I HAVE received more emails from readers in response to my articles on Victoria's water supplies than for any other subject. One recurring theme has been: what has been the response of the authorities? I have had two critical responses from the State Government. For the most part they have been what I would call nit-picking. They haven't dealt with the substance of my argument, which is that a sane water policy designed to expand the capacity of Melbourne Water would take up the cheapest options first and, in the case of the Murray-Goulburn, the water "savings" from the Foodbowl Modernisation Project are unlikely to materialise on the scale necessary to save the river. But one point made by the spokesman for Minister for Water Tim Holding is of fundamental importance in advancing the debate about the real plan behind the determination to build the desal plant at Wonthaggi. I dimly perceived that the point of the desal plant wasn't primarily the creation of water security, but the keystone in the edifice designed to make the long-term objective of the marketisation and eventual privatisation of urban water a profitable reality. According to the spokesman, my assumption that the desal plant would be a 30-year "take or pay" contract based on a public-private partnership was wrong. He said that "the contract has not been awarded and the funding details have not been finalised, but the expression of interest document has asked potential bidders to cost a 100% flexible contract, not a take or pay contract". My assumption was based on the simple presumption that no bank would lend $3.1 billion to build a plant capable of supplying 40% of Melbourne's water at a price five to six times the cost of the present supply without a watertight contract guaranteeing the repayment of the principal and interest on the loan. Even in 2007 at the tail end of a long drought, the water running into the catchments approximately balanced consumption. Melbourne is unlikely to need a 40% supplement to its water supply over the next decade, given normal prudent management of the system. No financial institution would lend money against this risk created by a standalone entity whose output is likely to cost five to six times the cost of water supplied from dams and 60 times the cost of water from aquifers already surveyed, capable of adding 20% to Melbourne water supplies. The risk of producing water under these flexible conditions defies belief without a lucrative quid pro quo. A private consortium would build and operate the proposed desal plant without a take or pay contract only if it was given management of Melbourne Water and entitlement to the profits. It is possible to develop a scenario where the desal operator is given control of the water market in the whole state. This may explain the urgency with which the Government took over control and the $70 million assets of the Mildura Irrigation Trust without compensation on the grounds that it may not be able to repay a $2 million government loan because the money was invested in financial securities tainted with subprime mortgages, even though members were prepared to put up irrigation charges to repay the money and avoid the takeover. The scheme of arrangement would be similar to Veolia's United Water, which began by building a water purification plant for Adelaide and ended up managing Adelaide's water, or the franchise agreement that Veolia's subsiduary, Connex, has with the Victorian Government to run Melbourne's trains. Under this scheme of arrangement the owner of the desal plant would be in the business of selling water rather than encouraging conservation and to maximise unit profit would have an incentive to sell dam water at desal prices. The desal plant and the pumps to get the water up to Melbourne will consume 90 megawatts of brown coal electricity, generating greenhouse gases equal to emissions from 280,000 cars. All this is being done in the name of water security. But it is only secure as long as the electricity to power the plant is secure. Perth's desal plant is out of action because the natural gas to fuel the base load power has been cut off for two months after an explosion. A dam is more secure than a desal plant because it has no moving parts that can break and is powered by gravity rather than coal or gas. In war or urban terrorism, power is the first target. The government spokesman complained that I misreported the minister on water savings (BusinessDay, August 18). What the minister said was "in an average year we can save something like 425 billion litres of water and that water can be shared. 175 billion litres to irrigators