VICTORIA'S government-owned rural and town water corporations are losing money as drought forces up their costs and dries up revenue.
Victorian Auditor General Des Pearson has found seven of the state's 13 regional urban water corporations generated losses in 2008-09.
The Auditor General found Coliban Water, the biggest loser, was in trouble due to below average rainfall, the lowest inflows to storages in recorded history, ongoing water restrictions and the need to buy water to guarantee supply.
"As a result of the above factors, Coliban Water continues to generate an operating loss, has a deteriorating liquidity ratio and is generating insufficient cash flows from its operations to fund new assets and or replace its existing assets," Mr Pearson reported.
"One possible strategy involves the Essential Services Commission reopening the previously approved prices within the five-year water plan with a view to increasing prices due to its deteriorating financial performance and position."
Coliban Water managing director Gavin Hanlon said his board had taken action by seeking ESC approval to increase its water prices to offset the drought-induced losses.
In releasing his water audit report last week, Mr Pearson also found the Goulburn Murray Water and Southern Rural Water corporations made net losses before tax of $37.4 million.
But GMW's annual report states its $34 million loss was due to $40 million of Government grants being counted as revenue in 2007-08, but the expenditure not being recorded until 2008-09 financial year.
While regional losses were high, Melbourne Water's three retailers dragged the water industry's overall profitability to $145 million (after tax) for 2008-09, an increase of $24 million from the previous year.
Coalition country water spokesman and deputy Nationals leader Peter Walsh said the state's water authorities were facing huge financial losses because they had been pressured to implement onerous water restrictions.
"Prolonged water restrictions have led to significant reductions in budgeted income leaving some of the state's water authorities on the brink of collapse," Mr Walsh said.
Yet the record shows Nationals leader Peter Ryan repeatedly called for tougher water restrictions for Melbourne in 2006 and 2008.
