy, but that has not stopped investors getting in early. Median property prices in mystical Byron Bay may have dropped 9% to $568,000 in the most recent survey, but the ride up was spectacular and the long-term price trend is 14.9% a year. 

Other States

 

The pretty little sea-side town of Victor Harbor lies on the East coast of South Australia’s Fleurieu Peninsula, 1½ hours’ drive south of Adelaide. The town receives a consistent rainfall of about 535mm per annum, mainly in winter, which is more efficient from a water retention perspective. Another advantage of the location is that it is generally up to 10˚C cooler in summer than Adelaide’s often scorching temperatures.

 

Water for the township is supplied via a pipeline from Myponga Dam, which is currently at just under 65% capacity. This sometimes needs to be supplemented from the Murray River – not a desirable option, given the current parlous state of that waterway. Recently, a new waste water treatment plant was installed for the town, giving access to water for irrigation of parks and gardens as well as for crops.

Tasmania’s capital, Hobart, which has ample water from the Derwent River and the nearby high country, nevertheless had water restrictions in place until February this year. No other town or city in Tasmania has water restrictions. 

Neither does Darwin or anywhere else in the Northern Territory. Residents of Darwin can expect to receive an increase in water supply under expected climate change scenarios, unlike cities in the southern part of Australia, which will most probably experience a decline in water supply and quality, according to the Climate Action Network (www.cana.net.au) – an organised and well-documented site put together by the Institute for Sustainable Futures.  

Not everyone wants to live in the remote northern tropics of the country, though. Darwin’s population grew by 0.7% between 2001 and 2006 and by 1.6% in 2005-2006, which is well below the national average. The median house price in Darwin is another story – up 16.4% since March 2006. It is now $390,000, according to the REIA. 

As far as water supply goes, Western Australia is in good shape, despite average rainfalls being 24% less than 30 years ago. Former premier Geoff Gallop congratulates himself on having the foresight to construct a wind-powered desalination plant at Kwinana, south of Perth in 2004.

The plant now supplies 17% of the State’s drinking water, with dams supplying another 12%. Groundwater will remain the main source, but another desalination plant is planned, which will result in treated sea-water supplying more than 30% of the State’s needs.   

On the dry side …

South East Queensland’s market garden − the Lockyer Valley (which usually looks green) - goes in and out of periods where its underground aquifer sinks to record low levels, through the use of irrigation for the district’s vegetable crops. Salinity and soil degradation are side effects of this situation.

The Lockyer Valley’s rainfall for the year to date is already 166mm below the long-term mean and only once in the last 10 years has annual rainfall been above the historic mean of 764mm. Some Lockyer Valley settlements (Laidley, Rosemount and Plainlands) were preferred locations for early lifestyle refugees from Brisbane.  

Up the range from the Lockyer Valley lies the Darling Downs city of Toowoomba. It could be argued that Toowoomba, with its recent acrimonious referendum over the proposed use of recycled water, first brought the current water debate to the wider public. The city’s fast-growing population is the obvious wild card in a scenario where rainfall, especially for the year to date, is a long way below the long-term average. Toowoomba people will end up drinking recycled water one way or another.  

In Western NSW, Tamworth might be world-famous for its country music festival, but the town has big water problems, according to a Herron Todd White (HTW) report in May, with only 13 months’ supply left in the Chiffey Dam. However, the area still attracts a relatively large pool of high net worth individuals who want to own a small part of rural Australia, as other alternatives have become fewer or overpriced, HTW reports.  

Water use, rather than rainfall, is the key

Our research shows, however, that it would be a futile exercise to use annual rainfall patterns alone as a guide to buying property.

 

Although there are some well-known trouble spots where annual rainfall figures have shown dramatic drops in some recent years, the long-term picture (since 1900) shows that overall, Australia’s annual rainfall has remained between 400 and 500mm a year.  

The big difference has been in water use. Department of Environment figures show that Brisbane, the Gold Coast, Newcastle and Sydney have reached and/or passed the dates when their consumption of water exceeds the sustainable yield. Brisbane needs to cuts its per capita consumption from 183 to 1245 kilolitres a year by 2030, while the Gold Coast needs to reduce from 127 to 78 kl/yr by 2030.  

Ongoing population growth has increased the load on dwindling water resources in Sydney, Melbourne, Brisbane and South East Queensland generally.  The Wivenhoe Dam (capacity 1,165,240ML), Somerset Dam (379,000ML) and North Pine Dam (214,960ML) together supply all of Brisbane and district’s drinking water. Currently, available supply over the whole system is at 18% of capacity.

 

No wonder Premier Peter Beattie wants his water pipeline (to bring treated effluent water into Queensland households) built quickly and at any cost.  

But Queensland is not the only state with problems. Recent signs that the Federal Government has realised the seriousness of the situation include plans to ban use of Murray-Darling River water for irrigation and Labor leader Kevin Rudd’s pre-election promise to loan money to Australian homeowners to become more self-sufficient.

 

And many local authorities offer incentives such as rebates to homeowners who install rainwater tanks (the Queensland Government offers rebates of up to $1000).  

So the search is on for water and you can expect governments to revisit schemes long thought abandoned.

 

Large sand islands like Bribie and North Stradbroke have long been recognised as having a reliable source of good water. Both islands support permanent residential populations and large numbers of summer visitors and both islands have water treatment plants which provide water for residents and near mainland suburbs.   

Redlands Shire, adjacent to Brisbane, started taking water from North Stradbroke’s freshwater lagoons in 1990 and the resident sand-mining company, Consolidated Rutile, has been using water a lot longer than that. It has been estimated that up to 450 million litres of groundwater a day flows out to sea, so it is easy to see why in the early 1900s North Stradbroke was seriously considered as a water source for Brisbane (in those early days, the scheme was judged to be too costly).  

The high rainfall/water tank areas

 

Homebuyers who rate water security highly should seek out the towns and cities which either have no shortage of water and/or which manage their resources well.

 

But beware of the phenomenon of the green drought. Springbrook, on an elevated plateau in the hinterland of Queensland’s Gold Coast, receives some 3000mm of rainfall per annum. The town does not have reticulated water, so residents must make their own water supply arrangements.

However, even with 3 metres of rain per year, Springbrook can have periodic water problems in the dry spring months, even to the extent of occasionally having to buy in water.  Mt Tamborine, also in the Gold Coast hinterland, receives some 1,550mm of rainfall per annum. Like Springbrook, Mt Tamborine’s 6,000 residents must be self-reliant, using rainwater tanks supplemented by groundwater.  

Maleny in the Sunshine Coast hinterland and neighbouring towns like Montville and Mapleton get, on average, over 2,000mm of rainfall annually. Only a limited area of Maleny is connected to town water, so homes only a few of kilometres from the main street have to rely on tanks and/or bores. The nearby villages of Montville and Mapleton are not on reticulated systems at all.

The area receives consistent high rainfall and water tanks are often overflowing, but again, the spring dry can result in some anxious moments for those relying on tank water. Maleny and district has been going through a growth spurt as Brisbane pre-retirees and others drove up property prices to secure a lifestyle (while commuting to work by express train).

Maleny’s reticulated water supply is reaching (some say is now beyond) capacity. The solution to the problem, according to the Caloundra City Council, which is the seat of Local Government for the town, is to build a pipeline from Baroon Pocket dam and pump water back up to the town. Many householders are not waiting for this, but are taking advantage of the State Government subsidies on water tanks. 

The “Oasis Change” factor will probably work against rural towns and cities perceived to be “dry” like Toowoomba, Warwick or Goulburn, all of which have had to endure long-running droughts and tough water restrictions.

Less logically, buyers will continue to look for homes in Brisbane and the Gold Coast, both in parlous danger of running out of water altogether through a lack of forward planning by successive state governments (all of whom actively encouraged interstate migration).  Although the Gold Coast’s storage level is above 80%, comparing Hinze dam (capacity of 161,000ML) to the dams feeding Brisbane is like comparing a bucket to a bathtub. No wonder they want to pinch water from northern New South Wales. 

Creative divining

 

No idea will be wild enough or small enough to go unscrutinised in the arid era.

Avid current affairs watchers will from time to time see segments about innovative people “harvesting” water by various means. It is nothing new – as the ABC series Bush Tucker Man revealed. Aborigines had been collecting early morning dew from leaves long, long before someone invented roofing iron and guttering. 

In Dalby, Western Queensland, the local Council has joined with gas exploration company Arrow Energy to build a desalination plant to treat 1,200 megalitres of water a year which would otherwise have been vented as a steam waste product from up to 100 wells sunk in the district’s coal seam. Dalby already has a desalination plant, built in 2004, The Courier-Mail reported in May. 

Darwin City Council is thinking on a micro-level when planning three desalination plants (each no bigger than a septic tank), to water council parks. Council says the $4 million plan could save council up to $500,000 a year. It failed to win a Federal Water Smart Grant, but undeterred, Council has re-lodged an a grant application this year. 

The Queensland State Budget allocated $6.5 million to a plan to search for new groundwater resources in previously-unexplored possible aquifers in areas including Noosa, Gympie, the area south-west of Cairns and around Warwick. 

A private company chaired by one Robert Hawke wants to export 50 million litres of water a year from Tasmania’s swollen west coast rivers to the most parched parts of the mainland. Tasmania’s Water Minister David Llewellyn told The Australian the scheme came within the realms of possibility when judged against the cost of desalination and other large infrastructure projects. 

Reach For Your Wallets

More than ever the authorities controlling water supplies will crank up the “user-pays” formula. Brisbane and Ipswich City Councils have flagged water rate price increases of between 20% and 35% in their latest budgets and Caboolture and Logan Councils are tipped to do the same when handing down their own budgets.  

Large-scale infrastructure plans are either in play or are being drawn up and all are certain to have a user-pays price ticket. The cost of the Queensland Government’s recycled water pipeline has controversially blown out by $600 million, largely as a result of the government’s need to have it finished as soon as possible.  

In Victoria, a decision will be made by the end of 2007 to adopt one or more water infrastructure projects, including a proposed $2.2 billion pipeline from the Goulburn Valley to top up Melbourne’s water supply. Other options include piping water from Gippsland in exchange for providing recycled water to Latrobe Valley power stations and some other trade-offs. 

The widely reported rainfall which came to many areas in May has amounted to a drop in a bucket. The chief executive of the Murray Darling Basin Commission told Business Daily that recent rains had generated only small inflows, giving little hope for any outflows in the new watering season.

As a result, consumers can expect prices of fresh fruit and vegetables to rise in the coming months – no rogue statement if you consider that 61% of Australians derive their daily food needs from the Murray Darling Basin.  In a national roundup, The Australian reported how climate change and water shortages had focused the minds of State government leaders on future water and power supply. But the proposed measures are contentious.  

• According to The Weekend Australian, Tasmania is planning to take over water resources from local councils to fund an $820 million upgrade of water infrastructure.
• In Canberra, our politicians could be drinking recycled wastewater from a $350 million wetlands/dam proposal as its water reserves dwindle to 30%, with level four restrictions only months away.  
• In NSW the Iemma Government has been criticised for its decision to approve a $2 billion desalination plant for Sydney and, while Iemma boasts of the results of the state’s building regulations mandating rainwater tanks and water-efficient technology in new houses, it still applies to only 2% of the total dwellings in NSW. 
• Western Australian already has desalination plants and WA residents can expect 30% of their water supply to be treated seawater by 2011.  
• The Victoria State Government has announced a $4.9 billion plan, which includes a major desalination plant and water pipeline, to solve Melbourne’s water problems.

 

Questions to ponder

 

Home buyers who are concerned about the future of the eastern seaboard cities and towns need to be asking these questions before buying property anywhere:

 

• What is the long-term water situation for the city/town;
• Does the property have rainwater tanks/bores;
• Is the property on town water;
• How secure is the town water supply;
• Is there sufficient groundwater to justify sinking bores?

Clearly, if water security is a priority for you as a home buyer, you cannot depend on Australia’s notoriously variable climate or the short-term thinking of politicians. Instead, you should so some basic homework on your preferred destination, which will quickly reveal current and historic trends. Installing rainwater tanks and the bigger the better is a quicker, cheaper and easier solution than waiting for dams, desalination plants or pipelines to be built.  

ENDS