COUNCILLORS in the Gladstone region are preparing to challenge the State Government over profits from the water board.

The council could lose $4.1.million per year if the government goes ahead with a plan to divert the money to its own coffers.

Water Minister Mark McArdle is considering changing the rules so the government can take dividends and tax equivalents from Gladstone Area Water Board.

Put simply, the government would receive money that currently goes to the council.

The proposal has been on the table for some time, but the issue took a turn for the worse recently when Mr McArdle wrote a letter to the council, saying the government was responsible for any liabilities from the water board, which is one reason it should receive profits.

The council believes liabilities are negligible.

They are worried Mr McArdle's letter shows he is leaning heavily toward the change.

Councillors are strongly of the view that ratepayers have invested heavily in the water board over the years and now that the board is profitable, they should receive the benefit.

A spokesperson for the Department of Energy and Water Supply said no decision had been made yet.

"The government is considering options to manage dividends and tax equivalent payments from the Gladstone Area Water Board," the spokesperson said.

Deputy Mayor Matt Burnett said a recent letter from Water Minister Mark McArdle on the issue was "insulting".

He said residents had been paying higher water rates over the years when the water board was not profitable and should receive the benefit now that it was making a profit.

"I think this letter is a bit rude," he said.

Mayor Gail Sellers was equally disappointed by the letter.

"We will definitely be writing back very strongly," she said.

Whose profit?

Dividends and tax equivalents from the water board have been allocated to the council for more than a decade.

However, that rule had been pointless since the water board never made a profit.

That changed last year when industrial projects caused a big increase in the board's activity and the total amount gained by council was $4.1.million.

Part of that money was used to reduce water rates by 20.5%.



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