A TUSSLE over recycled water is emerging between agriculture and housing in Melbourne's south-east, with State Government action required to meet booming demand. Agricultural businesses and residential estates are both keen users of recycled water from the eastern irrigation scheme, which treats sewage to create top-quality Class A water.

The operator of the scheme, Water Infrastructure Group, has upgraded the capacity of its ultrafiltration plant to meet demand. The plant processes Class C recycled sewage from Melbourne Water's nearby Carrum Downs treatment plant.

WIG, which is in partnership with Melbourne Water, has expanded capacity from 5000 megalitres a year to 5200 megalitres. The eastern irrigation scheme operates in the Cranbourne-Clyde area. "The upgrade is designed to ensure 100% reliability. With any excess capacity, we have the capacity to supply new and existing developments," WIG director Peter Everist said.

Recycled water has become the life blood for many agricultural businesses in the region. One of WIG's 60 customers is Mansfields Propagation, a wholesale nursery at Skye between Frankston and Cranbourne. Daniel Mansfield, who operates the nursery with his father, said recycled water had enabled the business to expand by 50 per cent in the past few years.

The green gardens and golf course of the nearby Sandhurst housing estate also rely on recycled water. Paul Phillips, Sandhurst's director of land sales, said access to recycled water was a factor in the strong sales of a new subdivison, Sandarra, last week, he said.

The State Government announced earlier this year that in the next 25 years, 40,000 houses would be on recycled water in Melbourne's south-east. But who will supply the water?

WIG, which is owned by US group Tyco International, has the right to operate the eastern irrigation scheme until 2029. WIG uses only 4 per cent of the Class C recycled water processed at the Carrum eastern treatment plant. The expansion of recycled water in the south-east is reliant on a planned $300 million upgrade of the Carrum plant.

A spokesman for Water Minister Tim Holding said the business case for the upgrade should be completed soon. Potential uses included residential expansion, Latrobe Valley power stations and environmental flows for rivers, he said.

Mr Everist said the price of water, particularly with the desalination plant coming on stream, would go up. "This will make the price of recycled water more competitive," he said.

Melbourne Water could not be contacted for comment.

(The Age, 25/11/2008)