www.engineersaustralia.org.au/ircnsw

NSW Infrastructure Report Card 2010 ISBN 978-0858259867 © Engineers Australia, July 2010 All rights reserved. Other than brief extracts, no part of this publication may be produced in any form without the written consent of the publisher. All Report Cards can be downloaded from www.engineersaustralia.org.au/irc Acknowledgements This publication was only possible with the support of members of Engineers Australia, other building and infrastructure professionals, and representatives from government departments, industry, and business and professional associations. NSW Infrastructure Report Card Committee • Ian Pedersen HonFIEAust CPEng EngExec

(Chair) • Peter Cockbain FIEAust CPEng • Amal Hanna FIEAust CPEng • Peter Hitchiner FIEAust CPEng • Jillian Kilby MIEAust • Adrian Page HonFIEAust CPEng • Ted Tooher FIEAust CPEng EngExec

Report Card contributors • Mark Babister MIEAust CPEng • Alan Betts MIEAust CPEng • Gunilla Burrowes FIEAust MPhil MIEEE • Kevin Dixon FIEAust CPEng • Barry Finlay FIEAust CPEng • Katharina Gerstmann MIEAust CPEng • Peter Gesling FIEAust CPEng • Brian Mahony FIEAust CPEng • Ronaldo Manahan • Gohulan Markandoo MIEAust • Richard Morrissey MIEAust • Doug Roser FIEAust CPEng • David Stewart FIEAust CPEng • Murray Thompson MIEAust • Paul Youman MIEAust CPEng

Sydney and Newcastle Division project staff

• Steve Finlay, Executive Director, Sydney Division • Helen Link, Division Director, Newcastle Division

National Project Director

• Leanne Hardwicke, Director, International and National Policy, Engineers Australia Consultant

• Principal Author: Athol Yates MIEAust, Australian Security Research Centre • Project Team: Professor Priyan Mendis FIEAust CPEng, Henry Pike, Barbara Coe, Trudy Southgate

and Minh Duc Nguyen

Sydney Division Level 3, 8 Thomas Street Chatswood NSW 2067 Tel: 02 9410 5600 Fax: 02 9410 0000 www.engineersaustralia.org.au/sydney Newcastle Division 122 Parry Street Newcastle West NSW 2302 Tel: 02 4926 4440 Fax: 02 4929 7121 www.engineersaustralia.org.au/newcastle

Australian Security Research Centre International Affairs House Level 1 32 Thesiger Court Deakin ACT 2605 Tel: 02 6161 5143 Fax: 02 6161 5144 www.securityresearch.org.au

Contents

Communiqué ............................................................................................................... i 

Ratings summary ...................................................................................................... v 

Overview ..................................................................................................................... 1 Rating process and description ................................................................................................. 1 State-wide issues ...................................................................................................................... 2 Cross-sector challenges ............................................................................................................ 4 

Transport .................................................................................................................... 7 1  Roads ...................................................................................................................... 11 

1.1  Summary ...................................................................................................................... 11 1.2  Infrastructure overview ................................................................................................. 12 1.3  Performance ................................................................................................................. 21 1.4  Future challenges ......................................................................................................... 24 1.5  Report Card rating ........................................................................................................ 25 

2  Rail ........................................................................................................................... 27 2.1  Summary ...................................................................................................................... 27 2.2  Infrastructure overview ................................................................................................. 28 2.3  Performance ................................................................................................................. 41 2.4  Future challenges ......................................................................................................... 47 2.5  Report Card rating ........................................................................................................ 47 

3  Ports ........................................................................................................................ 49 3.1  Summary ...................................................................................................................... 49 3.2  Infrastructure overview ................................................................................................. 49 3.3  Performance ................................................................................................................. 58 3.4  Future challenges ......................................................................................................... 59 3.5  Report Card rating ........................................................................................................ 60 

4  Airports ................................................................................................................... 61 4.1  Summary ...................................................................................................................... 61 4.2  Infrastructure overview ................................................................................................. 61 4.3  Performance ................................................................................................................. 69 4.4  Future challenges ......................................................................................................... 72 4.5  Report Card rating ........................................................................................................ 72 

Water ........................................................................................................................ 73 5  Potable water .......................................................................................................... 77 

5.1  Summary ...................................................................................................................... 77 5.2  Infrastructure overview ................................................................................................. 78 5.3  Performance ................................................................................................................. 89 5.4  Future challenges ......................................................................................................... 95 5.5  Report Card rating ........................................................................................................ 96 

Contents

6  Wastewater .............................................................................................................. 97 6.1  Summary...................................................................................................................... 97 6.2  Infrastructure overview ................................................................................................ 97 6.3  Performance .............................................................................................................. 106 6.4  Future challenges ...................................................................................................... 110 6.5  Report Card rating ..................................................................................................... 111 

7  Stormwater ............................................................................................................ 113 7.1  Summary.................................................................................................................... 113 7.2  Infrastructure overview .............................................................................................. 113 7.3  Performance .............................................................................................................. 118 7.4  Future challenges ...................................................................................................... 121 7.5  Report Card rating ..................................................................................................... 122 

8  Irrigation ................................................................................................................ 123 8.1  Summary.................................................................................................................... 123 8.2  Infrastructure overview .............................................................................................. 123 8.3  Performance .............................................................................................................. 132 8.4  Future challenges ...................................................................................................... 134 8.5  Report Card rating ..................................................................................................... 134 

Energy .................................................................................................................... 135 9  Electricity ............................................................................................................... 137 

9.1  Summary.................................................................................................................... 137 9.2  Infrastructure overview .............................................................................................. 137 9.3  Performance .............................................................................................................. 151 9.4  Future challenges ...................................................................................................... 156 9.5  Report Card Rating .................................................................................................... 157 

10  Gas ......................................................................................................................... 159 10.1  Summary.................................................................................................................... 159 10.2  Infrastructure overview .............................................................................................. 159 10.3  Performance .............................................................................................................. 175 10.4  Future challenges ...................................................................................................... 180 10.5   Report Card Rating .................................................................................................... 180 

Telecommunications ............................................................................................ 181 11.1  Summary.................................................................................................................... 181 11.2  Infrastructure overview .............................................................................................. 182 11.3  Performance .............................................................................................................. 192 11.4  Future challenges ...................................................................................................... 198 11.5  Report Card Rating .................................................................................................... 199 

Appendices ............................................................................................................ 201 Appendix A: Rating methodology ................................................................................. 202 Appendix B: Units and acronyms ................................................................................. 204 Appendix C: Glossary .................................................................................................... 205 Appendix D: References ................................................................................................ 209 

i

COMMUNIQUÉ

Infrastructure in NSW underpins the delivery of services that affect every part of the lives of the community. Sustainable economic growth of the State is dependent on good infrastructure and high quality infrastructure delivers a high standard of living through improvements to social, environmental and economic outcomes. In 2003, Engineers Australia released its first NSW Infrastructure Report Card, which rated the overall fitness for purpose of certain types of economic infrastructure. That Report Card found that while the State’s infrastructure was better than the national average at the time, it required significant enhancement to meet NSW’s current and future needs. Poor coordination, planning and the low priority given to infrastructure were seen as major impediments to the State having good infrastructure. Seven years on, this 2010 Infrastructure Report Card examines the current state of NSW’s infrastructure to determine whether it meets current and anticipated future needs. The State’s infrastructure is under stress in many areas and needs major changes to be fit for its current purpose. It is in average to poor condition. Given the expected population rise over the next 40 years, the public and private sector will need to invest a significant amount of money to bring NSW’s infrastructure up to a reasonable standard. While planning has occurred in some areas, there still remains a lack of strategic planning, coordination and integration and a commitment to existing plans. NSW also suffers from a disparity between the quality of infrastructure in rural and urban areas. Sound asset management practices need to be adopted across all infrastructure sectors, and issues such as demand management and a focus on sustainability and the potential impacts of climate change must become a higher priority. NSW infrastructure has not stood still since 2003, and the Report Card recognises that there have been some major infrastructure developments, some of which include: Major freeway and highway projects such as the M7, Lane Cove Tunnel, the Pacific

and Great Western Highway upgrades The generally good standard of the ARTC rail network, and incremental improvements

in some rail infrastructure, such as the upgrade to the Newcastle rail corridor and the completion of the Epping to Chatswood rail link

Major works at Port Botany, the Port of Newcastle and Port Kembla Upgrades to Sydney and Newcastle Airports Construction of the Kurnell desalination plant and upgrading of seven major dams Sydney Water’s SewerFix program and Wollongong’s Recycled Water Plant and

Recycled Water Scheme The incorporation of stormwater into integrated catchment planning and widespread

use of Water Sensitive Urban Design principles Irrigation scheme efficiency projects The CityGrid CBD electricity upgrade and the commissioning of major gas-powered

generators at Colongra, Uranquinty and Tallawarra, as well as upgrades at Eraring, Bayswater and Mount Piper Power Stations

Communiqué

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Construction of the QSN Link and the Sydney Primary Loop to improve security of gas supply to the Sydney basin, as well as expansion in capacity of the Moomba–Sydney Pipeline, Eastern Gas Pipeline and NSW–Victoria Interconnect

Projects under the Community Broadband Development Fund. Significant challenges remain in each sector. For instance, integrated land use is an issue for transport planning outcomes, for port development and on-airport development. Transport tasks must be encouraged away from roads and long-term strategic plans for major regional and inter-capital routes must be developed. There has been inadequate expenditure on rail infrastructure, and there is an immediate need to reduce crowding and improve services on CityRail and CountryLink services. Ports need to meet future container growth and congestion issues remain at Port Botany. Airports face long-term passenger and freight growth and regional airports face the problems of maintaining their financial viability. We need to better understand and manage potential climate change impacts on water and maintain a continual emphasis on water efficiency. The demand for recycled water must remain high. Appropriate stormwater infrastructure must be provided to ensure that all urban areas have adequate drainage and flood protection. Electricity infrastructure is ageing and needs renewal and there is a need to capture the opportunities of smart network technology. Challenges remain to plan gas infrastructure to meet demand and there is a need to expand the distribution network. It is essential that optimal telecommunications technologies are selected for the future. As well, a visionary approach to telecommunications infrastructure is required as telecommunications will be instrumental in delivering future economic growth and social benefit. Both the 2003 and 2010 Report Cards evaluate the status of assets and planning processes and assigns a rating that can range from A (very good) to F (inadequate). Ratings are given below for the current and past NSW and National Report Cards.

Infrastructure type NSW 2010 NSW 2003 National 2005 National 2001

Roads overall National roads State roads Local roads

C- B- D+ D+

Not rated C+ C+ C-

C C+ C C-

Not rated C C- D

Rail D- D C- D-

Ports C Not rated C+ B

Airports B Not rated B B

Potable water B- B- Metropolitan urban C- Non-metropolitan urban

B- C

Wastewater C+ C- Metropolitan urban C- Non-metropolitan urban

C+ C-

Stormwater C D C- D

Irrigation C Not rated C- D-

Electricity C- B C+ B-

Gas C Not rated C+ C

Telecommunications C- Not rated Not rated B

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Recommendations Engineers Australia recommends the following to ensure that NSW’s infrastructure will, in time, meet the needs and expectations of the business and government sectors, and the wider community. 1. Develop a long-term infrastructure vision and plan that accommodates the State’s

projected increase in population by 2051. 2. Identify where the additional population will be accommodated, the location of major

transport corridors, and the sources of water and other utility services. 3. Give greater attention to managing demand for infrastructure services, rather than

relying on building additional infrastructure to meet growing demand. 4. Factor in the impact of climate change on the viability of regional and rural areas in

infrastructure decisions. 5. Develop an independent planning infrastructure advisory group to coordinate

infrastructure planning and funding advice and to provide input to Infrastructure Australia.

6. Improve cooperation and collaboration between all levels of government and business in the planning and provision of infrastructure.

7. Deliver more efficient infrastructure outcomes and develop innovative funding models to provide the required infrastructure.

8. Address the current disparity between rural, regional and urban infrastructure, and recognise that improved infrastructure in regional and rural areas encourages business and individuals to relocate from Sydney and other major cities.

Communiqué

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v

RATINGS SUMMARY

The following summarises the 2010 NSW Infrastructure Report Card ratings.

Infrastructure type Grade Comment

Roads overall National roads State roads Local roads

C- B- D+ D+

These ratings recognise that the NSW road network is under stress due to demand rising faster than supply, and that there is a lack of a road pricing mechanism that ensures road usage becomes more efficient. National roads are in physically better condition than State roads due to the considerable investment in them over the last decade. The physical quality of State roads may be improving, but their service quality is deteriorating due to rising congestion. Local roads are struggling to maintain their existing standard, primarily due to increase in demand, coupled with a rising backlog of maintenance.

Rail D- This rating recognises that while the ARTC’s Hunter Valley Coal Network and to a lesser extent, the other ARTC lines are of a good standard, the Metropolitan Rail Network and the Country Regional Network require significant improvements. Targeted projects are improving both networks, however, there is limited confidence that the planned projects will deliver the scale of improvements required along the metropolitan network routes and in country areas to meet both the unmet existing needs and those arising from the rapidly growing passenger and freight needs in Sydney.

Ports C This rating recognises that capacity is adequate at NSW’s major ports due to recent infrastructure upgrades and is planned to grow in line with need. There is a lack of integration between the ports and road and rail infrastructure that has led to congestion problems and therefore the lower rating.

Airports B This rating recognises that there has been a significant investment in NSW’s major airports over the last decade and they meet current and anticipated short-term demand. Problems of access and constraints remain at these airports, including curfews due to nearby land use. A number of regional airports are under stress due to rising costs and limited ability to increase revenue, and a lack of State Government policy guidance about their future.

Potable water B- This rating reflects the significant infrastructure and demand management improvements undertaken in the metropolitan areas that have addressed the recent water supply problems caused by the drought. It also recognises that the water supply plans established by the metropolitan water supply utilities provide a sound basis for the delivery of an efficient and reliable water supply into the future. While there have been some improvements in regional water supply quality and availability, local water utilities face significant infrastructure and supply challenges, including limited ability to raise revenue to improve infrastructure and access to sustainable raw water sources.

Wastewater C+ This rating recognises that there have been improvements in wastewater infrastructure and asset management across both metropolitan and non-metropolitan areas resulting in a noticeable improvement in the environmental impact of wastewater. There has also been an increased reuse of wastewater, which is reducing demand for potable water.

Stormwater C This rating recognises that stormwater design and management is of a high quality in both new and infill developments. This is primarily due to water sensitive urban design becoming standard practice, and good land use planning. Significant problems remain in areas serviced by older stormwater systems, resulting in chronic localised flooding. These problems cannot be rectified easily due to their significant cost and community impact.

Ratings Summary

vi

Infrastructure type Grade Comment

Irrigation C This rating recognises there have been significant improvements to irrigation infrastructure over the last decade resulting in increased water efficiency and irrigation operations. The relevance of existing infrastructure and future infrastructure improvements will depend on water availability decisions to be made on the Murray Darling Basis cap this year.

Electricity C- This rating recognises that transmission and distribution systems performance has improved in the last few years and the committed medium-term investment will lead to further improvements. Of concern is the uncertain future of new baseload generation caused by uncertainty over the future of gas prices, carbon costs and government decisions. If new generation capacity is not constructed, NSW’s power needs will not be able to be supplied from within the State.

Gas C This rating recognises that the gas transmission and distribution systems are in a sound condition, and increases in gas exploration, production and pipeline capacity have increased supply. However, as future supply and demand for gas is highly uncertain due to government policy, the internationalisation of domestic gas prices, and the construction of new gas-fired generation plants along the east coast of Australian, it is impossible to determine if the infrastructure is appropriate for future demand.

Telecommunications C- This rating recognises that the mobile and broadband provision is generally very high in the metropolitan areas, but is of variable quality in regional areas. The twisted copper pair network, upon which ADSL services rest, is reaching its limits and the rollout of fibre, broadband wireless and satellite under the NBN will enable the next evolution of broadband services to be provided. Backhaul networks are in good condition and competitive provision will be improved through the NBN blackspots program.

1

OVERVIEW

Rating process and description The objective of the Report Card is to rate the quality of economic infrastructure. Engineers Australia has been rating infrastructure since 1999. In 1999, 2001 and 2005, national report cards were published. Report Cards on Australian States and Territories have also been published. This Report Card revises and expands on the 2003 edition of the NSW Infrastructure Report Card. The purposes of the Report Cards are to: Raise awareness of politicians, media, business and the public that infrastructure underpins the

community’s quality of life and that inadequate infrastructure impedes economic and social growth, and reduces environmental and societal sustainability

Generate debate on the adequacy of the infrastructure (including condition, distribution, funding and timing) required to meet society’s needs

Increase appreciation of the value of developing an integrated and strategic approach to the provision of infrastructure

Raise awareness of the new challenges facing Australia’s infrastructure due to climate change, change in demographics, demand increases, resilience and sustainability

Improve the policy, regulation, planning, provision, operation and maintenance of infrastructure. This Report Card provides a strategic overview of NSW infrastructure that other organisations can use when they undertake detailed analysis of particular infrastructures. It also provides a benchmark that the community can use to identify need and evaluate alternative infrastructure priorities over time. Ratings have been based on an assessment of asset condition, asset availability and reliability, asset management, sustainability (including economic, environmental and social issues) and resilience. The assessment includes evaluating infrastructure policy, regulation, planning, provision, operation and maintenance. (See Appendix A: Rating methodology for details.) The assessment was carried out through research and consultation. Interviews were held with relevant stakeholders and documents were analysed. The assessment has relied on publicly available information and has, in line with its aims, focused on strategic issues, supplemented by quantitative performance measures where these were readily available. A number of industry associations were consulted and Engineers Australia provided input through its experts. Ratings used are comparable with those of past Report Cards. The rating scale is detailed below.

Overview

2

Rating scale

Letter grade

Designation Definition*

A Very good Infrastructure is fit for its current and anticipated future purposes

B Good Minor changes required to enable infrastructure to be fit for its current and anticipated future purposes

C Adequate Major changes required to enable infrastructure to be fit for its current and anticipated future purposes

D Poor Critical changes required to enable infrastructure to be fit for its current and anticipated future purposes

F Inadequate Inadequate for current and anticipated future purposes *Fitness for purpose is evaluated in terms of the needs of the community, economy and environment using criteria of sustainability, effectiveness, efficiency and equity.

State-wide issues Past investment in NSW’s infrastructure

The figure below illustrates the investment in economic infrastructure over a 25-year period. Economic infrastructure covers roads, bridges, railways, ports, electricity generation and transmission facilities, water and sewerage facilities and telecommunications facilities. NSW’s investment levels have tracked parallel to the national levels until 2006 when investment declined in comparison to the national level. Investment levels are expected to increase significantly over the next few years. Index of economic infrastructure expenditure in NSW and nationally (real prices, base year index is 1988/89, base is 100 for national expenditure)1

The figure below identifies the NSW Government’s expenditure on infrastructure. The Government’s definition of infrastructure encompasses road, rail, housing, electricity, hospitals and schools. The figure indicates that investment has grown in the last few years. The recent growth is due to the construction of the Third Container Terminal at Port Botany, Sydney Water’s Desalination project, and a number of major transport projects, and projects under the Australian Government economic stimulus and nation building programs. Over the next four years (i.e. 2010/11 to 2013/14) the NSW Government's infrastructure investment will total $62.2 billion. Of this, about 77% will be spent in the four largest infrastructure sectors of transport, electricity, education and housing.2

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NSW Australia

Overview

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Total State investment in infrastructure3

Major factors influencing NSW infrastructure demand Both population and economic growth will be key drivers of infrastructure demand. Population The figure below shows NSW population projections along a high and low future growth path. It shows that NSW’s population will expand from around 7 million in 2007 to 9.1 million (30% increase) in 2051 under low growth assumptions, or 11.2 million (60% increase) under high growth assumptions. The vast majority of the population growth will occur in Sydney. A growing population will accelerate the demand for all water, electricity, transport and telecommunication services. NSW recent and projected population using high and low growth assumptions4

Gross State Product The table below shows NSW’s projected Gross State Product. Economic growth directly increases demand by businesses for infrastructure services, and indirectly by consumers due to their raised standard of living.

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Total State infrastructure investment

Total excluding the Australian Government's National Building -Economic stimulus plan

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Overview

4

NSW’s Gross State Product5

Gross State Product 2008/09 Outcomes

2009/10 Estimates

2010/11 Forecasts

2011/12 Forecasts

Percentage change 0.2% 2.5% 3% 3.5%

Climate change Climate change will affect demand as well as supply of infrastructure. Important climate change impacts in NSW over the next 50 years are expected to be: NSW will become warmer with more hot days and fewer cold nights By 2030, the annual average number of days over 35°C in Sydney will grow from the current 3

to 4-7 days and in Cobar from 41 to 45-65 days Warmer temperatures and population growth are likely to cause a rise in heat-related illness

and death for those over 65, increasing in Sydney from the current 176 annual deaths to 364-417 by 2020 and 717-1,312 by 2050

Warmer conditions may also help spread vector-borne, water-borne and food-borne disease further south; these health issues could increase pressure on medical and hospital services

Little change in annual rainfall combined with higher evaporation is likely to reduce run-off across the Murray Darling Basin by up to 10-25% by 2030

More frequent and severe droughts, with a greater fire risk, are likely In coastal areas, infrastructure is vulnerable to sea level rise and inundation.6

Key infrastructure impacts of the above will be: Growth in peak summer energy demand is likely due to air-conditioning use, and this may

increase the risk of blackouts Urban water security may be threatened by increases in demand and climate-driven reductions

in water supply Increases in extreme storm events are expected to cause more flash flooding, affecting both

industry and infrastructure, including water, sewerage and stormwater, transport and communications, and may challenge emergency services.7

Cross-sector challenges While each chapter identifies sector-specific challenges to the provision of infrastructure, below are challenges that cross multiple infrastructure sectors. Need for strategic planning, coordination and integration. Efficient infrastructure provision

requires sound strategic planning, coordination and integration. This involves coordination across infrastructure modes, such as between road and rail, and across stakeholders, such as all levels of government, the private sector and the community. Such an approach increases the likelihood of decisions being made that complement one another, rather than undermine all. However, implementing such an approach is both time consuming and costly. The challenge is ensuring that such an approach occurs in the shortest time possible and at the lowest cost.

Commitment to plans. There is concern over the cancellation and variation to NSW Government infrastructure plans and projects. Examples of such projects are the Sydney Metro project and the North West Rail Link. The NSW Government needs to improve its selection of projects and implement them as per their committed time frames, or provide an adequate justification of the need to vary them.

Complementary land use and transport planning. Efficient transport networks require supportive land use developments. Examples are to build high density residential and business areas along transport corridors, and provide accessible rail or other public transport to major new developments. It also requires that once decisions on land use and transport planning are made, both the land developers and infrastructure providers build the infrastructure as envisaged at the appropriate time. There have been a number of instances where land

Overview

5

developers have proceeded, but the transport infrastructure provision has been delayed or cancelled, resulting in an area being under-served. This has led not only to congestion and long transport times, but also to social exclusion.

Addressing the rural–urban disparity. There is a significant difference in infrastructure quality between rural and urban infrastructure. Given the lower population base and hence the income available for infrastructure providers, a gap is expected. Effort should be given to closing this gap for equity reasons and for the pragmatic reason that improved infrastructure in regional and rural areas may encourage more metropolitan businesses to relocate there, thus reducing pressure on the crowded capital and major cities.

Increasing capital works funding. The 1990s to mid 2000s witnessed a period when infrastructure spending was below the long-term average, as infrastructure providers sought to increase efficiencies from existing infrastructure in preference to building new infrastructure. The consequence today is that the infrastructure is mostly working at capacity, which requires an extremely high quality of operational management. Operational failures or infrastructure breakdowns can have an immediate and cascading impact affecting a large number of people and businesses. Since the mid 2000s, most infrastructure sectors have developed plans for a massive expansion in capital works projects. This infrastructure is mostly to meet existing demand rather than provide excess capacity to meet future demand. As most of the new infrastructure is to be built in developed areas rather than greenfield locations, the cost of building and upgrading the infrastructure is extremely high.

Increasing quality of asset management. A proven technique to extract the best value from infrastructure is through sound asset management. Some infrastructure providers already have sophisticated asset management plans and systems in place, but more are still developing them. Once developed, the plans must be funded to allow their implementation. The challenge is to raise the average quality of asset management plans and systems across the State.

Implementing demand management. Managing demand for infrastructure services has become critical as a way of reducing the need for new infrastructure and increasing the efficiency of existing infrastructure. Its benefit is demonstrated in the outcomes of the demand management practices implemented by the electricity and water sectors. There has been less effort put into demand management in the transport sector, primarily due to the lack of an effective pricing mechanism that takes into account the economic, social and environment cost of the transport task. It also requires that alternative transport modes are available or that the need for the transport task can be reduced without significant adverse effects on the consumer. All sectors need to utilise demand management more comprehensively and effectively.

Focusing on sustainability and climate change. Infrastructure must contribute to sustainable economic, social and environmental activities. While most major infrastructure projects in the State over the last decade have sustainability as one of their criteria, sustainability has not been prominent in policies and strategies that shape cities, towns and regions. Challenges in improving infrastructure’s contribution to sustainability include ensuring that decisions on infrastructure reflect the fact that its physical life is typically between 20 and 50 years, but can be over 100 years with refurbishment, and designing the infrastructure to operate under changed rainfall, temperature and wind speeds due to climate change.

Addressing the growing skills shortages. In NSW, an engineering skills shortage in some infrastructure areas is forecast. This shortage will arise not only due to increased demand for staff to work on infrastructure projects across the nation, but also due to the large numbers of engineering practitioners retiring over the next decade, and an inadequate supply of graduates. The consequence of this shortage will be delayed and higher cost projects

Building intelligent infrastructure networks. Infrastructure of the future will increasingly be intelligent. Intelligent infrastructure has attached or built-in components (e.g. sensors and cameras) that are able to collect and transmit information about its physical state. This information can be used to identify when water pipes require maintenance, when traffic conditions should be changed to improve flows, and which route motorists should use to minimise travel time. Currently, very little of NSW’s infrastructure could be called intelligent.

Overview

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Challenges to building intelligent infrastructure include justifying the cost of investing in intelligent infrastructure, designing network-wide intelligent infrastructure systems, and providing a process so that third parties can access infrastructure data and exploit it.

Conclusion NSW’s infrastructure is generally in average to poor condition. It has failed to keep up with demand, which is mostly being generated from the increasing population and the expanding economy. Over the next decade, there will be significant expenditure on new infrastructure. However, significant improvement in infrastructure performance will only be achieved by both building more infrastructure and employing demand management techniques to moderate demand.

7

TRANSPORT

Integrated transport The last few decades has seen two major changes in transport planning and operation in NSW. Firstly, transport modes, which were traditionally seen in isolation from each other, are now seen as complementary. This means that the goal is to integrate transport modes (i.e. road, rail, sea, air, bicycle and pedestrian traffic), to provide a seamless transport task, whether for freight or passengers. This approach, which was first introduced into NSW’s planning documents early this decade, has resulted in the acceleration of passenger interchange developments, introduction of multi-mode tickets, construction of commuter car parks that encourage those living in outer suburbs to transfer to the rail network at key points rather than drive to work, and expansion of intermodal freight hubs. Secondly, transport plans have become integrated with land planning strategies. This development recognises that the developments without transport access result in high level of congestion, social exclusion and higher transport costs. NSW, as identified in the Metropolitan Transport Plan (2010), has adopted a strategic land planning approach that consists of: Promoting urban infill as the main location for housing growth Promoting developments along transit corridors Upgrading the public transport network to link Sydney’s regional cities/growth centres of

Parramatta, Liverpool and Penrith. NSW’s key transport policy documents are summarised in the table below. Transport mode-specific documents are described in the relevant section.

NSW Government transport policies and strategies

Policies and strategies Description

NSW Freight Strategy (forthcoming)

The Strategy is intended to improve the planning controls for freight infrastructure to facilitate freight developments such as intermodal freight.

Metropolitan Strategy: Sydney Towards 2036 (forthcoming)

A revision of the 2005 Metropolitan Strategy.

NSW State Plan (2010) The Plan articulates a vision for the future of NSW through a series of objectives and plans to achieve the objectives.

Metropolitan Transport Plan: Connecting the City of Cities (2010)

The Plan provides for: • A 25-year perspective of land use planning for Sydney • A 10-year funded package of transport infrastructure • The creation of the Sydney Metropolitan Development Authority to work across

State agencies, local government and the private sector to deliver new housing, infrastructure and investment in key centres and corridors

• A commitment to build Parramatta as Sydney’s second CBD, and recognition of its role as a transport interchange for Western Sydney

• A partnership between the City of Sydney and the NSW Government to deliver integrated land use planning, infrastructure and funding in Central Sydney.

State Infrastructure Strategy 2008/09 – 2017/18 (2008)

The State Infrastructure Strategy is a rolling 10-year plan for infrastructure projects to support service delivery.

Transport

8

Metropolitan Strategy – City of Cities: A plan for Sydney’s future (2005)

The Strategy identifies the major challenges facing Sydney over the next 25 years as: • A population forecast to reach 6 million by 2036, an increase of 1.7 million since

2006 • A need for 770,000 additional homes by 2036 • A need to expand Sydney’s employment capacity by 760,000 to 2.89 million

jobs.8

NSW Greenhouse Plan (2005) This document provides a framework for meeting NSW’s greenhouse targets and commitments. This will be replaced by the Climate Action Plan, which is under development.

City of Cities: a plan for Sydney’s growth (2005)

The NSW Government’s metropolitan strategy is designed as a broad framework to secure Sydney's place in the global economy by promoting and managing growth.

Regional Planning Strategies (2006)

These are equivalent strategies for each region of NSW, Alpine, Central Coast, Hunter, Far North Coast, Mid-North Coast, Illawarra, South Coast, Sydney-Canberra Corridor, Murray and Western NSW.

The Integrated Land Use and Transport (ILUT) package (2001)

This is a framework for State government agencies, councils and developers to integrate land use and transport planning at the regional and local levels. The package includes both the policy and implementation guidelines.

Key State and Australian Government agencies involved in transport planning and management are: Transport NSW (formed in June 2010). Transport NSW is the lead agency of the NSW

transport portfolio, with primary responsibility for transport coordination, policy and planning transport services (i.e. rail, bus, ferry and taxi services), and transport infrastructure. Cross-transport mode agencies within the NSW transport portfolio group are:

Independent Transport Safety and Reliability Regulator. The Regulator is responsible for administering rail safety legislation, reporting on the reliability and sustainability of publicly-funded transport services, and strategic coordination of safety regulation across transport modes of rail, bus and ferry.

Office of Transport Safety Investigations. OTSI is an independent statutory body established to investigate safety occurrences involving bus, ferry and rail transportation

State Transit Authority. This authority is responsible for the operations of Sydney Buses and Newcastle Buses and Ferries.

Sydney Metro Authority. Until the Sydney Metro project was cancelled in February 2010, Sydney Metro was the NSW Government agency responsible for planning, delivering and commissioning the Sydney Metro network. It was also to oversee the ongoing Metro operations and dictate the service delivery standards to the private operator.

Transport Infrastructure Development Corporation. TIDC has the principal role of developing and delivering major transport infrastructure projects as directed by the Minister for Transport and Roads.9 Since its establishment in 2004, it has delivered 12 projects.10

Other agencies within Transport NSW that are discussed within the relevant transport mode section of the Report are:

Maritime NSW Newcastle Port Corporation Port Kembla Port Corporation Public Transport Ticketing Corporation Rail Infrastructure Corporation RailCorp Roads and Traffic Authority Sydney Ferries Sydney Ports Corporation.

Department of Infrastructure, Transport, Regional Development and Local Government (Australian Government). The Department has a policy advisory role in transport, and management of some transport programs.

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Intermodal hubs An intermodal terminal is one where freight is transferred from one transport mode to another, for example between road and rail. These terminals are an increasingly important element of the freight network as they lead to substantial improvements in freight efficiency. In Sydney, there are nine privately operated intermodal terminals, and these are mostly at capacity.11 There are three new intermodal terminals being planned – the Intermodal Logistics Centre at Enfield, Moorebank Intermodal Terminal and one in Western Sydney. The most advanced terminal is at Enfield and construction work has commenced at 60-hectare site. It will be operational by 2011 and will be at full capacity in 2016.12 The figure below identifies the location of intermodal hubs across NSW. The development of an intermodal hub at Newcastle will provide relief for the ports in Sydney, but its development will be dependent on the completion of road and rail improvements between Newcastle and Sydney, and between the Hunter and North-West regions of NSW. Intermodal hubs, and road and rail and port links across NSW13

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Case study: F3 Freeway Emergency Traffic Management Plan The F3 Freeway is an arterial road of national significance between Newcastle and Sydney. The F3 is 127km in length and carries in excess of 75,000 vehicles per day between Sydney and the Central Coast, which is located between Newcastle and Sydney. The road is dual carriageway and between the NSW Central Coast and Sydney passes through rugged terrain. The only alternative route is the Pacific Highway which has limited capacity to cope with diverted traffic and, due to the terrain, has limited access to the F3. Managing major traffic incidents that partially or fully block the F3 Freeway is therefore challenging. Recently the NSW Government has funded a $28 million emergency traffic management plan to reduce the impact of major crashes and incidents on the F3 between Wahroonga and Ourimbah. This project included the provision of 23 cross over points with supporting infrastructure to allow contra-flow conditions to operate. The aim is to utilise the contra-flow to divert traffic around incidents with the NSW Police, the RTA, other emergency service providers and salvage operators working together to implement traffic management measures to minimise traffic disruption. In October 2008 and November 2009, simulations were carried out at two locations. The purpose of these exercises was to allow the RTA and NSW Police to practice the activation of the contra flow, and to identity improvements. In April 2010, a major incident occurred on the F3 which closed the northbound carriageway. The ensuing disruption reportedly left some motorists stranded for up to 12 hours as the contra-flow was not implemented until 8 hours after the incident. An independent enquiry is underway into the incident and the management of it. There has also been media debate about whether the cross overs are appropriately located and the effectiveness of communication between emergency services. This is an example of how susceptible infrastructure can be to an incident and how poor planning, implementation and communication can undermine management of key parts of our transport infrastructure network.

11

1 Roads

1.1 Summary

Infrastructure type NSW 2010 NSW 2003 National 2005 National 2001

Roads overall C- Not rated C Not rated

National roads B- C+ C+ C

State roads D+ C+ C C-

Local roads D+ C- C- D

These ratings recognise that the NSW road network is under stress due to demand rising faster than supply, and that there is a lack of a road pricing mechanism that ensures road usage becomes more efficient. National roads are in physically better condition than State roads due to the considerable investment in them over the last decade. The physical quality of State roads may be improving, but their service quality is deteriorating due to rising congestion. Local roads are struggling to maintain their existing standard, primarily due to increase in demand, coupled with a rising backlog of maintenance. Since the last Report Card, the major road sector developments have been: The release of the Metropolitan Transport Plan with its 10-year funding commitments for

Greater Sydney The release of the updated NSW State Plan outlining the Government’s long-term transport

goals. Recently-completed and in-progress major infrastructure projects include: The Pacific Highway Upgrade Program Stage 2 of the Lane Cove Tunnel, completed in March 2008 $42 million duplication of the Alfords Point Bridge in August 2008 $11 million M4 overpass duplication at Mamre Road A widening of a 11.5km section of the F3 between Cowan and Mount Colah An upgrade of the Great Western Highway Extensive upgrades to the Hume and Prince’s Highways Hunter Expressway (F3 to Branxton).

Challenges to improving road infrastructure include: Determining an appropriate road pricing mechanism Encouraging transport tasks away from roads Improving road efficiency measures Improving bike infrastructure Developing long-term strategic plans for major regional and inter-capital routes Implementing plans Funding for local government roads Delivering integrated land use and transport planning outcomes.

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1.2 Infrastructure overview

1.2.1 System description NSW road infrastructure is comprised of: National Road Network roads (4,269km) State arterial urban and regional roads (13,549km) Privately-funded toll roads (163km) Local government-managed regional roads (18,474km) Local government-managed local access roads (144,750) State-controlled local roads in unincorporated areas of NSW (2,946km).14

The network totals over 180,000km of road, 5,051 bridges and major culverts, 3,751 traffic signals and facilities, and 22 tunnels. The total Roads and Traffic Authority (RTA) network has a value of $86 billion including land under roads.15 There are currently over 16 million vehicle trips made each day in the Sydney Metropolitan Area alone. Of these, roughly one million are made by commercial vehicles with freight, accounting for 15% of total vehicle kilometres. Roads in NSW are formally divided into Classified and Unclassified Roads. A Classified Road is defined under the Roads Act 1993 to be a main road, State highway, freeway, controlled access road, secondary road, tourist road and tollway. Table 1.1 provides details on road classifications. Table 1.1: NSW road classification system and road numbering system16

Road Type (Classification)

Description and management responsibility Road numbers

Arterial Roads (State roads)

High traffic volume roads; highways, freeways, motorways and main roads managed by the RTA.

1-29 State Highways 51-686 Main Roads 2001-2103 Secondary Roads 4001-4056 Tourist Roads 8001 Transitways

Sub–arterial roads (Regional roads)

These are major connector roads between State roads. They have significant traffic capacity, but lower than those of arterial roads. These roads have shared responsibility between RTA and local Councils

Local roads (Unclassified)

These are other minor roads managed by local Councils. 7000 series

The State’s main arterial roads total 17,981km, with the National Road Network constituting 4,269km of this total. The RTA manages these roads on behalf of the NSW Government, in addition to 2,946km of local roads in unincorporated areas of NSW. Municipal roads (also known as council or local roads) total 163,224km. Municipal roads are the public suburban roads on which most residents live or access property. All maintenance, road safety and traffic measures on them are the responsibility of local government. The replacement value of NSW local roads is $30.8 billion.17 The classification and location of the NSW road network is displayed in Figure 1.1.

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Figure 1.1: The NSW classified road network18

NSW has a number of private sector contractual arrangements through which the supply and operation of road infrastructure is outsourced; these are referred to as Private Sector Provided Infrastructure projects (PSPI). Under these agreements, the private sector provides the infrastructure and associated services for a period of time before ownership of the asset is returned to the RTA. The PSPI roads are listed in Table 1.2.19 There are 8 toll roads in NSW and these are the M2, M5, and M7, the Eastern Distributor, the Sydney Harbour Tunnel and Bridge, the Cross City Tunnel, the Lane Cove Tunnel and the Falcon St Gateway. The M4 was tolled until February 2010. Table 1.2: Private sector provided infrastructure projects20

Toll Road Concessionaire

M1 Eastern Distributor Airport Motorway Group

M2 Hills Motorway Transurban/Hills Motorway Limited

M4 Western Motorwaya NSW Statewide Roads

M5 South-West Motorway Interlink Roads

M7 WestLink Motorway WestLink Motorway Limited

Sydney Harbour Tunnel Sydney Harbour Tunnel Company

Cross City Tunnel CCT Motorway Group Holding

Lane Cove Tunnel Transurban, previously owned by Connector Motorways

The locations of these PSPI projects and proposed projects, are displayed in Figure 1.2.

a The M4 Motorway was handed back to the RTA on 15 February 2010.

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Figure 1.2: Private sector provided infrastructure projects*21

There are 4,928 bridges, major culverts and tunnels in NSW that the RTA is responsible for managing. The RTA has reduced the number of structurally deficient bridges since the mid-1990s. By the end of 2005/06, there were no structurally-deficient bridges on NSW roads.22 This trend is shown in Figure 1.3. Figure 1.3: Number of bridges on the NSW road network with constraints on users23

Bridges generally have a nominal design life of 90 years but require significant rehabilitation during their lifetime to ensure that they achieve this. The ages of RTA bridges are shown in Figure 1.4.

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Figure 1.4: Age profile of arterial road bridges24

There are more than 10,000 bridges located on Local Roads25 and about 26% are made of timber.26 In 2006, the NSW Government announced the Timber Bridge Partnership that aims to replace about 250 key timber bridges. By March 2010, some 98 bridged had been replaced.27

1.2.2 Policy and governance The NSW Government is primarily responsible for the policy, planning and funding of roads in the State. The management, maintenance and development of freeways (excluding freeway tollways), arterial roads and municipal roads are shared between the Road Traffic Authority (RTA) and local governments. Funding for roads comes from the Australian, NSW and local governments. The NSW Government’s strategic vision for roads is that they contribute to the transport system that underpins access to jobs, services and facilities, and have a major impact on the quality of life of NSW residents. The key road priorities and targets for the NSW Government are: Improving the road network Maintaining road infrastructure Improving road safety Increasing the mode share of alternatives to motor vehicles.28

Key roads Acts are: Transport Administration Act 1988. This Act establishes the RTA and sets out its statutory

functions and objectives. Roads Act 1993. This Act sets out the rights of the public to pass along public roads and

provides for the classification of roads. It confers certain functions on the RTA and provides for the distribution of functions between the RTA and other road authorities.

Road Transport (Safety and Traffic Management) Act 1999. This Act provides for the adoption of nationally-consistent road rules and makes provision for safety and traffic management on roads and road related areas.29

The Australian Government has limited powers under the Constitution to regulate transport. However, it is involved in facilitating national regulatory consistency in roads, developing national transport networks, and providing specific road funding programs. Until 2009, Australian Government road funding was provided principally under the AusLink (National Land Transport) Act 2005 and, to a much lesser extent, under the Local Government (Financial Assistance) Act

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1995 and the Federation Fund. However, in 2009, the Australian Government replaced the term AusLink in its land transport infrastructure funding program with the term Nation Building Program.b Key Australian Government funding components are: National Projects. These are targeted projects on the National Land Transport Network

designed to improve efficiency and safety. In NSW over the 2008/09 to 2013/14 period, National Projects funding totalled $478.98 million for ongoing projects, $5,313 million for new projects, $190 million for off-network projects and $698.23 million for road maintenance programs.30

Roads to Recovery. This program addresses the problem of local roads reaching the end of their economic life, and their replacement being beyond the capacity of local government. NSW councils received $484 million for the period 1 July 2009 to 30 June 2014.31

Black Spot Program. This program improves the physical condition or management of hazardous locations with a history of crashes involving death or serious injury. NSW black spot projects announced in April 2009 totalled $66.9 million.32

Financial Assistance Grants for roads. Annual Financial Assistance Grants for roads paid directly to local government totalled $605 million in 2009/10.

The RTA is the NSW Government agency responsible for road management, safety, licensing and registration. The RTA manages the National Road Network (for which the Australian Government provides a funding contribution), State roads and privately-funded toll roads. The RTA also has management responsibility for regional and local roads in unincorporated areas of NSW. An important group within Transport NSW for traffic management and planning is the Transport Coordination Group. The Group brings together operational staff from RailCorp, RTA’s Traffic Management Centre, Sydney Buses, private bus companies, Sydney Ferries, Ministry of Transport and NSW Police to manage morning and afternoon peaks in the CBD.33 Local government is responsible for planning, managing and maintaining municipal roads. It also provides some funding for them via rates and parking fees. Local government is generally responsible for the management and maintenance of the local components of the arterial roads in urban areas such as roadsides, service roads, parking and footpaths.

1.2.3 Sector trends Increasing urban congestion Congestion of roads is a major problem that increases the time and cost of road tasks, which reduces economic efficiency and liveability. The 2006 COAG Review of Urban Congestion Trends, Impacts and Solutions found that congestion imposed avoidable costs of $3.5 billion in Sydney in 2005 and this is expected to increase to $7.8 billion by 2020.34 The vehicle kilometres travelled in Sydney is projected to increase by 35% over the same period to reach 54.7 billion by 2020. This growth is likely to cause significant road congestion.35 A measure of road congestion is the volume to capacity ratio (V/C) – that is, the amount of traffic using or wanting to use the road compared to its theoretical maximum. The implication of each ratio band is below. Below 0.7, traffic speeds and journey time reliability will generally be acceptable Between 0.75 and 0.85, journey speeds begin to decrease and journey time can become

unreliable as congestion can grow quickly. When traffic accidents occur, they cause a significant increase in delays

Greater than 0.95, road speeds slow significantly and will occasionally reach a standstill.36

b The name change was announced at the Special Council of Australian Governments meeting on 5 February 2009, Council of Australian Governments, Communiqué, 5 February 2009, http://www.coag.gov.au/coag_meeting_outcomes/2009-02-05/index.cfm.

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The areas of the metropolitan Sydney road network that are currently congested during peak periods are displayed in Figure 1.5; they include the vicinity of Port Botany and Sydney Airport and the M2, M4, M5 and F5. Figure 1.5: Volume capacity ratios on major Sydney roads37

The projected growth in this congestion by 2016 is displayed in Figure 1.6. This shows that projected demand on the road network will exceed planned capacity in the vicinity of Port Botany and the Airport and on the M2, M4 and M5 East. The F3 and F5 are expected to almost reach planned capacity by 2016. Proposed extensions to the M4 and M5 motorways would provide additional capacity to the Port Botany and Airport vicinity, which will be vital to meet the forecast increased freight demand. To manage congestion on NSW roads, the NSW Government has introduced a number of demand management initiatives including: Tolls as price signals on new motorways The introduction of variable tolling on the Sydney Harbour Bridge Installing car pooling lanes on key arterial roads Installing bus priority measures on strategic bus corridors A CBD parking levy Commissioning a number of programs intended to change travel behaviour A change in planning direction to require an increase in housing located close to public

transport.38

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Figure 1.6: Projected volume capacity ratios on major Sydney roads for 201639

In February 2010, the NSW Government released the Metropolitan Transport Plan, which outlines a 25-year vision for land use planning and a 10-year funding commitment for transport infrastructure. The Plan is designed to address future growth in demand for transport infrastructure and thereby reduce congestion on Sydney’s road network. The 10-year funding commitment includes a $21.9 billion investment over the next 10 years to increase the efficiency of the road network, in addition to other spending designed to increase demand for alternative transport modes.40 Growth in the freight task Around 86% of the freight volume in Sydney is moved by road, with this figure increasing over time in proportion to rail. If the NSW Government’s target of increasing rail’s share of container traffic out of Port Botany from 18.5% to 40% is reached, container freight on inner Sydney roads will still double by 2021.41 Figure 1.7 displays the freight volumes on Sydney’s roads.

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Figure 1.7: Daily volumes of freight in Metropolitan Sydney42

The Sydney-Brisbane Corridor will see freight almost triple by 2029, with freight expected to rise by 7 million tonnes to 17 million tonnes, compared to only a doubling in freight on other major inter-capital freight routes.43 The National Transport Commission’s Twice The Task report warned that the greatest impact of freight growth would be in urban areas, near ports and intermodal freight terminals, and in outer industrial suburbs. Increased investment in road projects There has been an increase in the amount invested in road infrastructure projects over recent years from all levels of government. Recent investment in roads by the NSW Government includes: The Pacific Highway Upgrade Program, including the $871 million investment outlined in the

2010/11 NSW Budget Stage 2 of the Lane Cove Tunnel, completed in March 2008 $42 million duplication of the Alfords Point Bridge in August 2008 $11 million M4 overpass duplication at Mamre Road A widening of an 11.5km section of the F3 between Cowan and Mount Colah An upgrade of the Great Western Highway Extensive upgrades to the Hume and Prince’s Highways.

In May 2009, the Australian Government announced funding for two roads projects in NSW through the Infrastructure Australia Nation Building program. The Australian Government will contribute $1.5 billion towards the Hunter Expressway, which will provide a new dual carriageway between the F3 and the New England Highway, to be constructed between 2010 and 2013.44 A further $618 million will be invested in the construction of a 14.5km dual carriageway bypass of Kempsey on the Pacific Highway, which will be constructed between 2010 and 2014.45

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Growth in traffic in the Lower Hunter region In 2006, the NSW Government released a regional plan for the Lower Hunter. The Lower Hunter Regional Strategy identified that traffic volumes have increased by 3.4% per annum on roads in the Newcastle region and congestion would increase without mitigation action being taken. The plan outlines the following action to accommodate the growth: An investigation and identification of improved transport linkages connecting the Port of

Newcastle and Newcastle airport to the National Highway Network Continued improvements to the north-south access through the region, including the linkage of

the F3 to the Pacific Highway and upgrades to the Pacific Highway Completion of the Newcastle inner-city bypass between Shortland and Sandgate.46

Subsequent to the plan, in 2008, the Lower Hunter Transport Needs Study was produced. It forecast that road traffic would increase over the next 25 years at between 3.4% and 4.1% per annum. This growth is mainly driven by population and employment increases. The study assessed the adequacy of the roads and expressed them in terms of volume capacity ratios (V/C). Figure 1.8 presents the V/C ratio for 2031. Figure 1.8: Forecast volume/capacity ratios for Lower Hunter region in 203147

Adequate capacity of Illawarra freight routes roads An Illawarra regional plan was also produced by the NSW Government in 2006. This plan outlines the key transport issue in the Wollongong and Illawarra region as being access for passenger and freight vehicles to and from Sydney. The main freight access point for the region is Mount Ousley, which is forecast to have ample capacity for the next 10 to 15 years. The RTA has made a commitment to monitor the road corridor in light of future regional traffic growth.48 Reduction in expenditure on roads by local governments The 2010 Australian National Audit Office report into the Roads to Recovery Program found that NSW local governments failed to maintain their road spending in every year of the program. It found that they spent $839 million in the State from 2001 to 2007. This means that while their received additional money from the Australian Government, they reduced their own expenditure.49

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1.3 Performance

1.3.1 Road safety The quality of road infrastructure influences road safety. According to the Australian Transport Council, ‘improving the safety of roads is the single most significant achievable factor in reducing road trauma’. It notes that ‘road investment improves road safety through general road improvements – typically, 'new' roads are safer than 'old' roads – as well as through treatment of black spots’.50 In 2007, the NSW Government established the NSW Centre for Road Safety to promote Road Safety in NSW. It was set up as part of a restructure of the RTA’s road safety group to implement the NSW Government’s State Plan priorities of improving driver behaviour and creating safer roads. The State Plan outlines the Government’s priority to reduce fatalities to 4.9 per 100,000 population by 2016. Actions planned to be taken to achieve this objective include: Setting of speed limits that reflect the risk to road users Constructing crash barriers Widening road shoulders Promoting safer vehicles through the Australian New Car Assessment Program Maintaining and upgrading roads Education, legislation and enforcement.51

A key indicator of road accidents is the fatality rate per 100 million vehicle kilometres. As seen in Figure 1.9, the fatality rate for NSW roads per population, vehicles and distance travelled have started moving upwards since 2008. Figure 1.9: Fatality rates on NSW roads (12 month periods ending in May)52

Figure 1.10 shows the annual road deaths in NSW over the last 15 years compared with the national figures. The annual NSW road toll has ranged between 386 and 646. Figure 1.10: Road deaths in NSW and nationally53

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For details on rail level crossing safety, see 2.3.5 Level crossing safety.

1.3.2 Road quality on State roads Ride comfort is measured by the International Roughness Index (IRI). When the IRI is less than 4.2, travellers consider it a smooth ride. Table 1.3 identifies the proportion of the State road network defined as smooth. Table 1.3: Ride quality on State roads 2005/06 to 2009/1054

International Roughness Index quality

2005/06 2006/07 2007/08 2008/09 2009/10 (target)

Good (%) 87.5 87.9 88.6 89.1 89.0

Poor (%) 4.6 4.4 4.2 4.1 4.0

Figure 1.11 displays the ride quality on Sydney State roads. The percentage of road roughness rated as good on State roads has improved since 2004. However, a 2006 Auditor-General’s report into the condition of State roads recognised that the ride quality on Sydney’s roads was below that of other capital cities and country roads. Over the last three years, additional pavement works in the Sydney area have resulted in an improvement in the condition of roads.55 Figure 1.11: Ride quality on Sydney State roads (%)56

Figure 1.12 displays the percentage of good road surface roughness on selected Sydney State roads.57 The worst performing highways are the Great Western/Mitchell and Newell. Figure 1.12: Percentage of State roads where the surface roughness is rated as good58

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Surface cracking is detrimental to the durability of most road pavements and is a useful indicator of pavement condition. Durability indicates the capacity of road pavements to resist premature deterioration. Table 1.4 identifies the pavement treatment figures. Table 1.4: Pavement durability of all State Roads59

2005/06 2006/07 2007/08 2008/09 2009/10 (target)

Good (%) 78.1 76.5 78.0 76.3 76.0

Poor (%) 9.5 9.5 8.5 8.7 8.9

Following the recommendations of the Auditor-General, additional investment in pavement durability upgrades is being given to the urban network without diminishing the maintenance effort on the rural network. Figure 1.13 displays the annual percentage of the rebuilding of road pavements.60 Figure 1.13: Annual percentage of rebuilding of road pavements61

The RTA allocates maintenance funds, giving priority to upgrades that: Achieve the best overall economic benefit to the community Provide community-wide benefits from reducing accidents and travel time Reduce environmental impacts of road infrastructure maintenance.62

The 2010/11 NSW Budget outlined a $1 billion appropriation for the maintenance of the State’s existing roads.

1.3.3 Local government road quality The quality of local government roads is under pressure due to a significant gap in funding between what is required to maintain the assets and what is actually being spent. The 2008 NSW Road Asset Benchmarking Project identified this funding gap to be $618 million per year. This gap indicates that the asset is being consumed faster than it is being renewed or replaced. NSW local road infrastructure is depreciating at 1.7% per year and 100% of this amount needs to be replaced to maintain the current standard. Yet only 82% of sealed roads, 50% of unsealed roads and 54% of concrete/steel bridges are being replaced.63 Another measure of quality is the use of quality asset management plans. The Road Asset Benchmarking Project found that only 33%64 of local governments used the principles of the International Infrastructure Management Manual, the internationally recognised best-practice reference on infrastructure asset management. The result of not using asset management plans is

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that there is increased likelihood that asset management is sub-optimal and road service quality will decline faster than otherwise would be the case.

Environmental sustainability The NSW Government’s environmental policy objective is to limit 2025 emissions to 2000 levels and to reduce emissions by 60% by 2050.65 Transport produces 15% of total NSW emissions. Of this, 47% is produced by private cars and 25% is produced by commercial vehicles. The NSW Government aims to curb the growth in transport emissions while increasing transport choices. To achieve this objective, the NSW Government is: Adopting urban planning principles to reduce the need for car travel and the use of private

transport Improving and promoting public transport Facilitating and promoting cycling and walking.

The RTA has articulated an environmental policy to provide a framework for managing the environmental impacts of its operations. The RTA is committed to working within the principles of ecologically-sustainable development and improving environmental performance through: Developing and implementing environmental management systems with provision for auditing

and reviewing progress on an ongoing basis Promoting the efficient use, reuse and recycling of resources, and the minimisation of waste Including environmental considerations in all aspects of strategic planning of our road and traffic

management.66 Ongoing environmental challenges include: Vehicle emissions and greenhouse gases Water quality from road run-off Noise Alienation of land.

Active travel The NSW Government supports active travel (i.e. walking and cycling) as a way to improve an individual’s health and for broader environmental, social and economic benefits. The key government body that facilitates this is the Premier's Council for Active Living (PCAL). A significant outcome of PCAL has been the development of Designing Places for Active Living, a resource that provides specific considerations to help create environments for active living. PCAL has been developing the NSW BikePlan, which aims, over the next five to ten years, to double the number of people cycling in NSW. The BikePlan was released in May 2010.

1.4 Future challenges The future challenges to achieving improvements in road infrastructure are: Determining an appropriate road pricing mechanism. Road traffic and congestion is growing

at a much faster pace than road provision. Consequently, an improved method to moderate demand is required. One effective way to do this is through appropriate road pricing. This may include a road usage charge that combines congestion costs, road damage, environmental and other secondary damage impacts. Given that tolls are one of the few existing road pricing mechanisms employed in NSW, removing them as was done recently on the M4 without implementing a comprehensive road pricing mechanism is a retrograde step.

Encouraging transport tasks away from roads. Given the rising congestion, encouragement should be given to shift people and freight movement away from individual road vehicles. This will require better rail, bus and active travel options, as well as changing business practices such as just-in-time deliveries.

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Improving road efficiency measures. Improving road asset utilisation rather than building new roads is an important approach to getting value for money from road investment. Ways to improve efficiency are targeting roadworks on points of connection, building links between existing road networks, minimising the impact of road works, ensuring quick clearance of traffic incidents, improving traffic signal coordination, and prioritising road space for high occupancy vehicles or ‘high value’ movements.

Improving bike infrastructure. While the 2010 BikePlan has the potential to increase the use of bikes, this will only occur if special funding programs and budgets for bike infrastructure are provided. Constructing new bike infrastructure from existing transport budgets will result in infrastructure being rolled out at a much slower pace than the community expects.

Developing long-term strategic plans for major regional and inter-capital routes. Improving major regional and inter-capital routes is becoming more important as the NSW non-metropolitan population increases and travel between regional and capital cities increases. Key priority routes are the Pacific Highway and the Melbourne to Brisbane route. These routes need to be covered by strategic plans that cover both road and rail infrastructure, integrated with land use plans. The integrated regional transport plans will deliver increased transport efficiency while protecting the environmental wellbeing and sustainability of local communities.

Implementing plans. There are a number of NSW transport plans that contain ambitious capital works programs, however, there is concern that there is a lack of commitment to implementing them. This lack of commitment arises because of a lack of funds and inappropriate processes used in selecting projects. More realistic, rather than aspirational, plans should be developed and they should be implemented unless there are sound reasons to deviate from them.

Funding for local government roads. The gap is widening between what funds are required to maintain and improve local roads, and what is actually being spent. Funding is required to close the gap, with specific attention given to renewing and upgrading the more than 10,000 bridges on local roads, and facilitating the use of high productivity vehicles.

Delivering integrated land use and transport planning outcomes. Implementing integrated plans will require overcoming the following major challenges:

Ensuring that land use decisions to slow the growth in urban boundaries, reserve land corridors for future roads, and focus on building in designated growth corridors, are maintained over many decades

Increasing significantly the amount of funding for both new roads and maintenance. 1.5 Report Card rating

Infrastructure type NSW 2010 NSW 2003 National 2005 National 2001

Roads overall C- Not rated C Not rated

National roads B- C+ C+ C

State roads D+ C+ C C-

Local roads D+ C- C- D

These ratings recognise that the NSW road network is under stress due to demand rising faster than supply, and there is a lack of a road pricing mechanism that ensures that road usage becomes more efficient. National roads are in physically better condition than State roads due to the considerable investment in them over the last decade. The physical quality of State roads may be improving, but their service quality is deteriorating due to rising congestion. Local roads are struggling to maintain their existing standard, primarily due to increase in demand, coupled with a rising backlog of maintenance.

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Positives that have contributed to the ratings are: The release of strategic transport plans and funding commitments The delivery of several strategic road infrastructure upgrades An increase in road expenditure.

Negatives that have contributed to the ratings are: Increased road congestion and increased average travel time Mixed track record in delivering strategic road plans and projects Lack of coordination between transport authorities Lack of an effective road use pricing model Lack of a long-term strategy of major regional and inter-capital routes Growing funding gap resulting in deteriorating local road assets.

27

2 Rail

2.1 Summary

Infrastructure Type NSW 2010 NSW 2003 National 2005 National 2001

Rail D- D C- D-

This rating recognises that while the ARTC’s Hunter Valley Coal Network and to a lesser extent, the other ARTC lines are of a good standard, the Metropolitan Rail Network and the Country Regional Network require significant improvements. Targeted projects are improving both networks, however, there is limited confidence that the planned projects will deliver the scale of improvements required along the metropolitan network routes and in country areas to meet both the unmet existing needs and those arising from the rapidly growing passenger and freight needs in Sydney. Since the last Report Card, the major rail sector developments have been: Continual strong growth in metropolitan rail patronage Improvements in CityRail punctuality and reliability, but major problems remain with peak-hour

crowding Incremental improvement in metropolitan and regional rail infrastructure, excluding grain lines Closure of several grain lines Commencement and then cancellation of the Sydney Metro project Release of the Independent Public Inquiry Sydney's Long Term Public Transport Plan (2010)

and the NSW Government’s Metropolitan Transport Plan (2010) Takeover of the lease network, and in particular the Hunter network, by ARTC.

Recently completed and in-progress major infrastructure projects include: Epping to Chatswood Rail Link, completed in 2009 Newcastle Rail Corridor Upgrade, completed in 2007 North Sydney Station Upgrade, completed in 2008 Metropolitan Rail Clearways Program, ongoing Southern Sydney Freight Line, ongoing Construction of an additional platform at Hornsby, completed in 2009 14km spur line from Mt Thorley to Wambo Coal mine in the Hunter Valley, completed in 2006 Replacement of timber sleepers with concrete on the North South Corridor, completed in 2009 Construction of a number of passing loops on the North Coast and in the Hunter Valley and

North West rail network, completed in 2009 Duplication of track from Muswellbrook to Antiene in the Hunter Valley Completion of a second coal unloading facility and rail infrastructure at Kooragang Commuter Car Park Program, ongoing South West Rail Link Procurement of metropolitan rail cars Redevelopment of the Botany rail yard and Enfield Intermodal Freight Terminal.

Challenges to improving rail infrastructure in NSW include: Inadequate expenditure on rail infrastructure Building confidence in the NSW Government’s ability to select and implement projects Reducing crowding and improving services on CityRail and CountryLink services Provision of intermodal terminals Improving the travel time between Sydney and neighbouring urban centres

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Determining the future of the country grain network Improving and upgrading rail infrastructure beyond the Liverpool Range to open up the Namoi

Basin for coal exports.

2.2 Infrastructure overview

2.2.1 System description The NSW rail network consists of: Metropolitan Rail Area Network, which spans the Sydney metropolitan area, Central Coast, Blue

Mountains and Illawarra lines, and is owned and managed by Rail Corporation New South Wales (RailCorp)

Country Regional Network (CRN), which is owned by Rail Infrastructure Corporation (RIC) and managed under contract by Australian Rail Track Corporation (ARTC)

Leased Network, comprising the Defined Interstate Rail Network (DIRN) and the Hunter Valley Network. This network is owned by RIC and leased to ARTC on a 60 year lease

Other rail networks including light rail, historic railways and private sector lines. Figure 2.1 identifies the main NSW rail networks. All networks are standard gauge (i.e. 1,435mm or 4’8½”). Figure 2.1: NSW’s rail networks including closed lines67

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Metropolitan Rail Area Network The main elements of the Metropolitan Rail Area Network are the: Metropolitan Passenger Network (MPN), which carries passenger trains Metropolitan Freight Network (MFN), which carries freight traffic on dedicated freight, shared

freight and passenger lines. The network is owned and maintained by RailCorp. RailCorp also provides access to freight and passenger operators on the network. RailCorp is a Statutory Authority reporting to the NSW Minister for Transport. The objectives of RailCorp are to deliver safe and reliable railway passenger services, and manage their network in NSW in an efficient, effective and financially responsible manner.68 CityRail CityRail, a registered business of RailCorp, provides metropolitan passenger rail services in the Sydney, Central Coast, Hunter, Blue Mountains, and Illawarra regions.69 CityRail is the single largest public transport operation in Australia.70 Key characteristics of CityRail are that it: Operates over 3,236km of track Provides services across 307 suburban, intercity, and regional stations Provides over 90,000 service kilometres per day and 990,000 passenger journeys per day Provides 304.8 million passenger journeys per year Operates a fleet of 1,646 electric and 48 diesel carriages Employs around 14,000 people Operates infrastructure and rolling-stock assets valued at over $12.5 billion.71

Revenue for CityRail’s operations comes from three sources – fare revenue, NSW Government funding, and other revenue such as property rental and access fees. In 2008/09, passengers’ fares paid for around 27% of CityRail’s costs.72 The determination of what share of CityRail’s revenue should be paid by passengers and what share by taxpayers is made by the Independent Pricing and Regulatory Tribunal (IPART).73 Some 47% of RailCorp’s funding comes from the Government. In 2008/09, an average journey cost RailCorp $10.03 to provide and the passenger paid $2.16.74 Between 1993/94 and 2008/09, CityRail’s patronage increased at 1.9% per year. Over the past five years, passenger numbers across the network have increased more than 11%.75 Its patronage increased sharply in 2007/08, but has slowed in 2008/09 as seen in Table 2.1.76 Table 2.1: CityRail’s passenger figures77

Service provision 04/05 05/06 06/07 07/08 08/09

Passenger journeys (millions) 270.3 273.7 281.5 296.1 304.8

Increase on previous year (%) 1.3 2.8 5.2 2.9

Recently completed projects to improve the network are listed below, with ongoing projects detailed in Section 2.2.3. Epping to Chatswood Rail Link (completed in 2009). This project involved constructing a new,

underground passenger rail service connecting Epping to Chatswood via North Ryde. It included building the three new stations of North Ryde, Macquarie Park and Macquarie University.

Chatswood Transport Interchange (completed in 2008). This project involved a major reconfiguration of Chatswood Station to create a new interchange.

Newcastle Rail Corridor Upgrade (completed in 2007). This project involved a series of works including platform extensions, improving pedestrian access and signalling relocation.

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North Sydney Station Upgrade (completed in 2008). This project involved upgrading the station to allow for the increase in passenger movements and constructing a landmark building in the North Sydney CBD.78

Hornsby Platform 5 and associated yard upgrading at Hornsby.

Metropolitan Freight Network (MFN) The MFN consists of the dedicated freight lines within the rail corridors – Sefton Park to Chullora, Flemington South to Belmore, Belmore to Marrickville (shared passenger and freight corridor), Marrickville to Botany and Dulwich Hill to Rozelle.79 The MFN is owned and maintained by RailCorp, but it is proposed that ARTC will take control of MFN upon the completion of the Southern Sydney Freight Line.80

Country Regional Network The Country Regional Network (CRN) is divided into the following sub-networks – Passenger, Freight and Grain. Each sub-network requires different infrastructure performance levels to reflect its rail task. The owner of the CRN is RIC, a State-owned Corporation. RIC's principle objective is to ensure that those parts of the NSW rural network under its responsibility enable safe and reliable passenger and freight services to be provided in an efficient, effective and financially responsible manner.81 In 2004, a 60-year agreement commenced between RIC and ARTC for the operation of the CRN.82 Called the Country Regional Network Management Agreement (CRNMA), this alliance contract states that RIC retains strategic ownership responsibilities (including setting the overarching management and maintenance regime, approving ARTC’s recommended scope of works and services, and providing the budget allocations)83 and ARTC becomes the infrastructure manager.84 Funding of the CRN is specified in the five-year Country Regional Network Funding Agreement, which is negotiated between the RIC, Treasury and NSW Transport and Infrastructure.85 RIC is undertaking a competitive process to determine the delivery of infrastructure management, and expects to sign a contract by the end of 2010. The NSW Government does not operate freight locomotives on the CRN or other networks following the privatisation of the State-owned Freight Rail Corporation and National Rail Corporation in 2002. Freight rail operators in NSW include Pacific National, Interail Australia, Australian Western Railroad, Queensland Rail and Patrick Port Link.86 CountryLink CountryLink, a registered business of RailCorp, provides long distance passenger rail services on the CRN.87 Key characteristics of CountryLink are that it: Operates 144 rail services as well as 561 road coach services each week Has a fleet of 60 XPT carriages and 19 power cars, and 23 XPLORER carriages.88

CountryLink’s XPT fleet links Sydney with Melbourne, Dubbo in the west, and Grafton, Casino and Brisbane in the north. The XPLORER fleet links Sydney with Armidale, Moree, Griffith, Broken Hill and Canberra.89 As seen in Table 2.2, CountryLink’s patronage decreased between 2004/05 and 2007/08. It then increased and RailCorp has attributed this to better marketing activities.90 Table 2.2: CountryLink’s passenger figures91

Service provision 04/05 05/06 06/07 07/08 08/09

Passenger journeys (millions) 1.77 1.74 1.61 1.55 1.68

Increase -1.7% -7.5% -3.7% 8.4%

CountryLink’s network is shown in Figure 2.2.

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Figure 2.2: CountryLink’s network92

Projects to improve the quality of the passenger and freight sub-networks being advanced by RIC include: Replacing life-expired timber sleepers with steel and concrete sleepers. Over 2008/09, 400,000

new sleepers were installed. Repairing timber bridges and, where appropriate, replacing them with modern designs. During

2008/09, $2.3 million of repairs to over 50 bridges was undertaken as well as the completion of major bridge renewals.93

The Signal Box Rationalisation program, which involved centralising the functions of six signal boxes on the CRN to train control centres at Newcastle and Junee. This project was completed in July 2009.94

CRN Grain Network The operational grain network consists of 1,093km of track across 17 lines. The lines transport wheat, barley, other cereals, pulses and oilseed crops. The network’s lines and the grain production areas are illustrated in Figure 2.3.

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Figure 2.3: CRN Grain Network and grain production areas95

Grain production rates have been highly variable over the last decade as seen in Table 2.3. This variability, primarily due to rainfall, means that rail demand is also highly variable, diminishing the profitability of the railways. Table 2.3: NSW winter crop production (’000 tonnes)96

Year 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09

Production 10,834 11,171 3,505 10,768 10,724 11,867 3,837 3,145 9,7031

Some 47% of the network is designated as Class 1 or 2 lines, 27% is designated as Class 3 lines and 26% as Class 5 lines. Both Class 3 and 5 lines have axle limits of 19 tonnes and the design speed of Class 5 lines is generally 50km/h empty and 20 or 30km/h loaded depending on the type of wagon. However, a considerable portion of the Class 5 lines have speed restrictions imposed on them due to their poor condition, meaning that their speed is restricted to less than 30km/h.97 The grain network has been deteriorating and contracting for many years. The most recent group of closures was four branch lines in 2004.98 In 2004, the NSW Government committed to spending $69 million over three years to keep the remaining 11 grain lines open while a longer-term approach was developed with industry. The NSW mini-budget of November 2008 identified a further five grain branch lines for closure; consequently two branch lines in the west have had operations suspended. In June 2009, the NSW Ministry of Transport entered into a five-year Grain Rail Haulage Operating Agreement. This agreement resulted in the transfer of eighteen 48 Class locomotives and 180 wagons from Pacific National, which had stated it was not going to provide grain rail services on

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the network,c to GrainCorp. The result of this is that rail haulage operations on the grain network are now more secure.99 Grain rail wagon supply increased in 2009 with the introduction of 84 new wagons by El Zorro, a freight service contracted to ship grain by the AWB Limited (formerly Australian Wheat Board).100 In September 2009, the NSW Grain Freight Review was released by the Australian Government and it recommended that nine rail lines be kept open with State Government funding, and maintained at Class 5 level, and four should close if they did not receive industry support. Other recommendations included that: There is a need for more capacity on lines into the Port of Newcastle, where competition for rail

between coal and grain has increased Ports be better integrated into the east coast rail network All grain lines be kept in public ownership.101

In May 2010, the NSW Government released its preliminary response. As well as agreeing to the above, it stated that it would: Undertake a review of access pricing and appropriate governance arrangements for the CRN as

part of developing the NSW Freight Strategy in 2010 Undertake a market contestability process to determine if it is appropriate to consolidate the

NSW branch line network with the ARTC.102

NSW Leased Network The Leased Network comprises rail lines leased from the RIC to the ARTC for 60 years from 2004. The network consists of: Mainline interstate corridors Segments of the Country Regional Network The Hunter Valley Network.

The RIC/ARTC lease arrangements require ARTC investing in the rail lines to improve their efficiency and cost-effectiveness and RIC monitoring ARTC’s key performance indicators and reviewing progress of the investment program.103 Specifically, the ARTC is responsible for: Selling access to train operators The development of new business Capital investment in the corridors Management of the Leased Network The management of infrastructure maintenance.104

The Leased Network is illustrated in Figure 2.4. Freight on the Leased Network has increased considerably over the last decade due to economic and population growth, and coal exports.

c In 2002, the NSW Government signed an agreement (known as the ‘broadacre agreement’), with rail operator Pacific National to provide grain haulage services on the defined branch line network for five years. In 2007, Asciano (the holding company of Pacific National) announced its decision to cease branch line services in NSW. Department of Infrastructure, Transport, Regional Development and Local Government, 2009, New South Wales Grain Freight Review, p. 16.

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Figure 2.4: Leased Network105

Mainline interstate corridors The mainline interstate corridors, known as the Defined Interstate Rail Network (DIRN) consist of a north-south line connecting Melbourne to Brisbane, and an east-west line connecting Sydney with Adelaide/Perth. The NSW components of the north-south line consist of Albury to Macarthur, and Newcastle to the Queensland border. It currently does not include lines in the Sydney metropolitan area. The NSW component of the east-west line consists of Cootamundra to Broken Hill. ARTC investment aims at reducing transit time, increasing reliability, increasing capacity and reducing above-rail operating costs on these lines. This is being achieved, principally under the North-South Improvement Strategy, by: Concrete sleepering of the entire ARTC track between Victorian and the Queensland border Building the Southern Sydney Freight Line Installing automatic signalling Building passing loops and loop upgrades.

The North-South Improvement Strategy projects are mostly complete.106 To improve freight flows into and through Sydney, ARTC has also taken over the management of the operations of the Botany rail terminal.107 Hunter Valley Network The Hunter Valley network consists of the track from Port Waratah (Newcastle) to Werris Creek and from Muswellbrook to Ulan. The network primarily carries coal for export from a series of mines and coal loaders mostly between Muswellbrook and Newcastle. However, it also carries coal for domestic purposes, notably for Macquarie Generation at Drayton. In 2009, coal exports from the Hunter Valley totalled about 113 Million Tons Per Annum (mtpa) and will grow to 226mtpa by 2013.108 The ARTC lease requires that ARTC spend $142 million to upgrade the tracks over a five-year period.109 ARTC is investing in grade separation, installing bidirectional signalling, duplicating tracks and extending passing loops.110 The location of the network in relation to coal basins is shown in Figure 2.5. Coal shipped to the port at Newcastle is also supplied from the Newstan and Teralba mines to the south of Newcastle, which is carried along RailCorp’s network.111

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Figure 2.5: Location of the Hunter Valley Network in relation to NSW coalfields112

Other rail networks Sydney’s Metro Light Rail The only network in NSW is Sydney’s Metro Light Rail. This 7.2km single line is operated by Veolia Transport Pty Ltd under a 30-year lease arrangement with the NSW Government.113 In 2010, the NSW Government announced a $500 million expansion of the network. This will involve extending the existing line 5.6km from Lilyfield to Dulwich Hill, and a new 4.1km branch from Haymarket to Circular Quay via Barangaroo. Sydney’s Metro Monorail The Metro Monorail was opened in 1988 and consists of eight stations on 3.6km of track. Border Railway In 2009, a consortium led by Australian Transport and Energy Corridor Ltd (ATEC) announced that it would be building the Border Railway, a new interstate open access standard gauge railway,

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linking Moree with Toowoomba. The 340km railway will provide a second interstate rail link as it will connect with an existing standard gauge railway from Moree to Parkes that then links with Sydney, Melbourne, Adelaide and Perth. Construction is expected to be completed by 2014.114 Historic railways There are several historic rail lines operating in NSW, notably: The Zig Zag Railway The Cooma Monaro Railway The Lachlan Valley Railway.

Other significant historic rail infrastructure includes Central Station, Broadmeadow Roundhouse, the Rail Heritage Centre at Thirlmere, and the Goulburn Loco Roundhouse. The strategic policy for preserving railway heritage assets is defined in the NSW Government’s Sustainable Rail Heritage Management Strategy (2006). The Office of Rail Heritage, established within RailCorp, implements the strategy. The strategy’s key elements are: Establishing an asset management approach to the core collection of State-owned rail heritage

assets Partnering with rail heritage groups to conserve and manage core assets Upgrading the Thirlmere site to store and display most significant assets Supporting the development and transfer of heritage conservation skills between generations.115

2.2.2 Policy and governance A range of NSW Government documents sets out its policy for rail to various degrees. The most detailed is for the metropolitan rail network as detailed in the Metropolitan Transport Plan (2010). There are little publicly-available policy details on the passenger services in country NSW, grain lines and freight across the State. This contrasts with the extensive detail provided by ARTC on future developments on the Leased Network. Broad NSW rail policy includes: Shifting passenger and freight movements from road to rail, where justified by environmental,

economic or social imperatives Improving rail performance by increasing frequency, reliability and speed of services Increasing accessibility across the metropolitan public transport network by improving

connectivity of services at key interchanges Strengthening public transport links with future land use planning strategies, including facilitating

growth of new transit-oriented developments (TODs) Continuing to invest in improvements to customer information, safety, security and amenities.

Key targets for NSW include: Increasing the percentage of trips to work by public transport in Sydney to 28% by 2016 as seen

in Figure 2.6116 Increasing the share of commuter trips made by public transport to and from Sydney CBD

during peak hours to 80% by 2016117 Increasing the proportion of containers from Port Botany transported by rail to 40%.118 It is

currently 23%. Given that in April 2010, Patrick Port Logistics stated that it would discontinue its rail services from June 2010 to Port Botany from its Camellia rail terminal, which is 35km from Port Botany, this target may be hard to achieve. The closure was because the terminal is no longer a commercially-viable operation.119

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Figure 2.6: Proportion of journeys to work by public transport around the Sydney Metropolitan Area, showing the 2010 revised target120

In 2010, a report on the future of Sydney’s public transport network was released by the Independent Public Inquiry: Sydney's Long Term Public Transport Plan. Many of its recommendations align with the NSW Government’s subsequent Metropolitan Transport Plan such as scrapping the stand-alone metro system, building the North West and South West rail links, extending Sydney’s light rail system, and developing integrated fares in Sydney. The Report recommended giving priority for new spending to Western Sydney projects, doubling of public transport and a tripling of walking/cycling over the next thirty years.121

2.2.3 Sector trends New metropolitan rolling stock Two procurement programs are underway that will significantly update CityRail’s fleet. The first is the purchase of Oscars (outer suburban cars). By completion of the $320 million project in June 2012, CityRail will have a total of 192 Oscars (i.e. 48 four-car trains).122 The second is the purchase of Waratah carriages. This $3.6 billion project involves the design, development and manufacturing of 626 double-deck cars to replace CityRail’s 498 non-air-conditioned suburban carriages. The contract is a public-private partnership with the private sector to build and maintain the carriages for 30 years. The first carriages are due in late 2010. The Waratahs will be maintained at a new $220 million facility at Auburn, which is also their fit-out site.123 Ongoing incremental rail improvements There are number of expansion and efficiency projects underway with the most significant below. Rail Clearways Program This multi-year, $2 billion program involves the construction of additional track, platforms, turnbacks and stabling facilities to improve capacity and reliability on CityRail’s metropolitan network. The project is important in reducing shared train paths, and will create five independent clearways. This will reduce the impact that a disruption on one line will have on the entire network. TIDC is responsible for delivering the Rail Clearways Program. Figure 2.7.shows elements of the program.

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Figure 2.7:Elements of the Rail Clearways Program124

The Southern Sydney Freight Line (SSFL) This project involves building a 30km dedicated freight line between Macarthur and Sefton in southern Sydney. The line is being built beside the existing tracks. The new line will reduce a major rail freight bottleneck that not only affects Sydney freight trains, but also trains travelling between Brisbane and Melbourne. Currently, both passenger and freight trains share the tracks in the southern Sydney section. To prevent passenger delays, freight trains cannot use these tracks at peak periods. The SSFL will remove this constraint, allowing passenger and freight services to operate independently. Construction on the SSFL started in 2008 and is due to finish in 2010.125 Western Express Service This $4.5 billion project involves establishing a separate dedicated rail track to reduce travelling times from western Sydney to the city and providing up to 50% more services. It will require the construction of a new five-kilometre priority tunnel – City Relief Line – starting in 2015, and eight new platforms to increase capacity at Redfern, Central, Town Hall and Wynyard.126 South West and North West Rail Links Two new rail lines are being built to provide services to new growth areas, costing a total of $9.5 billion. The lines, as seen in Figure 2.8, are: South West Rail Link, which consists of an 11km rail line connecting Glenfield to Leppington

via Edmondson Park, to be completed by 2016. The line will service the expected 110,000 new homes in the South West Growth Centre and a residential population of 300,000.

North West Rail Link, which consists of a 23km line from Epping to Rouse Hill and six underground stations. It will provide a direct route between the north west of Sydney, Macquarie Park and the CBD. The line should reduce crowding on the Richmond and Main West Line. The line will be supported by the quadruplication (doubling of the existing track) of the line from St Leonards to Chatswood.127 Construction on this line is planned to start in 2017.

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Figure 2.8: North West and South West Rail Extension128

Commuter Car Park Program This program involves constructing 7,000 new commuter car park spaces in 29 CityRail locations across suburban Sydney, the Central Coast, Illawarra and the Blue Mountains. The program is designed to encourage those living in the outer suburbs to transfer to the rail network rather than drive to work.129 Northern Sydney Freight Corridor Program This program, which is still being scoped, aims to improve the capacity and reliability of freight rail along the 155km corridor between Sydney and Newcastle. It is likely to include a number of projects between North Strathfield and Broadmeadow such as grade separation, building passing loops/refuges and re-signalling works.130 Other improvement projects include: The Hunter Valley Coal Network Capacity Improvement Strategy, which is a program of works

to increase the coal haulage capacity of the lines. Improving the network will be central to achieving the goals of the 2009 Hunter Coal Port Plan, which aims to double the capacity of the Port by 2016.131

An integrated electronic ticketing system across the metropolitan area. This is expected to start in 2012.

The introduction of Digital Train Radios across RailCorp’s network. Deferment of the development of new rail networks There are two proposed rail networks that the NSW government has considered to be potential projects over the long term. They are: Sydney CBD Metro. This is envisaged to be a high frequency metro network with the

foundation lines being: Metro Line 1 City West line – from Westmead to the CBD and then beyond Rozelle to the

north-west

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Metro Line 2 City East line – from Malabar via Maroubra to the city and beyond to the Northern Beaches.

In November 2008, the NSW allocated $4.8 billion to fund Stage 1 (CBD Metro), which would consist of a single metro line with stations at Central, Town Hall Square, Martin Place, Barangaroo–Wynyard, Pyrmont and Rozelle. The Government formed Sydney Metro to advance the project. It started purchasing properties and shortlisted, in September 2009, two consortia to build, own and operate the metro network under a public-private partnership.132 In 2010, the NSW Government announced that the project would be cancelled. The Metropolitan Transport Plan identifies the Metro as a medium term project that is beyond the 10-year timeframe of the Plan but planning and corridor protection should be undertaken.133

Very Fast Train. The Very Fast Train project involves building a high-speed passenger network between east coast cities, notably Melbourne, Canberra, Sydney and Brisbane. This project has been explored a number of times over the last few decades but has not been able to proceed to development. In December 2008, Infrastructure Australia included the Very Fast Train in its list of projects worthy of further analysis. It costed a network between Victoria, ACT and NSW at $32 to $59 billion.134 The Metropolitan Transport Plan identifies very fast rail as a project that is beyond the 10-year timeframe of the Plan.135

Continual development of the Melbourne–Brisbane Inland Railway concept The Melbourne–Brisbane Inland Railway is a proposed standard gauge railway from Melbourne to Brisbane travelling inland. The ARTC is undertaking a three-stage study to assess the project. Stage 1 determined the route for further analysis, and likely demand, capital costs and operating costs of the railway. Stage 2 included engineering and environmental studies, and further developed the financial and economic analysis of the project. It found that the railway appears not to be financially viable on a standalone commercial basis. Similarly, the economic costs of the proposed railway exceed its benefits, although the figures improve for later start dates. Currently underway is Stage 3 of the study, which involves the development of the proposed alignment of the railway, further financial and economic analysis and identification of delivery strategies. The proposed 1,690km route being examined uses existing rail lines from Melbourne via Albury to Cootamundra, Parkes and Narromine; then a generally direct route, with substantial new construction, to Narrabri; existing lines to Moree and North Star near Goondiwindi; and new construction from North Star to Brisbane via Toowoomba. The study is expected to be completed in mid 2010.136 Growth in freight on the Leased Network Forecasting future freight demand depends on assessing the future attractiveness of rail compared to other modes (road, sea and air) in terms of its price, availability and reliability, as well as considering the probability of major new projects commencing. In the case of NSW, new projects include expansion in coal mining, and increased port developments.137 Historically, the ARTC has based its growth forecasts on historical rates of demand growth, plus 1% to 2%, and a broad continuation of historical rail market share.138 However, the ARTC considers that rail freight attractiveness will rapidly change in the future due to: Continued rising fuel costs in real terms Continued rising labour costs in real terms, in particular for long-distance truck drivers Introduction of a carbon trading scheme Introduction of mass-distance charging for road access Increased urban congestion Continued rising demand for coal Continued rising demand for other Australian minerals.139

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ARTC has developed projections for rail share, using a low base and high growth scenario, to 2017/18. Figure 2.9 presents these projections for various ARTC rail paths using 2004/05 as the base year. Figure 2.9: ARTC paths140

2.3 Performance

2.3.1 Passenger service network performance Passenger service performance targets are primarily: Punctuality (on-time running), measured as the percentage of the services arriving on time at

specified monitoring points Reliability, measured as a proportion of the timetabled train services that have completed their

runs. On-time running is reported as the percentage of journeys arriving at their destination within a certain time of the published timetable time. The factors that affect on-time running targets are: Train mechanical problems. RailCorp notes that around 25% of all peak delays relate to fleet

incidents, which is best addressed by improving maintenance.141 Signal, track, level crossing and points problems Vandalism Passenger or staff illness or injuries Passenger inability or unwillingness to board and alight quickly Extreme weather such as storms and heat waves Police operations, fatalities and bushfires.

Table 2.4 details on-time running for CityRail and CountryLink services. The measure of reliability has changed since 2004/05, which makes assessing long-term improvement difficult. Prior to 1 July 2005, reliability was measured by the percentage of peak trains arriving at their destination within 3:59 minutes of the timetable for suburban services and 5:59 minutes for intercity services. After 1 July 2005, it was redefined to be 5:00 minutes for suburban and 6:00 minutes for intercity services.142 The target for reliability for suburban trains has been static at 92% since 1993/04.143

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Table 2.4:On-time running for performance CityRail and CountryLink, 2004/05 to 2008/09144

Service provision 04/05 05/06 06/07 07/08 08/09 Target

CityRail

Metropolitan trains on time – peak (%) 61.5 88.7 92.9 93.6 95.8 92.0

Intercity trains on time – peak (%) 72.4 89.6 92.1 91.7 94.0 92.0

Total CityRail trains on time – peak (%) 63.1 88.8 92.8 93.4 95.5 92.0

CountryLink

Trains on-time (%) 71.2 75.9 73.7 70.5 76.6 78.0

Reliability is reported as the percentage of services completing their timetabled journey. The target for CityRail is less than 0.5% for services cancelled.145 Table 2.5 details reliability for CityRail services. CountryLink does not record reliability as a percentage of services that completed their journey.146 Table 2.5: Reliability for CityRail and CountryLink services, 2004/05 to 2008/09147

Service provision 04/05 05/06 06/07 07/08 08/09 Target

CityRail (%) 97.5 99.0 99.4 99.5 99.6 99.0

The Independent Transport Safety and Reliability Regulator undertakes an annual survey of CityRail customers. The survey shows that customer satisfaction has improved across most areas as seen in Figure 2.10. However, it is significant to note that customer satisfaction with crowding is still very low. Some 51% of train users are dissatisfied with crowding.148 Figure 2.10: Customer Satisfaction Survey (%)149

An indicator of track quality is provided by the Track Condition Index (TCI). The lower the TCI the better the track. A TCI score of 45.00 indicates an acceptable score and 40.00 or below reflects very good condition. The TCI has reduced over the last four years as seen in Table 2.6. RailCorp considers that a significant reason for this has been the upgrading of 80% of its track with concrete sleepers. These sleepers prevent buckling in hot weather, allowing normal speeds.150 Table 2.6: Track Condition Index for RailCorp’s networks151

05/06 06/07 07/08 08/09

Track Condition Index 41.29 40.41 40.35 40.27

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Frequency Punctuality Journey Time Delays and Cancellations

Crowding during Peaks

2004

2005

2006

2007

2008

2009

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Since the mid-2000s, RailCorp’s maintenance expenditure has increased as seen in Table 2.7. Over 2008/09, RailCorp spent $370 million on major periodic maintenance including replacing turnouts (i.e. points), rebuilding overhead wiring and reconstructing track.152 Table 2.7: Infrastructure and rolling stock maintenance expenditure153

Maintenance expense ($M) Capitalised maintenance ($M)*

2004/05 527 82

2005/06 630 131

2006/07 683 181

2007/08 734 172

2008/09 756 183

* Capitalised maintenance is maintenance that is paid as a lump sum to satisfy a maintenance liability for a period of time. Capitalised maintenance is apportioned over the period

The quality of the Country Regional Network is significantly worse that the metropolitan network. Much of the network was constructed in the late 1800s and the track alignment has changed little since then. While the last few years have seen improvements in the track quality, there are numerous speed restrictions in place, particularly on little-utilised sections and across bridges. There are a number of iron lattice truss girder bridges still in use on the network. The number of speed restrictions on the network, imposed by the Australian Rail Track Corporation as the network manager, coupled with delays caused by longer freight trains on the Leased Network, have contributed to CountryLink’s low on-time running performance.154 The situation on the other two segments of the Country Regional Network – freight and grain – are even worse, as seen in Table 2.8. The grain network condition is the worst, and much of the grain network infrastructure uses timber sleepers and timber bridges up to 100 years old. Due to its condition, only lighter older locomotives can be used on many of the grain lines. The NSW Grain Freight Review assesses the below-rail network in 2010 as poor.155 Table 2.8: Performance of the Country Regional Network156

Measure 2007/08 Actual 2008/09 Target

Tempory Speed Restrictions (minutes)

Passenger Freight Grain

83 203 424

130 270 550

Track Quality Index Passenger Freight Grain

31 38 45

31 42 46

Bridges Under Speed

Passenger Freight

1 3

5 5

The changes in the TQI over the last four years are seen in Figure 2.11. The RIC attributes the improvements in passenger and freight networks to its targeted maintenance at specific locations, and use of improved components for replacing life-expired infrastructure, such as replacing timber sleepers with steel and concrete sleepers.157 RIC predicts that given the current funding commitment, all timber bridges will be renewed within four years and all timber sleepers within 10 years on the passenger and freight network.158

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Figure 2.11: Track Quality Index (TQI) for the Country Regional Network159

On the Hunter Valley Coal Network, coal traffic is expected to increase significantly, requiring improvements to the single track sections of the network north of Muswellbrook.160 However, there is concern that with the growth in coal trains, there will be fewer train paths available for the grain trains161 and passenger trains. The 2009 Lower Hunter Transport Needs Study reported that passenger services are ‘full at peak times’ and at some locations north of Telarah, where coal, general freight and passenger trains share one pair of tracks and gradients place severe limitations on the capacity of the system.162 There are no capacity issues for coal trains running from the Newstan and Teralba mines on the RailCorp network to Newcastle.163 Over the longer term, a significant change in regional freight will arise in Newcastle as it has been nominated as the location for import/export container trade once Port Botany’s capacity is exceeded. This may occur as early as 2017. The improvements on the Hunter Valley Coal Network have been substantial and reflected in the improvement in the track condition index as well as the reduction in freight costs over the last five years. With the completion of the Southern Sydney Freight Line, the most significant bottleneck of the Metropolitan Freight Network will be addressed. Currently, part of the MFN is shared with passenger services. To prevent delays for passenger services, there is a freight curfew during morning and afternoon passenger peaks.164 The result is that freight trains are delayed and cannot arrive during optimum times for freight operations. The new freight line will allow separation of freight and passenger traffic allowing freight to operate uninterrupted. On many parts of the CRN, the limited load capacity of track and bridges, and the location of passing loops, impose constraints on rail capacity. However, there are no shortages of spare train paths within the region. For example, the 2009 Central West Transport Needs Study found that there would be no capacity problems with the existing network for at least 25 years.165 However, a significant impediment to rail operations is imposed by constraints off the CRN, notably for trains accessing the Metropolitan Rail Area Network and Port Botany in particular.

2.3.1 Derailments The quality of the rail network is reflected in the number of derailments. NSW’s rail network experienced 469 derailments between January 2001 and June 2009.166 Converting this figure to derailments per million km travelled, NSW’s level of derailments per distance travelled is below the national average, as seen in Table 2.9.

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45

Table 2.9: Train derailments per million km travelled, 1 January 2001 to 30 June 2009167

Period NSW Qld WA Tas Vic NT SA Total

January 2001 – June 2009

0.90 0.96 0.82 10.20 0.53 1.61 1.27 0.91

2.3.2 Level crossing safety Level crossings can be controlled through either passive or active control systems. Passive control systems alert road users through signs and road markings of an approaching level crossing. Active traffic control systems alert road users through flashing lights and sounds that are triggered by approaching trains. For high risk level crossings, Active Advanced Warning Systems can be installed that alert road users of approaching trains up to 200 metres before the crossing. There are 3,061 rail level crossings in NSW that have passive protection measures.168 There have been 85 road vehicle collisions at NSW level crossings between 1 January 2001 and 30 June 2009.169 Normalising this collision rate for train distance travelled, the NSW accident rate is trending down as seen in Figure 2.12. Figure 2.12. Normalised road vehicle collisions at level crossings per million train km travelled by jurisdiction, 1 January 2001 to 30 June 2009170

NSW road and rail agencies have formed the Level Crossing Strategy Council to coordinate improvements in level crossings. The Council also oversees the $7 million per annum Level Crossing Improvement Program funded by the NSW Government. Prioritised level crossing work is done via the Australian Level Crossing Assessment Model.171 As part of the Federal Economic Stimulus package, the Australian Government provided $13.6 million over 2008/09 and 2009/10 to fund the installation of boom gates and other safety measures at 55 high risk rail level crossing sites across NSW. Work on the upgrades started in mid-2009 and is expected to be completed by mid-2010.172

2.3.3 Rail safety and security In 2008, the Rail Safety Act 2008, was introduced, which establishes a safety regulatory regime for rail owners and operators that conforms to the national model legislation. RailCorp publishes a range of safety statistics with an overall composite safety indicator being the Safety Incident Index. This index incorporates accidental passenger fatalities, serious signals passed at danger (SPAD) incidents, significant track defects, explosions, collisions with motor vehicles at level crossings, and trains exceeding track speed limits by more than 20kph.173 For many months, RailCorp did not meet its targets as seen in Figure 2.13.

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2.4 Future challenges The future challenges to achieving improvements in rail infrastructure are: Inadequate expenditure on rail infrastructure. The Metropolitan Transport Plan predicts that

the population in Sydney will increase by 550,000 people by 2021. A considerable proportion of this growth is predicted to occur in Western Sydney and the Plan recognises the need for public transport infrastructure improvements, especially rail, to service this growth area. Meeting the proposed 10-year funding guarantee commitments will prove a significant challenge to meeting demand for transport infrastructure.

Building confidence in the NSW Government’s ability to select and implement projects. The Sydney Metro project cancellation has resulted in concerns about the NSW Government’s inability to correctly select projects and then implement them. The history of the North West Rail Link is also illustrative of inconsistent priorities. It was first announced in 1998 for construction by 2010, then in 2006 its commencement was rescheduled to 2017, in 2008 it was cancelled, and in 2010 it was again announced that it would proceed in 2017. The NSW Government needs to improve its selection of projects and implement them as per their committed time frames.

Reducing crowding and improving services on CityRail and CountryLink services. Low customer satisfaction with crowding in peak times, along with the lack of significant improvement in train reliability, is an ongoing concern.

Provision of intermodal terminals. Multi-use intermodal terminals are essential to increasing rail volumes, and driving down transport costs. While the ARTC provides the interstate mainlines, it is generally private sector operators that provide the intermodal terminals. To maximise the benefits from these terminals, all stakeholders (e.g. local government, local businesses, community and transport operators) should be involved in their planning and funding in proportion to the benefit that they receive from them.

Improving the travel times between Sydney and neighbouring urban centres. The rail service between Sydney and its neighbouring centres of Wollongong, the Blue Mountains and Newcastle are currently slower in several cases than in the past. For instance, the train between Newcastle and Sydney took 2 hours, 26 minutes in 1937 and today takes 9 minutes more, and the train between Gosford to Sydney took 70 minutes in 1960 but today takes 94 minutes.179 The challenge is to increase the speed, reliability and convenience of these trips to increase their attractiveness compared to road.

Determining the future of the country grain network. The short-term future of the country grain network is secure, however, there is uncertainty about its long-term prospects. Any decision on its future needs to recognise the long-term costs of closing lines, including additional road traffic and maintenance, and the increased cost of hauling grain by road.

Improving and upgrading rail infrastructure beyond the Liverpool Range to open up the Namoi Basin for coal exports. While coal lines in the Hunter region continue to improve, additional coal exports from the nearby Namoi Basin will also require improved rail access in that region.

2.5 Report Card rating

Infrastructure Type NSW 2010 NSW 2003 National 2005 National 2001

Rail D- D C- D-

Based on considerations of planning, funding, and infrastructure capacity and condition, NSW’s rail infrastructure has been rated D-. This rating recognises that while the ARTC’s Hunter Valley Coal Network and to a lesser extent, the other ARTC lines are of a good standard, the Metropolitan Rail Network and the Country Regional Network require significant improvements. Targeted projects are improving both networks, however, there is limited confidence that the planned projects will deliver the scale of improvements required along the metropolitan network routes and in country

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areas to meet both the unmet existing needs and those arising from the rapidly growing passenger and freight needs in Sydney. Positives that have contributed to the rating are: Significant projects to improve metropolitan rail reliability and punctuality Metropolitan tram line extensions Metropolitan rail fleet upgrade A policy commitment that public transport is central to future urban development and emphasis

on transport-oriented development Improving the quality of the ARTC network Delivery of significant improvements to the Hunter Valley Coal Network Replacement of timber sleepers with concrete on interstate sectors.

Negatives that have contributed to the rating are: Metropolitan rail service problems Declining condition of the grain network Inadequate long-term public transport planning Inadequate commitment to major new rail networks Lack of long-term vision for rail including within a broader transport strategy Lack of planning to advance a high speed rail network connecting major centres.

49

3 Ports

3.1 Summary

Infrastructure Type NSW 2010 NSW 2003 National 2005 National 2001

Ports C Not rated C+ B

This rating recognises that capacity is adequate at NSW’s major ports due to recent infrastructure upgrades and is planned to grow in line with need. There is a lack of integration between the ports and road and rail infrastructure that has led to congestion problems and therefore the lower rating. Since the last Report Card, the major port sector developments include: The development of the NSW Government’s Port Growth Plan Relocation of car imports from Port Jackson to Port Kembla.

Recently completed and in-progress major infrastructure projects include: The reclamation of 60 hectares of land for five extra shipping berths at Port Botany The completion of the Mayfield No.4 berth at the Port of Newcastle NCIG berth at Newcastle and channel deepening project The completion of the Inner Harbour redevelopment and outer harbour projects at Port Kembla.

Challenges to improving port infrastructure include: Meeting future container growth Addressing congestion at Port Botany Implementation of the port and freight plans Integrating land use decisions with port development Additional Coal Export facilities at Newcastle Deepening of Newcastle Harbour.

3.2 Infrastructure overview This section focuses on the major commercial seaports and the two regional seaports as they are an integral part of the State and national transport system. It does not cover local ports, defence ports or stevedoring services whose primary role is to load and unload ships. However, it should be noted that over the last five years, there has been a significant investment by port users on port infrastructure.

3.2.1 System description NSW’s port infrastructure, as seen in Figure 3.1, consists of: Four major commercial seaports – the ports of Sydney Harbour, Port Botany, Port Kembla and

Newcastle Two regional commercial seaports – the ports of Yamba and Eden.

The function of the commercial seaports is to promote and facilitate trade. This role is fulfilled through the leasing of common user infrastructure to private sector stevedores and specific sites to private berth owners for the import and export of commodities. The ports also have a responsibility to promote safe navigation and environmental management.180 Of the NSW commercial ports, Port Botany is the largest container port, while the Port of Newcastle and Port Kembla specialise in the export of coal and other resources.

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Figure 3.1: NSW ports181

Port Botany Port Botany is located on Botany Bay, 12km from Sydney’s central business district. It is the larger of Sydney’s two ports. The port is wholly owned by the NSW Government and operated by the Sydney Ports Corporation under the Ports Corporatisation and Waterways Management Act 1995. The Sydney Ports Corporation is required to be a successful business that promotes and facilitates trade through the port and ensures port safety. Port Botany is the major container port of NSW and has a significant bulk liquid capacity. The port accounts for approximately 70% of the throughput of Sydney Ports Corporation with Port Jackson constituting the remaining 30%. Port Botany consists of two container terminals with six container vessel berths at Brotherson Dock, in addition to a common user bulk liquids berth and storage facility. Caltex operates a private crude oil and petrochemical import facility at Kurnell. The channel to Port Botany is 213m wide and has a minimum depth of 15m. Port Botany is serviced by a rail freight line and the road network.182 Sydney Ports Corporation has three main projects under way. They are: Port Botany Expansion. This $725 million project involves reclaiming about 60 hectares of

Botany Bay and developing a 63-hectare terminal within five new shipping berths and 1,850m of new wharves. The expanded terminal is expected to be completed in mid-2011.

Intermodal Logistics Centre at Enfield. This $192 million project involves establishing an intermodal centre at the disused rail marshalling yards, and consists of a 12-hectare intermodal terminal, eight hectares of empty container storage, five hectares of warehouse distribution areas and four hectares of light industry and commercial areas.

Second Bulk Liquids Berth at Port Botany. This $53 million project involves developing a second bulk liquids berth to cater for the growth in bulk liquids.183

Figure 3.2 displays the locations and tenants at Port Botany.

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Figure 3.2: Port Botany facilities184

Sydney Harbour Sydney Harbour handles a wide range of commercial vessels, and has 11 berths that cater for dry bulk, bulk liquids and general cargo. The port is operated by the Sydney Ports Corporation. The key elements of the port are: Glebe Island, two common user berths with bulk dry cargo discharge facilities and adjacent

storage silos. Some of the cargo that is discharged at Glebe Island includes bulk refined sugar, gypsum and cement.

White Bay, 1,275m of berth used for general cargo and lay-up.185 Shell’s Gore Bay Terminal in Greenwich, used for the import, export and storage of oil products,

and supplies the Clyde Refinery with crude oil via a 19km underground pipeline.186 Hanson’s Blackwattle Bay berth, which services the discharge of bulk concrete aggregate.187

The major changes to the port have been: In 2008, the NSW Government announced that the Passenger Cruise Terminal would be moved

from Wharf 8 East Darling Harbour (now known as Barangaroo) to White Bay. The ownership of the land was transferred from the Sydney Ports Corporation to the Sydney Harbour Foreshore Authority, and authority for redeveloping the site has since been transferred to the new Barangaroo Delivery Authority.188

The transferring of car imports from the Glebe Island port to Port Kembla, with the last car carrier discharging its cargo at Glebe Island in November 2008.189

Under the 2003 NSW Government’s Ports Growth Plan, Sydney Harbour will remain a working port with at least 1,000 commercial ships coming through Sydney Heads each year. However, containers and general cargo stevedoring will be progressively encouraged to relocate to Port Kembla as existing leases expire. Despite the Government’s object of maintaining Port Jackson as

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a working port, there is increased pressure for alternative uses for port land.190 Figure 3.3 displays the port’s precincts and tenants. Figure 3.3: Sydney Harbour port191

Newcastle The Port of Newcastle is NSW’s largest port by throughput and the world’s largest coal export port. It is located at the mouth of the Hunter River in the city of Newcastle. The Port of Newcastle services the Hunter region’s coal, aluminium, steel and grain exports. The port is wholly-owned by the NSW Government and operated by the Newcastle Port Corporation under the Ports Corporatisation and Waterways Management Act 1995. The Newcastle Port Corporation is required to be a successful business that promotes and facilitates trade through the port and ensures port safety. In 2008/09, the Port of Newcastle facilitated 95.84 million mass tonnes of trade, with 90.49 million mass tonnes of this trade being coal exports.192 Coal exports from the Port of Newcastle are loaded at the three terminals. Two of these terminals are owned and operated by Port Waratah Coal Services, with the other owned and operated by a consortium of Hunter Valley coal producers called Newcastle Coal Infrastructure Group. Port Waratah Coal Services’ facilities are located in Carrington at Dyke No.4 and Dyke No.5 berths as well as at Kooragang No.4-6 berths located on Kooragang Island. The Newcastle Coal Infrastructure Group terminal is also located on Kooragang Island currently occupying Kooragang No.8 berth with expansion planned for Kooragang No.9 berth, to be operational in 2010. The Port of Newcastle handles a diverse range of cargo types including bulk, break bulk, project cargo, general cargo, containers and passengers. The port currently has 16 operational berths in total, with 10 allocated to general cargo and six allocated to coal. Two berths located at the Eastern

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Basin are used for general cargo activity including break-bulk, aluminium, steel and timber products. The Western Basin No.3 berth is used primarily to handle grain exports, with Western Basin No.4 having the only berth-side rail line on the eastern seaboard, which is ideal for rolling stock. Bulk ore products are loaded at Dyke No.2 berth located at Carrington. The Channel berth and Dyke No.1 berth are classified as tie-up berths and are currently being used to handle passenger ships and petroleum products respectively. The BHP No. 6 berth located on the former BHP steelworks site at Mayfield is used by Koppers Australia for the discharge and loading of high temperature bulk liquids such as tar and pitch.193 A large proportion of the old BHP steelworks site, which ceased steel production in September 1999, was recently transferred to the Newcastle Port Corporation. A section of this land was redeveloped in 2009 to create a 265m berth and 10,000m² hardstand area for the handling of break-bulk, project, general and containerised cargo.194 Mayfield No.4 berth is the first project on the 90-hectare site previously occupied by BHP. Future development on the site will be used for container trade, with 35 hectares already reserved for a future container terminal and wharf facility. The development of this land will meet with the NSW Government’s strategic objective of making Newcastle the next major container port once Port Botany has reach capacity.195 Other planned infrastructure developments at the Port of Newcastle include the $2.55 million refurbishment of the Channel berth. The demand for coal exports over the last few years resulted in a capacity shortage in the coal supply chain, manifested in lengthy queues of coal vessels waiting their turn to load, and uncertainty whether capacity would be available to meet future demand. To address the capacity constraint, the NSW Government brokered an industry agreement on a long-term terminal access solution for the Port of Newcastle. The agreement, known as the Hunter Coal Export Framework, is ACCC-approved and includes triggers requiring terminals to build new capacity to meet coal producers’ demand, long-term contracts to underpin the terminals’ investment in capacity, guaranteed access for new entrants and expanding producers, and a proposal for a fourth coal-loading terminal in Newcastle.196 In February 2010, Port Waratah Coal Services announced the commencement of a $670 million expansion project that will increase capacity to meet its contractual obligations of handling 126mtpa by 2012. Since 2007, PWCS has committed over $1 billion to expand its terminal capacity. The new coal terminal, owned and operated by the Newcastle Coal Infrastructure Group (NCIG) officially opened in May 2010. Stage 1 of the project delivered an initial terminal capacity of 30mtpa. The $1 billion investment includes rail infrastructure, coal storage area, shiploaders, wharf facilities and two shipping berths. Stage 2AA is about to commence and will expand capacity from 30mpta to 53mtpa. The maximum capacity of the terminal is 66mtpa.197 Figure 3.4 displays the location of the facilities at the Port of Newcastle: Port Kembla Port Kembla is located 8km south of the city of Wollongong in the Illawarra region of NSW. Port Kembla is primarily used to service the local coal industry in addition to exporting grain and bulk products. It is Australia’s largest port for steel exports by throughput. Port Kembla became the state’s primary car import port in 2008, after import of cars into Sydney Harbour ended.

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Figure 3.4: Port of Newcastle facilities198

Port Kembla’s throughput for the 2008/09 financial year was 26,405,138 mass tonnes. Coal exports constituted approximately half of this throughput, with the import of motor vehicles and the export of steel products also being of significance.199 Infrastructure at Port Kembla is divided between the Inner and Outer Harbour. The Inner Harbour consists of privately-operated BlueScope Steel facilities used for the import of raw materials and the export of steel, a series of coal berths, a grain berth and a multi-purpose berth that handles bulk and break-bulk commodities. The coal berth at the port is operated by the Port Kembla Coal Terminal Limited. The terminal has an export capacity of 16 million tonnes of coal per annum and operated at 83% 2008/09 of capacity.200 The Outer Harbour consists of the Bulk Liquids and Oil Berths that are used for fuel and liquid handling, and a common-user berth that handles bulk and break-bulk commodities.201 Australian Amalgamated Terminals opened a facility in Port Kembla in 2008; this is used for the processing of motor vehicles, containerised and break-bulk products. Port Kembla’s Inner Harbour recently underwent a redevelopment that was completed in 2008. This redevelopment included: A $16 million, 130m extension of the Multi-Purpose berth Construction of a 15,000 square metre cargo storage facility for sensitive cargo A third roll-on/roll-off berth The dredging of approximately 380,000 cubic metres Relocation of the Inner Harbour Rail Spur Construction of a 20-hectare pre-delivery inspection facility for imported vehicles The extension of Berth 105 to allow for the increasing size of car vessels.

Plans have been developed to reclaim approximately 52 hectares of land in the Outer Harbour in order to construct seven new berths. This project will ensure the future capacity of the port as more trade is relocated from Port Jackson and existing trades grow. The recently completed and planned expansions to the terminal facilities will be adequate for natural growth and the transfer of cargoes

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from Port Jackson. The capacity of connecting infrastructure to the port is likely to be adequate to meet forecast growth, however, some improvements may be required to the road network at the north of the port.202 Figure 3.5 displays the location of port facilities at Port Kembla. Figure 3.5: Port Kembla facilities203

Eden The Port of Eden is located in Twofold Bay adjacent to the town of Eden on the NSW south coast. The port services the south coast region of NSW, including the major population centres of Bega, Merimbula, Bombala and Cooma. The port is owned by the NSW Government and operated by NSW Maritime. The export of woodchips is the predominant function of the Port of Eden. Of the 1,199,172 mass tonnes exported through Eden in 2008/09, 803,369 mass tonnes were hard woodchips and

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289,533 mass tonnes were logs. The port has significant capacity to meet the needs of users and is home to a large fishing fleet.204 The infrastructure at the Port of Eden consists of a 200m multi-purpose wharf and an approximately 6,000 square metre storage area, which was opened in 2006.205 Yamba The Port of Yamba is located on Goodwin Island at the mouth of the Clarence River near the town of Yamba in northern NSW. The port services the Northern Rivers district of NSW including the major population centres of Grafton, Ballina, Lismore and Coffs Harbour. In 2008/09, the total trade throughput at the Port of Yamba was 16,002 mass tonnes. The major commodities traded were timber products, manufactured articles, live animals and petroleum products. The port is home to a large prawning and fishing fleet and provides a link to Lord Howe and Norfolk Islands. Infrastructure at the Goodwin Island facility includes a 70m wharf, and has a paved storage area of 5,000 square metres. The channel depth is limited to three metres at low water.206

3.2.2 Policy and governance The NSW Government plays two key roles in the NSW ports sector. Primarily, as the shareholder of the three port corporations, the Government is responsible for ensuring that the ports are managed efficiently and effectively in the best interests of the people of NSW. The Government also oversees the broader strategic planning of how ports and port developments fit within the State’s transport supply chains and connecting infrastructure.207 The NSW Government’s strategic vision for ports is identified in the NSW Ports Growth Plan (2003). This plan addresses strategic issues in relation to the development of NSW ports up to 2025, providing a framework to achieve adequate port capacity to meet projected growth. The plan outlines the following direction shifts for NSW ports: The relocation of general cargo and car imports from Port Jackson to Port Kembla to provide

more potential for growth The identification of the old BHP site at Newcastle as the next major container port in NSW,

following the point where capacity is reached at Port Botany An emphasis on facilitating a greater capacity at the Port of Newcastle for the export of coal and

bulk goods. Port operations and development are regulated in three main areas. They are: Market competition in stevedoring and freight-forwarding operations. The Australian

Competition and Consumer Commission (ACCC) reviews stevedoring and freight-forwarding operations to ensure that the market remains competitive.

Development of ports. Proposals for the expansion of port facilities are subject to environmental assessment processes.

Safety of ports. The NSW Maritime Authority is responsible for ensuring that the port corporations comply with their Port Safety Operating Licences and sets benchmarks for the operation of ports under the Ports Corporatisation and Waterways Management Act 1995 and the Marine Safety Act 1998.208

Prices for port corporation services are not subject to regulatory oversight in NSW, as is the case in Victoria, Queensland and South Australia. A 2007 review into port competition and regulation in NSW found that expanding the current levels of economic regulation of port corporation prices is not likely to deliver improved competition outcomes. If an increase in regulatory oversight was initiated, it would most likely be done through the Independent Pricing and Regulatory Tribunal

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(IPART) by the declaration of port services as a government monopoly service under the IPART Act.209 Key multi-jurisdictional bodies and government agencies are: Department of Transport and Infrastructure. The NSW Government Department responsible

for transport coordination, infrastructure, policy and planning. NSW Maritime Authority. The NSW Maritime Authority, commercially known as NSW

Maritime, is the State maritime regulator and is responsible for port safety and providing strategic advice to the NSW Government on ports and maritime matters.210

3.2.3 Sector trends Port throughput growth The cargo throughput of all NSW ports has increased 2.59% per year on average for the last four years. However, the actual growth figures vary with individual ports as seen in Table 3.1. This variation reflects the fact that port traffic is heavily dependent on the state of the economy, product demand, geographic location, and seasonal variations. Table 3.1: Cargo throughput by port (’000 mass tonnes)211

Year ending June

2004/05 2005/06 2006/07 2007/08 2008/09 4-year average annual change (%)

Sydney 25,870 25,905 27,796 29,177 27,754 1.90

Newcastle 83,560 85,573 85,692 93,315 95,840 3.50

Port Kembla 24,385 25,909 25,413 26,591 24,394 0.37

Eden 953 1,047 1,330 1,273 1,199 6.69

Yamba 12 14 10 16 16 12.02

NSW Total 134,780 138,448 140,241 150,372 149,202 2.59

Table 3.2 identifies the import, export and cruise vessel for each port. Table 3.2: Import, export and cruise vessel visit data for 2008/2009212

Port Import (mass tonnes)

Export (mass tonnes)

Total Throughput Cruise vessel visits

Sydney 20,304,032 7,449,990 27,754,022 119

Newcastle 3,027,138 92,812,719 95,839,857 3

Port Kembla 7,329,944 17,063,783 24,393,727 0

Eden 447 1,198,725 1,199,172 0

Yamba 4,709 11,293 16,002 0

NSW Total 30,666,270 118,536,510 149,202,780 122

The Sydney ports are the only NSW ports that handle large volumes of containers. The volume of freight to pass through Sydney each year is forecast to more than double by 2025.213 Figure 3.6 illustrates the growth in numbers of these containers.

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Figure 3.6: Container Traffic, Sydney Ports Corporation214

Container volumes have grown by approximately 7.4% per annum over the past 30 years. This growth is forecast to continue with 2.6 million TEU expected to pass through Port Botany in the 2016/17 financial year and 4 million TEU in 2024/25. Figure 3.7 illustrates the forecast growth in container trade at Port Botany.215 Figure 3.7: Forecast growth in container trade at Port Botany to 2024/25216

3.3 Performance

3.3.1 Port infrastructure Performance measures of port service quality are not comparable across ports due to differences in location, port infrastructure and the types of cargo handled. In addition, most port measures, such as average ship turnaround time, are likely to be influenced by the efficiency of stevedores rather than for port infrastructure. Unlike Victoria, Queensland and South Australia, prices for port corporation services in NSW are currently not subject to independent economic regulatory

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oversight, making it difficult to obtain the necessary cost data upon which to assess price and quality of port services. However, in terms of infrastructure, the following comments can be made: Landside infrastructure connecting to Port Botany is inadequate resulting in congestion The coal supply chain capacity balance in Port of Newcastle has improved but is still causing

loading congestion.

3.3.2 Port security Port Botany, Port Jackson, Port Kembla, the Port of Newcastle and the Ports of Yamba and Eden are all Security Regulated Ports. All have security plans that aim to safeguard maritime transport and facilities against unlawful interference. The security regulatory environment is governed by the Commonwealth’s Maritime Transport and Offshore Facilities Security Act 2003 and Offshore Facilities Security Regulation 2003, which reflect the International Ship and Port Facility and Security (ISPS) Code. Over the last few years, each port has increased security measures such as participating in information-sharing forums between government agencies and regulated port users, building new and upgraded fencing and gates, restricting access to sensitive areas, undertaking background checking of port workers through the introduction of the Maritime Security Identification Card (MSIC), and increasing the volume of closed circuit television (CCTV) surveillance.

3.3.3 Environmental sustainability The NSW port corporations all aim to achieve environmental sustainability. They attempt to minimise the impacts of their operations on surrounding land and water environments and achieve ecologically sustainable port developments through a combination of strategies.217 Environmental factors that are key to green ports are resource consumption (e.g. water, energy, transportation) and environmental quality (e.g. emissions, water quality, land use). The importance of environmental issues is reflected in the fact that it is a key requirement to the approval and successful financial and political completion of the project. Future port developments will continue to meet increasingly strict environmental guidelines.

3.4 Future challenges The challenges in achieving improvements in port infrastructure are: Meeting future container growth. Container freight volumes are expected to grow for the

foreseeable future. Over the short to medium term, this growth can be accommodated by developments underway in Port Botany, which will provide additional stevedoring capacity and infrastructure upgrades, but will require expansions to the M5 motorway and the freight rail network to accommodate increased traffic volumes to the port. In the long term, growth in container freight cannot be accommodated solely at Port Botany due to development restrictions; they will need to be facilitated at the Port of Newcastle. A future challenge will be the need to integrate any new container facilities at the Port of Newcastle into intermodal hubs/supply chains where consolidation and dispatch of containers occur, rather than at the ports. Instead, container ports will focus on rapid loading and unloading of containers, and optimising transfers.

Addressing congestion at Port Botany. Easing the landside bottlenecks at Port Botany will be an increasingly difficult challenge as total throughput continues to grow. The NSW Government’s stated objective of a 40% rail modal share of freight to and from Port Botany by 2016 appears to be unachievable with currently only 23% of freight being moved by rail. Measures to increase the land supply chain efficiency such as the Operational Performance

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Management (OPM) framework will need to be continued to meet this future challenge in addition to extensive infrastructure improvements.218

Integrating land use decisions with port development. Ports require large amounts of land and generate significant road and rail traffic. Ensuring compatible land use around ports is challenging due to the typically high value of land around ports. The need to consider future port requirements when making nearby urban development decisions is recognised by the NSW Government. However, ensuring that this occurs is challenging and requires that:

Local governments consider the port’s future requirements Ports better contribute to local and regional planning Urban encroachment and other developments do not prevent the efficient functioning of the

port. Port-specific challenges. The particular challenges facing each of the major ports in NSW are:

Port Jackson: Providing appropriate port and landside infrastructure to accommodate the existing commercial port uses interfacing with city urban development; this includes the cruise terminal and passenger ferry facilities

Port of Newcastle: Providing increased channel length and depth to support proposed container and bulk material terminal developments combined with landside transport development to accommodate future growth

Port Kembla: Providing for the progressive staged development of the Outer Harbour to satisfy demand and the encouragement and facilitation of integrated landside infrastructure to optimise the efficiency of existing and proposed port infrastructure.

3.5 Report Card rating

Infrastructure Type NSW 2010 NSW 2003 National 2005 National 2001

Ports C Not rated C+ B

Based on considerations of planning, funding, and infrastructure capacity and condition, NSW port infrastructure has been rated C. This rating recognises that capacity is adequate at NSW’s major ports due to recent infrastructure upgrades and is planned to grow in line with need. There is a lack of integration between the ports and road and rail infrastructure that has led to congestion problems and therefore the lower rating. Positives that have contributed to the rating are: Transfer of car imports from Sydney Harbour to Port Kembla Agreement on improving the port components of the Hunter coal supply chain Formation of the HVCCLT Investment in port infrastructure by both the Government and private sector

Negatives that have contributed to the rating are: Major land side congestion at Port Botany Uncertainty over port functions in Sydney Harbour Lack of integration between port operations and land side infrastructure Inadequacy in implementation of Newcastle coal loading capacity plans

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4 Airports

4.1 Summary

Infrastructure Type NSW 2010 NSW 2003 National 2005 National 2001

Airports B Not rated B B

This rating recognises that there has been a significant investment in NSW’s major airports over the last decade and they meet current and anticipated short-term demand. Problems of access and constraints remain at these airports, including curfews due to nearby land use. A number of regional airports are under stress due to rising costs and limited ability to increase revenue, and a lack of State Government policy guidance about their future. Since 2005, the major aviation sector developments have been: The release of final Master Plans for all Commonwealth-leased airports The release of the Australian Government’s National Aviation Policy Statement.

Recently completed and in-progress major infrastructure projects include: An eight-storey car park at Sydney Airport’s Terminal 1 Upgrades to Sydney Airport’s airside infrastructure to accommodate A380 aircraft Upgrades of the ground lighting facilities at Sydney Airport Upgrades to airport baggage screening systems Enlargement of runway end safety areas at Sydney Airport The extension and upgrading of Sydney Airport’s Terminal 1 Rehabilitation of the apron at Newcastle Airport.

Challenges to improving aviation infrastructure include: Aligning on-airport development with local land use plans Meeting long-term passenger and freight growth Maintaining the financial viability of regional airports.

4.2 Infrastructure overview

4.2.1 System Description Engineers Australia understands that many organisations/processes contribute to the aviation sector and influence the planning, development and operations of aviation. However, this Report only addresses the physical infrastructure and the activities of the relevant organisations that impact on airport infrastructure. Aviation infrastructure consists of fixed assets on airport land, including runways, terminals, buildings (i.e. aeronautical and non-aeronautical industrial, commercial and retail buildings), roads, drainage systems and fencing.

Airports in NSW can be divided into the following categories: One international and major domestic airport – Sydney Airport One major domestic airport – Newcastle Airport 11 major regional airports Numerous local government controlled airports and aerodromes 2 dedicated General Aviation airports - Bankstown and Camden Airports.

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Table 4.1 identifies the passenger statistics for NSW’s major airports in the last four years. Table 4.1: Passenger statistics for NSW’s airports219

Total Revenue Passengers

Airport 2005/06 2006/07 2007/08 2008/09

Albury 198,020 212,264 247,144 282,451

Armidale 100,984 86,215 95,273 95,559

Ballina 269,886 323,791 318,385 334,190

Bathurst 21,137 24,152 24,941 22,926

Broken Hill 43,631 48,405 59,561 55,809

Coffs Harbour 322,206 323,565 337,698 321,678

Dubbo 155,805 171,026 189,883 173,032

Grafton 6,250 9,001 22,311 20,106

Griffith 60,066 62,625 79,430 58,799

Lismore 64,715 66,880 68,778 60,992

Lord Howe Island 30,736 32,454 34,736 33,442

Merimbula 57,732 64,881 63,904 54,718

Moree 20,959 21,774 29,686 26,728

Moruya 16,759 20,837 21,487 20,129

Narrabri 11,949 12,863 22,625 16,844

Narrandera 16,235 16,507 16,750 13,690

Newcastle220 816,651 958,087 1,065,972 1,172,938

Orange 56,576 58,252 60,736 54,560

Parkes 28,660 31,697 35,183 30,599

Port Macquarie 108,969 116,945 142,380 189,279

Sydney 28,996,263 31,016,186 32,700,964 32,345,879

Tamworth 92,634 98,199 107,312 116,669

Taree 9,056 9,376 23,148 20,516

Wagga Wagga 171,677 203,798 225,394 209,279

International freight data has decreased from 354,623 tonnes in 2005/06 to 344,101 in 2008/09.221 Domestic freight data is held by cargo terminal operators and is not generally available. Sydney Airport Sydney Airport is located on the north shore of Botany Bay, 8km from the Sydney CBD on Commonwealth-owned land that is leased by Sydney Airports Corporation Limited. Sydney Airports Corporation Limited has operated the airport since 2002 under a 50-year lease from the Australian Government, with an option for a further 49 years.222 Sydney Airport is Australia’s busiest airport, handling almost half of Australia’s international air traffic. It is a key component of NSW transport infrastructure and contributes to the NSW economy through tourism, airfreight and business development. Despite the global economic crisis and pandemic (H1N1) 2009 influenza (swine flu), Sydney Airport’s 2009 passenger figures remained steady as seen in Table 4.2. Table 4.2: Sydney Airport’s passenger figures223

2008 (‘000) 2009 (‘000) % Change

International 10,450 10,559 +1.04%

Domestic 20,217 20,356 +0.68%

Regional 2,039 1,997 -0.02%

Total 32,874 32,998224 +0.30%

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Sydney Airport operates under Commonwealth-enforced curfew restrictions. Through these restrictions, the airport is subject to: An 11pm to 6am curfew restriction on take-offs and landings of specific aircraft and operations A movement restriction of 80 movements per hour ‘Noise sharing’ which requires an increase in flight paths above non-residential areas and the

utilisation of all three runways.225 The terminal infrastructure at Sydney Airport consists of an international terminal (T1), two domestic terminals (T2 and T3) and a freight terminal. This infrastructure is supported by three runways and a comprehensive taxiway system. Addition infrastructure includes internal roads, terminal aprons, hangar space and car parks. Construction in underway on a $500 million upgrade to the international terminal and runway to accommodate the new Airbus A380.226 The Airport’s Master Plan (approved in 2009), stated that international passenger movements are expected to increase to 78.9 million by 2027/28. Regional passenger growth has been forecast to reach 3.1 million in 2027/28. Total passenger movements are shown graphically in Figure 4.1. Figure 4.1: Total passenger movements at Sydney Airport from 2007 to 2029 (millions)227

Sydney Airport has forecast that there is sufficient capacity at Sydney Airport to meet expected growth. However, the Australian Government noted in approving the airport’s master plan that it does not accept that the airport can handle projected long-term growth and anticipates the future requirement for a second Sydney airport to be built.228 Since the privatisation of Sydney Airport in 2002, there has been over $850 million invested in capital projects by the Sydney Airport Corporation Limited.229 Key completed development projects include: A $65 million eight-storey car park at T1 providing 3,000 undercover car spaces A $90 million upgrade to 100% checked baggage screening at T1 and T2 A $128 million upgrade of airside facilities to accommodate the introduction of A380 aircraft

such as new gates and aerobridges and strengthened runways A $40 million upgrade of facilities in T2 including aerobridges, IT facilities and passenger waiting

areas

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A $67 million investment in upgrading of airport ground lighting facilities Five enlarged runway end safety areas Nine new remote layover aircraft parking positions.230

Key developments still underway at Sydney Airport include: A $500 million upgrade and extension of T1 that will add 7,300 square metres to the departures

level, a new outbound baggage handling system and an upgraded arrivals baggage system Construction of the sixth and final runway end safety area, expected to be completed in 2010231 Construction of a new seamless transfer facility for Qantas passengers transferring from

international to domestic flights, expected to be operational by mid-2010.232 Newcastle Airport Newcastle Airport is located at Williamtown, 19km north of Newcastle. Newcastle Airport operations are managed by Newcastle Airport Limited, a joint venture of the Newcastle City Council and the Port Stephens Council. The 28 hectares of land on which the airport operates is owned by the Commonwealth and is leased to the Newcastle and Port Stephens Councils under a 40-year lease that will terminate in 2045. The airport facilities are adjacent to the Royal Australian Air Force Base Williamtown and an operating agreement exists between the two facilities whereby the RAAF provides landing and take-off services to the airport and allows the airport to use the RAAF infrastructure such as the runway.233 The infrastructure located within the leased airport area includes terminal buildings, aprons, car parking and aviation support facilities. Key facilities that are located within RAAF Williamtown, and therefore outside the scope of this Report Card, include the main runway, taxiways, navigation aids and other aviation support infrastructure.234 Newcastle Airport reported 1,168,973 passenger movements in 2008/09, which was an increase of 103,574 passengers from the 2007/08 figure making it the second largest airport in NSW. Recent infrastructure investments include a upgrade to the baggage screening system, an undercover walkway, an expansion of the terminal check-in areas, an enlargement of the car parking areas and a new aircraft apron. The 2007 Newcastle Airport Master Plan indicates that to accommodate future growth at the airport, upgrades will be required to the airport’s fuel, maintenance and general aviation facilities. The existing RAAF airfield was analysed as sufficient for anticipated civil operations without the need for a runway extension.235 Future expansion of Newcastle Airport may in the longer term be hindered by the restrictions created by the adjoining RAAF base. Newcastle Airport has outlined in its Master Plan that it recognised the primacy of military operation at the airfield and is pursuing commercial objectives within the limitations of existing arrangements. Ballina Airport The Ballina Airport operates under the name of the Ballina/Byron Gateway Airport and is owned and operated by the Ballina Shire Council. The airport is located approximately 5km north of the town of Ballina on the NSW North Coast. The airport facilitated 334,190 passenger movements over the 2008/09 financial year making it the 3rd largest airport in NSW and the largest one not located on Commonwealth land. The Ballina Airport has one runway that is 1,900m long and can cater for Boeing 737 aircraft. The runway is connected by two taxiways that lead to a RPT apron and a General Aviation apron and hangar area. The existing RPT apron can accommodate two Boeing 737 aircraft simultaneously. A passenger terminal, located at the south of the runway, has recently undergone an expansion to provide for additional check-in and checked baggage screening facilities. Hangars and other

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general aviation infrastructure are situated to the west of the RPT apron.236 The Ballina Shire Council has produced a Development Strategy for the airport, which was reviewed and revised in 2008. This strategy outlines further development and growth of the airport infrastructure. Coffs Harbour Airport Coffs Harbour Airport is owned and operated by the Coffs Harbour City Council. The airport facilitated 321,678 passenger movements over the 2008/09 financial year making it the fourth largest airport in NSW. The airport has the capacity to handle aircraft up to the size of a Boeing 767. In addition to passenger services, the airport also has pilot training and general aviation facilities. The Coffs Harbour City Council has outlined a policy to create and implement an Airport Business Plan to be used as a business management tool for the continued success of the airport. Previous airport upgrades have been financed through the airport’s operational profits. The only major upgrade to Coffs Harbour Airport in recent years has been an upgrade to 100% checked baggage screening in 2008 after receiving a $300,000 grant from the Australian Government.237 Albury Airport Albury Airport is owned and operated by the Albury City Council and is located 5km from the centre of Albury. It is a major regional airport that also services the nearby Victorian city of Wodonga. In the 2008/09 financial year, the airport facilitated 282,451 passenger movements. The airport terminal recently underwent an upgrade and expansion including an upgrade to meet 100% checked baggage screening standards. Wagga Wagga Airport Wagga Wagga Airport, similar to the Newcastle Airport, is located on Australian Government land adjacent to a Royal Australian Air Force Base. However, unlike Newcastle Airport, Wagga Wagga Airport operates the airfield under a 30-year lease from the Australian Government, due to expire in 2022. RAAF Base Wagga is primarily being used as a ground training base. The airport is owned and operated by the Wagga Wagga City Council. Over the 2008/09 financial year, the airport facilitated 209,279 passenger movements. The infrastructure at Wagga Wagga airport consists of: The main 1,768m long runway The secondary 1,526m cross runway suitable for light aircraft only A series of taxiways connecting the runways to the aprons A sealed 200m apron connected to the terminal A 170m general aviation apron The recently enlarged terminal building Visual and radio navigation aids.238

The Wagga Wagga City Council has developed a draft Master Plan for the airport that is expected to be adopted by Council during 2010. The plan outlines the desired development concept to maximise the operational capacity of the current airport site to accommodate increased aircraft movements as part of the Council’s objectives of establishing Wagga Wagga as 'a world-class aviation education and training city' and its airport as 'a centre of national aviation significance'. General Aviation Most airports in NSW have the capacity to service general aviation. The largest dedicated general aviation airport in NSW is Bankstown Airport. Bankstown Airport is located in the centre of Sydney’s metropolitan area on land owned by the Commonwealth and leased to Bankstown

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Airports Limited. The airport is the premier general aviation airport in NSW. In the 2008/09 financial year, the airport facilitated over 370,000 aircraft movements. The infrastructure at Bankstown Airport includes: Three parallel runways A designated helicopter landing site An extensive taxiway system 11.5km in length 70,600 square metres of paved aircraft parking aprons 90 separate hangar structures.

Bankstown Airport is forecast to have 456,967 aircraft movements by 2029/30. Bankstown Airport Limited has outlined in its 2010 Draft Master Plan that it intends to maintain the airport’s position as a general aviation centre while attracting niche freight and passenger operations.239

4.2.2 Policy and governance All airports are governed by the Commonwealth Air Navigation Act 1920 and the Aviation Transport Security Act 2004. Airports leased from the Commonwealth come under the Airports Act 1996. Airports owned by the Commonwealth are subject to additional Commonwealth legislation provisions, and are not subject to other State legislation. On-airport planning at Commonwealth-leased airports is defined by an airport’s Master Plan. Master plans must be developed by new airport operators within a prescribed period to cover the next twenty years and reviewed and updated at no more than five-yearly intervals. Master plans are required to be approved by the Minister for Infrastructure. Major development plans are required for certain types and scale of developments, such as runway extensions, terminal expansions and capital works over $10 million. While the use of master plans is the basis for planning considerations on airports, these stop at airport boundaries and have little, if any, influence off-airport.240 The regulations and planning policies that influence off-airport planning decisions vary depending on whether or not they are Commonwealth-leased airports, defence airports or airports that come under the State planning regimes. All airports not owned by the Commonwealth are subject to State legislation. The NSW Government advises airport operators and local governments on the appropriate use of the NSW planning provision overlays covering airport environments. Air services within NSW that link small communities to Sydney Airport are subject to regulation by the NSW Government in the Air Transport Act 1964. This regulation is designed to encourage stability, route development and continuity of services to smaller communities. The NSW Minister for Transport has the power to deregulate certain intrastate air routes, and has done so for all services not linked to Sydney Airport, and routes that link Sydney Airport to: Albury Armidale Ballina Coffs Harbour Dubbo Griffith Lismore Newcastle Orange Port Macquarie

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Tamworth Wagga Wagga.241

The current air services regulation policy of the NSW Government is as follows. The threshold for a route being allocated to one operator only by licensing, is that the route

operates at or below 50,000 passengers per annum. Five-year licences (March 2008/March 2013) currently apply. Where regulated routes now exceed the 50,000 passenger level, the five-year commitment

takes precedence over deregulating the routes. Regulated route licences will run their full term, subject to licence conditions.

Deregulated routes account for 75% of all intrastate passengers in NSW.242 In December 2009, the Australian Government released the National Aviation Policy White Paper. This will drive an improvement in the better-integrated planning at Commonwealth-leased airports by: Requiring each capital city airport to establish a Planning Coordination Forum, to act as the

vehicle leading the ongoing discussions between the airports and the three levels of government on issues including the Master Plans, the airport’s program for proposed on-airport developments, regional planning initiatives, off-airport development approvals and significant ground transport developments that could affect the airport and its connections

Requiring airports to produce more detailed Master Plans that will have to contain: Additional detail on proposed use of land in the first five years of a Master Plan, including

information on planning for each non-aviation precinct, the number of jobs likely to be created, anticipated traffic flows, and the airport’s assessment of the potential impacts on the local and regional economy and community

The inclusion of a ground transport plan in the Master Plan The inclusion of a more detailed analysis of how the Master Plan aligns with State, Territory

and local government planning laws, as well as a justification for any inconsistencies. Requiring all airports to establish and lead Community Aviation Consultation Groups to ensure

that local communities have direct input on airport planning matters, with appropriate arrangements for engagement with other industry stakeholders such as airlines and Airservices Australia where necessary

Prohibiting incompatible developments on federal airport sites, such as residential developments and schools, unless exceptional circumstances exist

Developing a number of initiatives to safeguard both airports and communities from inappropriate off-airport developments that could threaten public safety and the future viability of aviation operations; these would include working with the jurisdictions on national land use planning regimes near airports.243

Key multi-jurisdictional bodies and government agencies are: Civil Aviation Safety Authority (CASA). CASA is an independent statutory authority

established in 1995 under the Civil Aviation Act 1988 to regulate aviation safety in Australia and the safety of Australian aircraft overseas.

Airservices Australia. Airservices Australia is the monopoly provider of air traffic management and fire fighting services at Australia’s major civil airports.

Department of Infrastructure, Transport, Regional Development and Local Government. The Department has a policy advisory role in aviation and provides advice to the Government on the Commonwealth’s aviation agencies’ strategic direction, their financial and operational performance, and their governance framework. The Department also has a role in leading the development and publication of major future air traffic policy directions to give effect to the Government’s decisions, as well as leading and coordinating the implementation review processes.

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Australian Competition and Consumer Commission (ACCC). The ACCC is responsible for financial and service quality monitoring at five capital city airports including Sydney.

Department of Transport and Infrastructure (NSW). This Department regulates intrastate air routes by limiting competition on low volume routes and licensing these routes on a one-route one-licence basis.244

4.2.3 Sector trends Increasing passenger movements and air freight volumes The Bureau of Infrastructure, Transport and Regional Economics (BITRE) predicts that passenger movements through all airports will increase by 4% per annum over the next 20 years resulting in a doubling of passenger movements over the period. Each master plan provides forecasts of passenger demand for their airport. International airfreight represents 0.1% of Australia’s total physical exports in tonnes but represents 25% of physical exports by value. Over 80% of freight is carried in the holds of passenger aircraft with the remainder transported in dedicated freight aircraft. Total air freight at Sydney Airport is forecast to grow from 471,000 tonnes in 2007 to 1,077,000 tonnes in 2029. This represents an average annual growth rate of 3.8%. Figure 4.2 displays the forecast growth in freight volumes. Figure 4.2: Air freight forecasts for Sydney Airport 2007-2029245

Conflicts between on-airport development and off-airport land use planning The State government and local government have no control over land use planning decisions on Commonwealth-leased airports. This has led to on-airport developments that do not mesh with local development and infrastructure plans. The problem arises because the Airports Act 1996, which applies to the airports, diminishes the ability of the States and local government to ensure that airport development conforms to broader planning strategies. Specifically, the Act results in airport development plans being exempt from State planning legislation. It only requires airport owners to involve State and local governments in airport planning via seeking comments on draft master plans on a five-yearly cycle. This problem is well recognised and results in the undermining of the State’s land use policy to concentrate development in activity centres, and freight and logistics precincts.

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The Sydney Airport Master Plan provides for sections of airport land to be set aside for a range of commercial non-aeronautical land uses. The Master Plan outlines information on these developments, that they will support the airport’s function and provide a degree of civic amenity to the airport. The NSW Government believes that development of commercial activity at airports should be a matter for the NSW Government planning agencies, as these agencies are best placed to make judgements with regard to the wider urban area planning frameworks.246 Major airports becoming Airport Cities A global trend is for major airports to become major business areas that integrate air facilities with business, industrial and commercial developments. This builds on the historical concept that key transport nodes (such as coastal and river ports and railway towns) have become major commercial centres. In NSW, this is occurring at Sydney Airport. Airports are no longer just a key piece of transport infrastructure; they are becoming destinations in their own right and are becoming Airport Cities. The challenge for airports in achieving this goal includes: Simultaneously meeting the growing demand of air passengers and freight, and the demand for

other non-aeronautical functions due to commercial and retail developments Ensuring that they have sufficient on-airport infrastructure to meet demand Ensuring that there is sufficient off-airport infrastructure to allow transport to and from airports to

operate efficiently Preventing or minimising inappropriate creep of residential developments towards the airport

boundaries, which could compromise the operations of the airports Minimising noise and other environmental complaints by those living close to the airports from

air, road and rail movements.

4.3 Performance

4.3.1 Aviation safety Table 4.3 provides details on air accidents and fatal accident statistics for NSW 1999–2009. Table 4.3: Non–fatal and fatal accidents in NSW, 1999 to 31 March 2009247

NSW 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Total

Non–fatal Accidents

40 55 38 44 36 32 36 18 23 30 3 355

Fatal accidents

6 1 2 3 5 2 7 10 3 10 1 50

Fatalities 11 1 5 8 10 4 11 14 3 16 1 84

4.3.2 On-time arrivals Only eight NSW airports are monitored for punctuality and reliability by BITRE, and these are listed in Table 4.4.d Table 4.4: On-time arrivals and departments for December 2009248

Airport Percentage On-time Arrivals Percentage On-time Departures

Albury 89.8% 90.3%

Ballina 75.9% 73.8%

Coffs Harbour 73.9% 71.1%

Dubbo 81.4% 77.6%

Newcastle 87.4% 88.5%

Port Macquarie 86.3% 83.2%

d On-time performance is reported for all routes where the passenger load averages more than 8,000 passengers per month, and where two or more airlines operate in competition. The following data reports by airport against flights operated on those routes only.

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Airport Percentage On-time Arrivals Percentage On-time Departures

Sydney 82.0% 82.8%

Wagga Wagga 77.8% 84.2%

To put these figures into perspective, in December 2009, Proserpine Airport (Qld) recorded the highest percentage of on-time departures (95.1%), while Coffs Harbour recorded the lowest (71.1%). Proserpine Airport also recorded the highest percentage of on-time arrivals (95.1%), while Coffs Harbour Airport also recorded the lowest (73.9%).

4.3.3 Quality of service Sydney Airport is the only NSW airport required to report its quality of service to the Australian Competition and Consumer Commission (ACCC).e Quality of service includes subjective measures such as surveys of airport users’ perceptions and objective measures such as check-in waiting times. As seen in Figure 4.3 below, over the entire reporting period (2004/05 to 2008/06), Sydney Airport’s overall rating was generally better than satisfactory. Figure 4.3: Sydney Airport—overall quality of service ratings for international and domestic terminal services, and airside services249

4.3.4 Security Following the terrorist incidents on 11 September 2001, the Australian Government introduced additional security requirements, notably through the Aviation Transport Security Act 2004 and the Aviation Transport Security Regulations 2005, at Australian airports including: Increased Australian Federal Police presence at airports 100% checked bag screening for all international flights Screening of all domestic checked bags at major airports250 Limiting liquids, aerosols and gels on international flights.251

While security requirements are determined by the Australian Government, airports have the ability to enhance their operational effectiveness via coordination with police, security operators, and airlines. The additional security measures, notably the requirement of 100% checked bag screening, contributed to the increase in airports’ costs during 2004/5. Costs incurred included the equipment to screen passengers and checked baggage, and the installation of overt and covert closed-circuit television security cameras.252 Future security priorities of airports will be to: Extend security along the supply chain to address the security risk of freight

e The Australian Competition and Consumer Commission (ACCC) requires seven designated airports to report costs, revenues and profits relating to the supply of aeronautical and aeronautical-related services, and quality of service monitoring.

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Expand the counter-terrorism focus of security measures to address other forms of criminal behaviour at airports.

4.3.5 Environmental sustainability Commonwealth-leased airports are required to prepare and maintain an Airport Environment Strategy (AES) that is reviewed and updated every five years. The main intent of an AES is to demonstrate to the Australian Government, key stakeholders and the surrounding community how an airport will manage environmental issues on the airport for that five-year period. The Act requires that an airport undertakes consultation with key stakeholders and the community prior to submission of the AES to the Government. Environmental issues on the leased airports are administered principally by Australian legislation, the Airports Act 1996, the Airport (Environment Protection) Regulations 1997 and the Airport (Building Control) Regulations 1997. The Airport Building Controller (ABC) and the Airport Environment Officer (AEO) are the on-site regulatory representatives for DITRDLG who administer the Act and Regulations on behalf of the Australian Government. The larger airports, by the very nature of their operations, tend to produce noise and hydrocarbons from aircraft. As such, the implementation of various elements of the environment strategy is important in displaying a proactive approach to manage the impact on the environment. The AESs prepared for Sydney and Newcastle address the following issues and propose monitoring and mitigation strategies: Air quality Soil quality Water quality Noise emissions Flora and fauna Waste management Heritage considerations Ground transport Dangerous goods and hazardous materials.

The smaller airports, including the rural and remote areas, do not normally prepare such detailed documents for their facilities. However, they have procedures in place for more immediate environmental issues such as fuel spills. Greenhouse gas mitigation Civil aviation accounts for about 2% of global emissions and this is expected to rise due to growth in the aviation sector. Ways to reduce emissions include improving aircraft fuel efficiency and air traffic management such as continuous descent approaches. A challenge for the aviation sector will be the impact of the proposed ETS legislation. If it results in subsidies for alternative modes of travel (e.g. fuel credit for heavy on-road transport businesses), there is a risk that the exclusion of the aviation industry from comparable assistance may have the effect of creating a structural competitive distortion in the market for passenger travel and freight. Sydney Airport has developed a carbon neutral strategy with the intention of reducing the Airport’s carbon footprint. The Airport has already produced a comprehensive emissions inventory as the first stage of the strategy. The second stage will be the pursuit of initiatives to reduce the Airport’s emissions, with the aim of becoming a carbon neutral airport.

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Noise Noise concerns from airports have resulted in the imposition of a curfew at Sydney airport. The NSW and Australian Governments support the continuation of the existing curfew restrictions at the airport.

4.4 Future challenges The challenges in achieving improvements in airport infrastructure are: Aligning on-airport development with local land use plans. Past development at

Commonwealth-leased airports has lead to on-airport retail and commercial development that has caused significant problems for commuters, off-airport businesses and airport users. The cause of this is outside the NSW Government's control and will require Australian Government intervention to prevent this from occurring in the future.

Meeting long-term passenger and freight growth. In the short and medium term, there is sufficient capacity at Sydney Airport to meet expected growth. In the longer term, a second airport will be needed. The Australian Government would not speculate, in their National Aviation Policy White Paper, on any potential locations for a second Sydney airport, apart from ruling out the Badgerys Creek site due to the restrictions presented by years of urban growth in the area. The Sydney Airport Corporation’s parent company, Southern Cross Airports Corporation, was given first right of refusal by the Australian Government in 2002 to build and operate a second major airport within 100km of Central Sydney.253 Future investment decisions by Sydney Airport and Newcastle Airport may be influenced by uncertainty surrounding a second Sydney Airport.

4.5 Report Card rating

Infrastructure Type NSW 2010 NSW 2003 National 2005 National 2001

Airports B Not rated B B

Based on considerations of planning, funding, and infrastructure capacity and condition, NSW’s aviation infrastructure has been rated B. This rating recognises that there has been a significant investment in NSW’s major airports over the last decade and they meet current and anticipated short-term demand. Problems of access and constraints remain at these airports, including curfews due to nearby land use. A number of regional airports are under stress due to rising costs and limited ability to increase revenue, and a lack of State Government policy guidance about their future. Positives that have contributed to the rating are: Release of the Australian Government’s National Aviation Policy Release of the Australian Government’s Australian Airspace Policy Statement Investment in aviation infrastructure to meet demand.

Negatives that have contributed to the rating are: Sydney and Newcastle Airports, the two largest airports in NSW, artificially constrained by

curfew and cap on aircraft movements Lack of aviation policy engagement from the NSW Government Lack of landside access infrastructure co-ordination at Sydney and Newcastle airports.

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WATER

Integrated water cycle policy and practice NSW has been experiencing a prolonged drought for much of this decade, causing stress on the State’s water resources. In response to this and a growing population, the NSW Government and water authorities have implemented a range of water restrictions, conservation measures and supply augmentation projects. By 2010, these resulted in a widespread improvement in water security for urban populations. The easing of the drought in many rural areas has also improved their water supply. The last decade’s water crisis has accelerated the need to manage all water resources in an integrated and sustainable manner. Water resources consist of surface water, groundwater, wastewater, stormwater, recycled water and seawater. An integrated approach seeks to maximise the triple bottom line (e.g. economic, social and environmental) benefits from the use of water. It does this by encouraging the utilisation of the different water types (e.g. recycled water) for their highest value use, and reducing reliance on single sources. In NSW, an integrated approach is central to the State’s water strategies. This integration is evident in policies such as the Water for Life – Metropolitan Water Plan and the Best Practice Management of Water Supply and Sewerage Guidelines used by local water utilities. The NSW Government priorities for water are identified in the State Plan, and the table below identifies the Plan’s water priorities and their targets. State-wide water priorities and targets as identified in the State Plan254

Priority Targets

Secure sustainable supplies of water and use water more wisely

• Increase water recycling from 15GL per year in 2005 to 70GL of water per year by 2015 • Save 145GL of water per year by 2015, representing almost 25% reduction from

Sydney’s projected water demand in that year • Commission Sydney’s desalination plant to provide up to 90GL of water per year by

2010 • Meet reliability performance standards for water continuity and quality

Protect our native vegetation, biodiversity, land, rivers and coastal waterways

• Meet State-wide targets for natural resource management to improve biodiversity and native vegetation, sensitive riverine and coastal ecosystems, soil condition and socio–economic wellbeing

Water strategies have been developed for areas within the State and key urban plans are listed in the table below.

Region Water strategies Description

Greater Sydney

Metropolitan Water Plan: Water for Life (2006) (revision due in in 2010)

The plan establishes the approach to providing water for greater Sydney in the face of drought, changing climate and a growing population. The plan has four elements – dams, recycling, desalination and water efficiency.

Hunter Region H250 Plan (2008) The plan establishes the long-term water resource planning to meet forecast water demand for the next 50 years, expected to increase from 73GL/year to 118GL/year.255 The plan’s key elements are to achieve greater recycling and water efficiency, and to build the Tillegra Dam.256

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Region Water strategies Description

Gosford/Wyong Councils' Water Authority

WaterPlan 2050 (2007) The plan outlines an integrated water management approach to secure water supplies until 2050 in the region.

Key government agencies in the water sector are: Department of Environment, Climate Change and Water (DECCW) (NSW Government).

Formed in 2009 from an amalgamation of the Department of Environment and Climate Change and the Department of Water and Energy, DECCW’s water-related responsibilities include sustainability programs (e.g. water conservation), policy and regulation for water quality, environmental water management and coastal lakes and estuaries, and water allocation determinations for communities, industry, farmers and the environment.

NSW Office of Water (NOW) (NSW Government). NOW is a separate office within DECCW and is responsible for the management of the State's surface water and groundwater resources. Specific responsibilities include:

Determining the volume of water available for allocation each year to towns, water users and the environment, particularly during times of severe water shortage

Ensuring that all users and the environment have access to sustainable water supplies Developing statutory water-sharing plans that set the rules for sharing water between users,

and between users and the environment Negotiating interstate and national water agreements, particularly in view of the significant

institutional changes occurring in the Murray Darling Basin Approving the extraction and use of water, the policies and procedures for the permanent

trade of water entitlements, and the annual trade of available water Coordinating the development of metropolitan, town and non-urban water policy Monitoring the quantity, quality, and health of our aquatic ecosystems and water

extractions.257 Catchment Management Authorities (CMAs) (NSW Government). There are thirteen CMAs

across NSW and they are responsible for managing natural resources within their catchments Specific roles of CMAs include preparing Catchment Action Plans and managing incentive programs to implement the plans.258

Natural Resources Commission (NRC) (NSW Government). The NRC provides independent advice to the NSW Government on managing the State’s natural resources in an integrated manner, to maintain landscapes that are resilient, function effectively, and support environmental, economic, social and cultural values. It developed the Standard for Quality Natural Resource Management and State-wide targets for natural resource management. It also audits Catchment Action Plans to determine compliance with the Standard and targets.259

Office of the Hawkesbury–Nepean (NSW Government). The Office was established in March 2009 to improve the health of the Hawkesbury–Nepean river system by ensuring that the management of the river is more coordinated.260

Murray Darling Basin Authority (MDBA). The MDBA is responsible for planning integrated management of the water resources of the Murray Darling Basin.261 In 2008, the MDBA assumed responsibility for all the functions of the former Murray Darling Basin Commission. The MDBA’s key functions are:

Preparing the Basin Plan for approval by the Minister for Climate Change and Water, including setting sustainable limits on water that can be taken from surface and groundwater systems across the Basin (due in 2011)

Advising the Minister on the accreditation of State water resource plans Developing a water rights information service that facilitates water trading across the Murray

Darling Basin Measuring and monitoring water resources in the Basin.262

National Water Commission (NWC) (Australian Government). The NWC is responsible for driving progress towards the sustainable management and use of Australia’s water resources

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under the National Water Initiative. The Commission advises the Council of Australian Governments (COAG) and the Australian Government on national water issues and the progress of the National Water Initiative.

Key NSW legislation for the water sector consists of: Water Management Act 2000 Dams Safety Act 1978 Hawkesbury–Nepean River Act 2009 Hunter Water Act 1991 Local Government Act 1993 Natural Resources Commission Act 2003 Pipelines Act 1967 Protection of the Environment Operations Act 1997 Public Health Act 1991 State Water Corporation Act 2004 Sydney Water Act 1994 Sydney Water Catchment Management Act 1998 Water Act 1912 Water (Commonwealth Powers) Act 2008 Water Industry Competition Act 2006 Water Management Act 2000.

The frameworks to manage water resources in NSW are defined by the: NSW Standard for Quality Natural Resources Management. This document defines the

standards that apply to natural resource management including at the State, regional or catchment, local and property levels. Catchment Action Plans by Catchment Management Authorities need to comply with the Standard.263

State-wide targets for natural resources management. The NSW Government has adopted 13 targets designed to achieve landscapes that are ecologically sustainable, function effectively and support the environmental, economic, social and cultural values of our communities. The five water-specific water targets are that, by 2015, there will be:

An improvement in the condition of riverine ecosystems An improvement in the ability of groundwater systems to support groundwater-dependent

ecosystems and designated beneficial uses No decline in the condition of marine waters and ecosystems An improvement in the condition of important wetlands, and the extent of those wetlands is

maintained An improvement in the condition of estuaries and coastal lake ecosystems.

NSW Water Quality and River Flow Objectives. The Objectives are agreed environmental values and long-term goals for NSW's surface waters. They define the water quality indicators that should be used to assess a waterway’s condition.264

Water Management Act 2000. The Act’s objective is to create the sustainable and integrated management of the State's water assets by:

Protecting the health of rivers and groundwater systems, and associated wetlands, floodplains and estuaries

The integrated management of water with other natural resources such as vegetation, soils and land

Ensuring that water management is a shared responsibility between the government and the community

Ensuring that water management decisions consider environmental, social, economic, cultural and heritage aspects

Recognising that social and economic benefits to the State result from the sustainable and efficient use of water.265

Wa

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5 Potable water

5.1 Summary

Infrastructure Type NSW 2010 NSW 2003 National 2005 National 2001

Potable water B- B- Metropolitan urban C- Non-metropolitan urban

B- C

This rating reflects the significant infrastructure and demand management improvements undertaken in the metropolitan areas that have addressed the recent water supply problems caused by the drought. It also recognises that the water supply plans established by the metropolitan water supply utilities provide a sound basis for the delivery of an efficient and reliable water supply into the future. While there have been some improvements in regional water supply quality and availability, local water utilities face significant infrastructure and supply challenges, including limited ability to raise revenue to improve infrastructure and access to sustainable raw water sources. Since the last Report Card, the major potable water developments in NSW have been: Periods of drought causing low inflows into potable water storages and waterways Implementation of a number of water augmentation projects Development of 50-year water plans by water utilities Reduction in average consumption per residential property State-wide improvement in drinking water quality due to the commissioning of new water

treatment facilities Reduction in water losses from distribution systems Introduction of the Building Sustainability Index - BASIX throughout NSW The imposition of water restrictions and permanent water conservation measures for many rural

areas and in Sydney, the Illawarra and the Blue Mountains to moderate demand Ongoing increases in the cost of water A review into the future of non-metropolitan water local water utilities.

Recently completed and in-progress major infrastructure projects include: The Kurnell Desalination Plant The upgrading of seven major dams owned by the State Water Corporation to meet modern

design requirements in the event of extreme flood conditions Warragamba and Nepean Dams deep storage access project Infrastructure to allow water from Tallowa Dam to be transferred to the larger dams Infrastructure to increase environmental flows at Avon, Cataract, Cordeaux and Nepean dams.

Challenges to improving potable water infrastructure include: Understanding and managing climate change impacts on water Improving the operations and assets of local water utilities Providing new services to coastal areas Maintaining continual emphasis on water efficiency and increasing potable water substitution as

water supplies increase Improving the health of waterways Development and implementation of integrated water cycle management plans.

This section does not address the use of wastewater or stormwater as a substitute for non-potable water, as these issues are discussed in the Wastewater and the Stormwater sections.

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5.2 Infrastructure overview

5.2.1 System description NSW’s potable water infrastructure can be categorised into metropolitan water systems and non-metropolitan water systems. Metropolitan water systems There are two major metropolitan water systems where State-owned corporations provide water supply. They are: Greater Sydney The Lower Hunter region.

Greater Sydney water supply system The Greater Sydney water supply system encompasses the areas of Sydney, the Illawarra and the Blue Mountains. Its main elements are the raw water sources sourced from catchments managed by Sydney Catchment Authority and from Sydney’s desalination plant, and the water treatment and reticulated infrastructure managed by Sydney Water. Figure 5.1 illustrates the system. Figure 5.1: Greater Sydney water supply system269

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79

Sydney Catchment Authority There are five drinking water river catchments to the south and west of Sydney and water from these is used both for urban consumption and as environmental flows to maintain the ecological health of the downstream river systems. There are 11 major dams that provide drinking water in these areas, and the largest is the Warragamba Dam. Lake Burragorang, formed behind Warragamba Dam, supplies up to 80% of Sydney’s water.270 The total storage capacity of this dam is enormous and if full, and assuming no inflows, it could supply all Sydney Water’s needs for four years.271 The dams are managed by the Sydney Catchment Authority (SCA), which is a statutory body established in 1999 under the Sydney Water Catchment Management Act 1998. The role of the SCA is to manage and protect the catchment areas, provide infrastructure, supply raw water, and regulate certain activities in or affecting catchment areas. It supplied 490GL in 2008/09, of which 99% was supplied to Sydney Water, 0.91 percent to Shoalhaven City and Wingecarribee Shire Councils, and the remainder to SCA’s other customers.272 SCA’s activities are funded by the sale of raw water to customers. It owns 21 water storage facilities prescribed by the NSW Dams Safety Committee and provides dam safety surveillance services to Sydney Water’s 16 prescribed dams.273 Figure 5.2 shows SCA’s drinking water catchments. Figure 5.2: Drinking water catchments under the responsibility of the Sydney Catchment Authority274

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Over the last few years, SCA has increased its focus on catchment management as a way of restoring the health of its systems. This has involved: Creating and modifying infrastructure at its dams and weirs to allow for environmental flows and

fish passage, such as was recently completed at Tallowa Dam Improving knowledge of catchment pollutants and consequences, such as better understanding

the blue green algae outbreaks.275 SCA’s strategy for catchment management is defined in the NSW Government’s Metropolitan Water Plan and in SCA’s Healthy Catchments Strategy 2009/2012. To improve its catchments, SCA is providing grants to local governments to rectify sewerage problems, improve riparian zones (the interface between land and river), improve the water quality flowing from paddocks to waterways, and reduce dairy waste.276 In 2007, the SCA completed a $119 million277 Warragamba and Nepean Dams deep storage access project. This involved installing infrastructure to access water that lies below the lowest outlet point in a dam from where the water can be extracted, or below the level where gravity can draw the water out of the dam. This project has enabled an extra 40GL/year (7% of Sydney’s water needs)278 to be extracted from the dams.279 To augment surface water supplies, the SCA in recent years has investigated the use of groundwater. It identified three borefield sites that could supply 30GL to 45GL of water for two to three years. Due to increased dam levels and water-saving initiatives, the NSW Government has requested that these projects be put on hold.280 The water storage level in the SCA’s dams has varied considerably over the last decade as shown in Figure 5.3. The impact of the drought from 2002/2007 is reflected in the decline in water storage levels. Figure 5.3: Water storage levels in SCA’s dams281

Kurnell Desalination Plant In January 2010, the $1.89 billion Kurnell Desalination Plant commenced supplying potable water to 1.5 million consumers across Sydney. When fully operational, the plant can provide 250ML/day (90GL/year), about 15% of Sydney’s water needs.282 The plant will run until 2012 to ensure that it is fully operational and its continual use will then be determined by rainfall, climatic outlook and dam levels. The desalination process involves obtaining clean seawater from the Tasman Sea via a 2.5km pipe, and pushing the water under high pressure through semi-permeable reverse osmosis membranes where the pores in the membranes allow water, but not salt molecules, to pass through.283 The brine is pumped back out to sea via another 2.5km pipeline. The desalinated water

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is then pumped along an 18km pipeline where it joins the city pressure tunnel at Erskineville, and hence into the Sydney water system.284 Sydney Water Corporation Sydney Water Corporation supplies drinking water, recycled water, wastewater services and some stormwater services to more than four million people in Sydney, the Illawarra and the Blue Mountains, making it the Australia’s largest urban water utility. It is a statutory corporation, constituted under the State Owned Corporations Act 1989, and operates under the Sydney Water Act 1994.285 Sydney Water’s area of operations covers some 12,700 square kilometres and is illustrated in Figure 5.4. Figure 5.4: Sydney Water’s area of operations286

Sydney Water receives $1.7 billion/year for its water and wastewater services, manages assets with a replacement value of $39 billion, has a total operating expenditure of $1 billion and employs over 3,150 staff.287 Table 5.1 identifies the key potable assets of Sydney Water.

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Table 5.1: Sydney Water key potable assets (June 2009)288

Asset Units

Length of water mains owned and operated 20,936km

Number of reservoirs in service 263 reservoirs

Number of pumping stations in service 162

Quantity of drinking water used/supplied 487,323ML

Number of people supplied with water 4,375,400 people

Properties with a water main available 1,754,730 properties

Sydney Water’s capital expenditure on potable water is forecast to be $972.8 million for the current regulatory period (2008/09 to 2011/12). This is double that of the past period (2004/05 to 2007/08).289 Large investment programs include: Maintain water distribution systems program, $538.5 million Water meter replacement program, $49.74 million Critical water main program, $176.4 million.290

Lower Hunter region supply system Hunter Water Corporation provides water services to almost 500,000 people in the Lower Hunter region covering Cessnock, Lake Macquarie, Maitland, Port Stephens and Newcastle. Over the last few years, Hunter Water has also assumed responsibilities for operations in Dungog, Singleton and around Branxton to Whittingham.291 Figure 5.5 shows the elements of Hunter Water’s potable water infrastructure. Figure 5.5: Hunter Water’s potable water infrastructure292

Hunter Water obtains its raw water from both surface water and groundwater. Surface water is obtained from Chichester and Grahamstown Dams. Chichester Dam provides about 35% of Lower Hunter’s potable water supply, and Grahamstown Dam provides 40% of the supply but on peak demand days, supplies up to 75%.293 Groundwater is sourced from the Tomago and Tomaree

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sandbeds. The Tomago Sandbeds provide about 20% of the Lower Hunter’s drinking water. The sandbeds, which are a natural geological feature consisting of fine grained sand up to 50 metres deep, contain fresh water that has landed on the sand surface and soaked down. A layer of impervious clay and rock stops that water from draining out. The sandbeds start at Tomago and extend north-east for 25km to Lemon Tree Passage. A network of underground bores and vacuum stations draws raw water from the sandbeds and pumps it to the Grahamstown Water Treatment Plant.294 The Tomaree Sandbeds cover an area at the north-eastern tip of the Tomaree Peninsula, where Hunter Water operates three groundwater schemes. These are supplied by the Lemon Tree Passage water treatment plant, which draws water from the eastern edge of the Tomago Sandbeds to supply Karuah and the Tilligerry Peninsula, and Glovers Hill and Anna Bay treatment plants, which draw water from the Anna Bay Sandbeds to supply towns along the Tomaree Peninsula.295 Table 5.2 identifies the key potable water characteristics of Hunter Water. Table 5.2: Hunter Water key potable water characteristics (June 2009)296

Asset Units

Population supplied with water 515,695

Properties connected to water (metered) 222,454

Capacity of major sources (ML) 288,000

Total water mains in service (km) 4,821.96

Length of water main per connected property (m) 21.68

Water filtration plants297 5

Service reservoirs298 76

Pumping stations299 84

Over the next four years, Hunter Water expects to spend over $1 billion300 on water and wastewater projects. The main potable water project is the 450GL Tillegra Dam, the building of which is proposed for the Upper Williams Valley (north of Dungog) at an estimated cost of $406 million. Construction approvals for the dam were still being sought at the time of this report’s writing. The need for the dam is justified on the basis that as the Lower Hunter has small water storages that fill up quickly and empty rapidly, a large volume of stored water is also required to ensure water supply during an extended drought.301 According to Hunter Water, the Tillegra Dam was the most cost-effective compared to other dam, river extraction, desalination, stormwater and wastewater recycling options.302 Other potable water capital investment projects include: Dungog Clear Water Tank and Water Dosing Facility Anna Bay Reservoir Cessnock Water Supply Upgrade Chichester Trunk Gravity Main Replacement Fletcher Water Trunkmain Upgrade Maitland and North Rothbury Water Supply Upgrade South Wallsend Water Supply Upgrade Thornton North Trunkmain Upgrade Tomago (Ash Island) Pipeline Upgrade Tomaree–Tilligerry Transfer Pipeline Wallsend Water Pump Station Upgrade.303

Hunter Water’s storages have been less affected by the drought across NSW as seen in Figure 5.6 largely because the drought was not as severe in the lower Hunter as it was in other parts of the State, compared with long term averages and past droughts.

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Figure 5.6: Hunter Water storage levels304

Non-metropolitan water systems In NSW, there are 340 water supply schemes305 that supply drinking water to non-metropolitan towns. State Water Corporation The State Water Corporation is NSW’s rural bulk water distribution corporation that controls water used by most non-metropolitan towns. It also supplies bulk water to industry, irrigation, stock, farms, mines and electricity generators. It manages and operates 20 dams and more than 280 weirs and regulators. It assets portfolio is valued at $3.6 billion.306 Figure 5.7 shows its area of operations and dams. Figure 5.7: The area of operations and assets of State Water Corporation307

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The drought of the last few years has been the dominant factor in the organisation’s operations, and its impact is reflected in the declining volume of water sold since 2006 as seen in Figure 5.8. In 2008/09, the State Water Corporation delivered 1,446GL, which is 27% of its long-term average sales.308 Figure 5.8: Water sold by the State Water Corporation309

The State Water Corporation’s most significant ongoing capital works activity is the dam safety upgrades project. This $250 million project involves upgrading seven major dams to meet modern design requirements of extreme flood conditions. The project is expected to be completed in 2013.310 Local water utilities Potable water for non-metropolitan areas is the responsibility of local government under the Local Government Act 1993, and is provided by local water utilities consisting of: 96 general purpose local government councils Four water supply county councils; these are multi-council organisations that supply water to 21

local government areas One water supply and sewerage county council Five water supply authorities (Gosford City Council, Wyong Shire Council, Fish River Water

Scheme, Country Energy and Cobar Water Board).311 The local water utilities draw their water from the State Water Corporation’s supply, groundwater and unregulated streams. They service about 30% of the State’s population (1.8 million people). The total assets of these organisations, including both water supply and sewerage, are valued at $17 billion.312 The water supplied by the local water utilities has fallen over the past 16 years, primarily due to the introduction of strong pay-for-use water pricing signals, water conservation, demand management and water restrictions. In 2008/09, water supplied by local water utilities was 288GL.313 Over the last 10 years, a number of non-metropolitan communities faced the prospect of running out of water. Consequently, since 2002, the NSW Government has provided $52 million in emergency drought relief projects and assisted more than 129 communities.314 Assistance included subsidies for water cartage, development of new water sources such as bores, and construction of pipelines to connect communities to another water supply scheme.315 The 2008 Independent Inquiry into Secure and Sustainable Urban Water Supply and Sewerage Services for Non-Metropolitan NSW (Non-Metropolitan Water Inquiry) examined the water supply

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and sewerage services for non-metropolitan NSW and identified the major challenges facing these organisations as: The need to increase water sharing with the environment The forecast reduction in long-term rainfall and increased incidence and severity of droughts as

a consequence of climate change Increased investment required to replace ageing assets The growing shortage of skilled labour Demographic shifts with high population growth in coastal areas and low population growth in

many inland NSW areas, resulting in the need for increased investment in some areas and stranded assets in others.316

The Non-Metropolitan Water Inquiry made seven recommendations, notably aggregating the 104 Local Water Utilities into 32 regional groups, improving regulation and pricing of water and wastewater, and addressing skills shortages. At the time of writing, the NSW Government has not responded to the recommendations. Country Towns Water Supply and Sewerage Program The NSW Government's Country Towns Water Supply and Sewerage Program (CTWSS) has been instrumental in improving water supply and sewerage services to country towns in NSW. The program offers management, technical and financial support to local water utilities. It commenced in 1994 in recognition that there was a huge backlog of infrastructure that was needed but could not be funded by local authorities. Since then, the CTWSS Program has spent $1.1 billion on more than 350 water supply and sewerage projects. The Program is scheduled to expire in 2016/17.317 To access funding, local water utilities need to comply with six key criteria as set out in the Best-Practice Management of Water Supply and Sewerage Guidelines. These are: Strategic Business Planning Pricing (including Developer Charges, Liquid Trade Waste Policy and Approvals) Water Conservation Drought Management Performance Reporting Integrated Water Cycle Management318

This requirement has been one of the main drivers for improvement in local water utilities. NSW’s water consumption Water consumption across NSW has been falling over the last decade as seen in Table 5.3. Table 5.3: Water consumption trends319

System Measure 2004/5 2005/6 2006/07 2007/08 2008/09

Sydney Water

Average consumption per residential property (kilolitres)320

211.0 203.0 199.0 182.0 197.7

Hunter Water

Average consumption per residential tenement (kilolitres)321

194.6 177.4 179.6

Local water utilities

Average consumption per connected property (kilolitres)322

199 190 185 173 175

This decline has been due to pay-or-use pricing, demand management programs, targeting pipe leakages, increased use of recycled water and water restrictions. Of these, one of most important has been the water restrictions as seen in Figure 5.9, showing the relative components of the water saved in Sydney Water’s system. In Sydney, the employment of water restrictions between 2003 and 2009 resulted in more than 474GL of water being saved.323 Interestingly, Hunter Water has also achieved significant reductions in water use, but without resorting to water restrictions as it did not experience drought conditions.324

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Figure 5.9: Sources of water saving from Sydney Water’s water supply system325

Water costs The regulation of water supply and sewerage prices in NSW falls into three broad categories: Utilities that have their prices regulated by the Independent Pricing and Regulatory Tribunal

(IPART). These are Sydney Catchment Authority, Sydney Water Corporation, Hunter Water Corporation and the Gosford/Wyong Councils' Water Authority.

Utilities that require the Minister for Water to approve their prices. These are Country Energy (Broken Hill), Cobar Water Board (bulk water supplier), Fish River Water Supply (bulk water supplier) and Sydney Olympic Park Authority.

Utilities that have no direct regulation of their prices. These are the 101 non-metropolitan local water utilities. These utilities determine their own prices in accordance with the Best-Practice Management of Water Supply and Sewerage Guidelines. These guidelines require the water utility to prepare a business plan detailing all the operating, capital and financial costs of delivering services into the future. This enables the required revenue and tariffs to be determined based on evidence.326 The Department of Environment, Climate Change and Water provides utilities with financial planning and pricing guidelines and software, based on IPART principles, to assist with their price setting.327 The 2008 Non-Metropolitan Water Inquiry recommended that their pricing regime be strengthened and overseen by independent body.328

Water prices for the vast majority of water utilities have increased considerably over the last few years, and will increase over the current regulatory period. For example, Hunter Water customers will see their bills increase by 31% in 2012/13 compared to 2008/09.329 A comparison of water charges across Australia shown in Figure 5.10 shows that Sydney Water is mid range and Hunter Water is at the low end.

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Figure 5.10: Annual water costs for residential customers using 200kL for utilities with 100,000 plus connected properties 2008/09330

5.2.2 Policy and governance Relevant water policy documents and legislation are detailed at the front of this chapter. Upcoming NSW Government actions that will change the policy arrangements are: The release of the Metropolitan Water Plan Decisions on the recommendations of the Non-Metropolitan Water Inquiry.

The principal regulatory controls of the metropolitan water utilities are: Operating Licence. The licence is administered by the Minister for Water, and IPART reviews

and drafts the licence for approval by the Minister. The licence specifies customer service standards, including drinking water quality. IPART arranges an annual audit of the Corporation’s performance against the activities in the operating licence.331

Pricing. IPART sets the maximum price charged. Water resource access. The Department of Environment, Climate Change and Water licenses

the extraction of water from natural surface and groundwater sources. Drinking water quality. NSW Health establishes requirements for drinking water management

and monitoring particularly relating to the Australian Drinking Water Guidelines 2004. There are also comprehensive procedures for communicating the results of water quality monitoring programs.332

Local water utilities do not have an operating licence regime but instead work under a light-handed regulatory framework in accordance with the Best-Practice Management of Water Supply and Sewerage Guidelines. The Guidelines are not enforceable. Ultimately, the Minister for Water is responsible for overseeing the performance of local water utilities under the Local Government Act 1993 and the Water Management Act 2000. The Department of Environment, Climate Change and Water, on behalf of the Minister for Water, monitors the performance of the local water utilities. Local water utilities determine their own prices in accordance with the voluntary Best-Practice Management of Water Supply and Sewerage Guidelines.333

5.2.3 Sector trends Climate change impacts on inflows Climate change is predicted to reduce the water availability in NSW due to changes in rainfall, runoff, evaporation rates and extreme events including floods and drought. For example, the CSIRO has forecast that in southern parts of the State, mean annual runoff will be up to 20% less in 2030 relative to 1990; in the eastern parts there will be little change; and in northwest corner it

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will increase by up to 20%.334 This will have a significant effect on many communities whose water supply is already vulnerable. Increased focus on water efficiency Increased water efficiency is an ongoing priority for the NSW Government and all water utilities. For example, the target for water efficiency in Greater Sydney is to save 24% of the region’s needs by 2015.335 This is being achieved by techniques including: Installing water-saving devices Designing new homes so that they use 40% less drinking water Supplying rebates for water efficient washing machines and rainwater tanks Promoting water-saving programs for business.

A total of 74 non metropolitan local water utilities are currently involved in the Water Loss Management Programme, which is a $22 million joint initiative of the Local Government and Shires Association of NSW and the NSW Water Directorate with partial funding from the Australian Government through the Water Smart Australia Programme.336

5.3 Performance Key parameters to assess infrastructure performance are the levels of services, maintenance levels, water quality indicators and environmental management. For IPART-regulated water utilities, the operating licence specifies the minimum standards. Levels of service include water breaks and average duration of interruptions. Figure 5.11 shows that the number of water main breaks have reduced for the metropolitan utilities and remained static for local water utilities. However it should be noted that weather and soil type are key factors in determining pipe breakages, rather than pipe age or maintenance activity. Reactive clay soils swell with moisture and shirk when dry. Consequently pipes buried using the clay soil as backfill, which was common practice until about 1970, suffers more breakages in very wet and dry conditions compared with sandy soil. Figure 5.11: Water main breaks per 100km of water main, 2002/03 to 2008/09337 338

Figure 5.12 shows that compared to similar-sized utilities, the frequency of water main breaks for Sydney Water and Hunter Water are in the middle range.

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Figure 5.12: Water main breaks per 100km of water main for utilities with 100,000+ connected properties339

Another performance indicator is the rate of water loss. Water losses occur due to leakage from pipes, fittings and water services, and pipe breaks. Water losses are measured using the Infrastructure Leakage Index, which takes into account factors such as length of main, number of connections, connection density, operating pressure, meter errors, theft and fire fighting, so that it can be used to compare to different water networks. A level of 1 indicates that it is achieving the theoretically lowest possible level of leakage that could be achieved. Index values lower than 1.5 are deemed to be excellent while 1.5 to 3.5 is categorised as good to fair.340 Table 5.4 provides details on the Infrastructure Leakage Index for Sydney Water and Hunter Water. Table 5.4: Infrastructure Leakage Index for Sydney Water and Hunter Water

2004/05 2005/06 2006/07 2007/08 2008/09

Sydney Water341 1.8 1.5 1.5 1.5 1.4

Hunter Water 1.7 1.3 1.3 1.3 1.34342

Sydney Water has had a range of initiatives to reduce water loss with the most important being the Active Leak Detection Program. This has been running since 2002/03 and uses acoustic and electronic equipment to scan the water network and identify hidden leaks for repair.343 The result has been a 44% reduction in water lost since 2002/03.344 Sydney Water loses about 7.3% of the drinking water that it draws.345 Sydney Water considers that it has reached the point where the costs associated with water loss reduction equal the benefits derived from water savings. Thus it considers that the full benefits of the Active Leak Detection Program have been achieved and increased inspection will only maintain or slightly reduce current water losses.346 Hunter Water has also implemented a number of water loss management initiatives, including the Active Leak Detection Program, Water Service Replacement Program and Water Main Replacement Program, and improving response times to reported leaks. The result is that it has achieved an excellent Index rating. Hunter Water plans to survey at least 20% of the network each year as part of the five-year rolling program, which will reduce leakages further.347 Table 5.5 provides details on the interruptions and water loss for Sydney Water and Hunter Water.

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Table 5.5: Infrastructure Leakage Index for Sydney Water and Hunter Water

Utility Year ended 30 June 2009 2008 2007 2006 2005

Hunter Water348 Average number of unplanned water supply interruptions per 1,000 properties

271.2 225.2 372.3 386.9 395.9

Water losses (kilolitres/water main kilometre/day)

3.67 3.9 4.2 na na

Sydney Water349 Average frequency of unplanned water interruptions per 1,000 properties

5.0 5.6 5.7 6.1 na

Water main breaks and leaks per 100km

33.7 30.0 35.1 42.5 37.8

Figure 5.13 details water losses per connection for water utilities with more than 100,000 connected properties, and indicates that the losses per connection of Sydney Water and Hunter Water was relatively high compared to similar sized utilities nationwide. Figure 5.13: Water losses for utilities with 100,000+ connected properties (litres/service connection/day)350

All NSW water utilities have their water continuously monitored and assess the quality of their water in accordance with the Australian Drinking Water Guidelines (ADWG). The monitoring covers biological, microbiological, physical and chemical parameters of the water supplied, using samples from dams, treatment plants, local reservoirs, and the garden taps of consumers. The key performance measure for microbiological water quality is the bacteria count of Escherichia coli (E. coli). The presence of E. coli means that water may be contaminated with faecal material. The ADWG’s requirement for E. coli is that ‘at least 98% of scheduled samples contain no E. coli’.351 A limitation of using the E. coli indicator is that while total coliforms are the most sensitive, they are the least specific indicator group for faecal contamination. Water recently contaminated by faeces will always contain coliforms, but as some coliforms also occur naturally in soil and vegetation, coliforms may sometimes be present in water in the absence of faecal contamination. Coliforms other than those of faecal origin can be present in drinking water as a result of the presence of biofilms on pipes and fixtures or contact with soil as a result of fractures or repair works.352 Figure 5.14 shows NSW water utilities’ microbiological compliance for E. Coli. Sydney Water and Hunter Water have consistently achieved 100% and local water utilities achieved 99% in 2008/09. However, there were 12 non-complying local water utilities and these served between 1,000 and 5,300 connected properties.353

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Figure 5.14: Microbiological compliance354

Water quality testing also covers chemical and physical compliance. State-wide in 2007/08, 98% of samples complied with the ADWG for chemical water quality. Some 96% of local water

utilities complied with the ADWG for chemical water quality. 95% of samples complied with the ADWG for physical water quality (aesthetic). 98% of local

water utilities complied with physical water quality.355 Over the last few years, there has been a State-wide decline in the number of complaints, reflecting a State-wide improvement in drinking water quality due to the commissioning of new water treatment facilities.356 The increase in Hunter Water’s complaints in the last year followed the commissioning of two new water carrier trunk mains in April 2009. The Corporation conducted flushing of the water mains in the affected suburbs and resolved the issues.357 The State-wide level of about three complaints per year per 1,000 properties is similar to other Australian utilities.358 Figure 5.15 breaks down the water complaint level by utilities. Figure 5.15: Water quality complaints by utilities359 360 361

State Water Corporation The IPART Operational Audit 2008/09 into State Water operations found that the Corporation demonstrated a very high level of compliance with the asset management clauses of the Licence.362 Hunter Water The IPART Operational Audit 2008/09 into Hunter Water operations found that it: Supplied treated drinking water of a very high to excellent quality

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Achieved full compliance in meeting all system performance standards for water continuity, water pressure and sewer overflows

Achieved full to high compliance with requirements relating to customer service and environmental activities

Achieved full to moderate compliance with requirements relating to the management of water supply and demand.363

The expenditure on maintenance and the size of the maintenance backlog also provide an insight into the quality of the infrastructure. Table 5.6 identifies that Hunter Water completed its planned maintenance for 2008/09 and had an insignificant maintenance backlog at year-end. Table 5.6: Hunter Water’s maintenance activities364

Year ended 30 June 2008 2009

Total planned maintenance completed for network and treatment assets (%) 99.3 99.3

Total planned maintenance completed for critical assets (%) 100.0 100.0

Maintenance work completed on time (%) 74.3 83.1

Sydney Water The IPART Operational Audit 2008/09 into Sydney Water operations found that it: Continued to supply treated drinking water of an excellent quality Achieved full compliance with requirements relating to the Australian Drinking Water Guidelines Achieved full compliance with infrastructure performance requirements including water

continuity, water pressure and sewer overflows and response times for leaks and breaks Achieved full compliance with the Demand Management requirements, including water

conservation, leakage management and water recycling.365 Table 5.7 identifies that Sydney Water completed most of its planned maintenance for 2008/09. It achieved a reduction in its backlog of maintenance because of increased maintenance expenditure.366 Table 5.7: Sydney Water’s maintenance activities367

Year ended 30 June 2007 2008 2009

Total planned maintenance completed for network and treatment assets (%) 95.0 97.4 103.2

Total planned maintenance completed for critical assets (%) 100.0 96.8 100.6

Maintenance work completed on time (%) 95.0 92.0 84.0

Local water utilities The Non-Metropolitan Water Inquiry identified that compared to similar interstate utilities, areas of good performance for NSW utilities included that: The annual residential water volume supplied per property was lower than all the other

Australian States Water main breaks were lower than most of the capital city utilities and country Victoria The operation, maintenance and administration cost per property for water supply was higher

than the capital city utilities but was lower than country Victoria.368 Areas of poor performance included that: The economic real rate of return was lower than the capital city utilities and country Victoria 17 local water utilities failed to comply with the ADWG for microbiological water quality 7 local water utilities failed to achieve full cost recovery for water supply 11 local water utilities had more than 30 water main breaks per 100km of main (State-wide

median was 11)

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26 local water utilities failed to comply with the Australian Drinking Water Guidelines for chemical quality; these non-compliances were not health-related and involved parameters such as hardness, iron and manganese

14 local water utilities failed to comply with the Australian Drinking Water Guidelines for physical water quality; these non-compliances were not health-related and involved parameters such as colour and turbidity.369

Generally, the level of performance for smaller utilities is lower than for larger ones. For example, in 2007/08, while over 85% of utilities with more than 10,000 connected properties complied with the Best-Practice Management of Water Supply and Sewerage Guidelines, only 66% of utilities with less than 1500 connections did so.370 The Non-Metropolitan Water Inquiry presented the performance graphically as seen in Figure 5.16. The ratings were based on 23 key performance indicators. Figure 5.16: Performance of NSW local water utilities371

An area of improvement has been the increased utilisation of best practice asset management activities by water utilities. This is reflected in the growing deployment of the National Asset Management Strategy (NAMS.AU) Asset Management Planning developed by the IPWEA. The NAMS.PLUS programme is based on IPWEA’s International Infrastructure Management Manual framework (IIMM). The program provides the tools and guidance to assist organisations to write their own asset management plans to enable the provision of condition assessment data and long-term renewal/upgrade capital works programs.

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Potable water on Local Aboriginal Land Council land Potable water and sewerage services on land managed by the 121 Local Aboriginal Land Councils are the responsibility of the Councils. There is little comprehensive information about the water infrastructure in these locations, however, the Department of Water and Energy recognises that the current arrangements for managing water and sewerage services in Aboriginal communities are not effective due to a lack of skills and staff to manage the systems well, and difficulties in paying for water at an appropriate price to provide sustainable systems.372 The 2008 report into local water utilities stated that drinking water standards in many Aboriginal communities are poor and do not meet the basic standards set by State and national health guidelines.373 In July 2008, the NSW Government initiated a joint program with the NSW Aboriginal Land Council that involves investing $205 million over the next 25 years to improve the water supply and sewerage services in these communities.374

In April 2010, the Australian Government announced that it will be funding the following potable and wastewater projects in remote communities in NSW: Walgett potable water and sewerage program, $4.2 million Wilcannia potable water and sewerage program including sewage works in adjacent Aboriginal

communities, $2.2 million.375

5.3.1 Environmental sustainability The NSW Government and all water utilities are actively promoting the sustainable use of water through demand management and efficiency improvement programs. Examples of water efficiency measures include the following. In 2009, Hunter Water introduced Smart Water bills that allow residential customers to compare

their own consumption within their local area and the entire Hunter Water area.376 This measure seeks to encourage householders to reduce their consumption.

Hunter Water increased the rainwater tank rebate by 20% in 2008/09. Sydney Water introduced a toilet replacement service. This service organises the replacement

by a qualified plumber of a single flush toilet with a 4-star dual flush toilet for only $330. The larger utilities are also active in reducing their carbon footprint, principally through improving their energy efficiency. The use of the Kurnell Desalination Plant could have a significant impact on carbon dioxide production due to its energy consumption, but the NSW Government has determined that it will source its power from a wind farm. In 2008, Sydney Water released its Climate Change Strategy, which has the following themes: Becoming carbon neutral for energy and electricity use by 2020 Implementing best practice in energy efficiency for water and wastewater treatment Using renewable energy across our business Helping the community and businesses be water-efficient Building a desalination plant powered by 100% renewable energy Recycling 70 billion litres of wastewater a year by 2015.377

5.4 Future challenges The challenges in achieving improvements in potable water infrastructure in NSW are: Understanding and managing climate change impacts on water. Climate change is creating

significant risks to potable water supply, notably through lower rainfall and runoff, and increased frequency of droughts and bushfires. Managing these risks requires a better understanding of their potential impacts. This issue is being addressed by the metropolitan water system owners.

Improving the operations and assets of local water utilities. Addressing skills shortages, ageing assets, improving water quality and variable water flows is going to require changes to the local water utilities to enable them to sustainably supply their services into the future.

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Providing new services to coastal areas. It is expected that the coastal non-metropolitan NSW population will grow by 34% between 2001 and 2031, and this will require a significant expansion of water and wastewater services. For some local water utilities, obtaining the necessary funds from service fees will be difficult and additional funds will be required.

Maintaining continual emphasis on water efficiency and increasing potable water substitution as water supplies increase. As the water supplies increase, individual support for conservation and reuse may diminish. This increases the importance of locking in water efficacy via mechanisms such as the Water Wise Rules and the requirement for new houses to meet BASIX, the Building Sustainability Index.

Improving the health of waterways. With the development of water-sharing plans for surface water and groundwater slowing the growth in extraction, and rainfall delivering more water, waterway health is improving. However, balancing the needs of the environment with community and industry will always be challenging due to the growing demand for water from a rising population and expanding economy. Continual work needs to ensure that extraction rates are sustainable, even during periods of extended drought.

Development and implementation of integrated water cycle management plans. Since the release of the NSW Government’s Integrated Water Cycle Management Guidelines (IWCM) in 2004, there has been little practical implementation of this management system by local water utilities in NSW. IWCM is needed because it deals effectively with the complex linkages between different elements of the water cycle, including urban, rural, catchment and environmental-related issues.

5.5 Report Card rating

Infrastructure Type NSW 2010 NSW 2003 National 2005 National 2001

Potable water B- B- Metropolitan urban C- Non-metropolitan urban

B- C

Based on considerations of planning, funding, and infrastructure capacity and condition, NSW’s potable water infrastructure has been rated B-. This rating reflects the significant infrastructure and demand management improvements undertaken in the metropolitan areas that have addressed the recent water supply problems caused by the drought. It also recognises that the water supply plans established by the metropolitan water supply utilities provide a sound basis for the delivery of an efficient and reliable water supply into the future. While there have been some improvements in regional water supply quality and availability, local water utilities face significant infrastructure and supply challenges, including limited ability to raise revenue to improve infrastructure and access to sustainable raw water sources Positives that have contributed to the rating are: Good quality of the metropolitan water reticulation system Increase in the security of metropolitan potable water supply through a suite of demand and

supply initiatives Improvements in the quality of water supplied and increased investment in water infrastructure

drought security projects in rural areas Effective water conservation and efficiency programs Significant investment in metropolitan water infrastructure.

Negatives that have contributed to the rating are: The high cost of generating additional water supply The financial, asset quality and water quality problems facing a number of local water utilities. The lack of State Government progress/direction/action in relation to the 2008 Non-Metropolitan

Water Inquiry.

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6 Wastewater

6.1 Summary

Infrastructure Type NSW 2010 NSW 2003 National 2005 National 2001

Wastewater C+ C- Metropolitan urban C- Non-metropolitan urban

C+ C-

This rating recognises that there have been improvements in wastewater infrastructure and asset management across both metropolitan and non-metropolitan areas resulting in a noticeable improvement in the environmental impact of wastewater. There has also been an increased reuse of wastewater, which is reducing demand for potable water. Since the last Report Card, the major sewerage and recycled water sector developments in NSW have been: A significant increase in the use of recycled water A reduction in the environmental impact of sewage Expansion of the wastewater system to the new urban developments in Sydney’s north west

and south west growth centres Expansion of the reticulated sewerage services to communities in greater Sydney’s

environmentally-sensitive areas and to Clarence Town Sewerage Scheme in the Hunter region, under the NSW Government’s Priority Sewerage Program

Introduction of BASIX throughout NSW. Recently completed and in-progress major infrastructure projects include: Sydney Water’s SewerFix program, which is fixing leaks and blockages in pipes, installing new

pipes and upgrading sewerage pumping stations Increasing capacity and improving performance at a number of Sydney Water’s sewerage

pumping stations Sydney Water’s Replacement Flows Project Rosehill-Camellia Recycled Water Project Expanded Rouse Hill Recycled Water Scheme Wollongong Recycled Water Plant and Recycled Water Scheme.

Challenges to improving wastewater and recycled water infrastructure include: Addressing climate change risks for sewerage infrastructure Ensuring that demand for recycled water remains Improving the operations and assets of local water utilities Providing new services to coastal areas. Development and implementation of integrated water cycle management plans.

6.2 Infrastructure overview

6.2.1 Sewerage system description Sewage is produced by domestic households and by businesses/industrial operations, where it is known as trade waste. Sewerage systems are made up of reticulation mains, service branch lines, maintenance holes (manholes), pumping stations, trunk sewers and sewage treatment plants. Most sewers flow under gravity, with these sewers designed so that there is sufficient slope to stop build-up that may lead to blockages.

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NSW’s potable water infrastructure can be categorised into: Metropolitan water systems Non-metropolitan water systems.

Metropolitan wastewater systems There are two major metropolitan wastewater systems where State-owned corporations provide wastewater supply. They are: Greater Sydney The Lower Hunter region.

Greater Sydney wastewater supply system The Greater Sydney wastewater supply system encompasses the areas of Sydney, the Illawarra and the Blue Mountains. It consists of 25 separate systems, of which eight drain to coastal sewage treatment plants and 17 drain to inland sewage treatment plants.378 Figure 6.1 illustrates the system. Figure 6.1: Sydney Water’s wastewater system379

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Sydney Water’s daily volume of wastewater is 1.2GL. Of this, more than 26ML is recycled. Around 75% of wastewater is processed at Sydney Water's three largest sewage treatment plants – Malabar, North Head and Bondi.380 Table 6.1 identifies the key wastewater assets of Sydney Water. Table 6.1: Sydney Water key wastewater assets (June 2009)381

Principal statistics Assets

Total length of sewers owned and operated by Sydney Water 23,817km

Number of sewage pumping stations in service 674

Number of sewage treatment plants 29

Wastewater collected (includes discharge and bypass) 477.202GL

Number of people with wastewater services 4,268,140

Properties with a sewer main available 1,706,758

Sydney Water’s capital expenditure on wastewater is between $300 and $400 million per year.382 A significant proportion of this investment is to meet demand from the growing north-west and south-west areas of Sydney. Current projects over $10 million are identified in Table 6.2. Table 6.2: Sydney Water’s capital expenditure program (2008/09 to 2011/12)383

Project Total ($ millions)

Maintain water distribution systems – Sydney, Blue Mountains 538.5

Water meter replacement program 31.5

Critical water main program 176.4

Sewer Network Reliability Upgrades 369.2

Overflow abatement 264.7

Upgrade Illawarra Sewage Treatment Plants to protect beaches 19.1

Upgrade Hawkesbury/Nepean Sewage Treatment Plants 11.3

Upgrade reliability of sewage treatment plants 93.5

Blue Mountains Sewerage 53.6

Upgrade Warriewood Sewage Treatment Plant to protect oceans 20.3

Improve Stormwater Quality 41.5

North Head STP Performance and Reliability 70.1

Recycled Water Projects 23.2

Priority Sewerage Program – Stage 2 36.2

Western Sydney Recycled Water Initiative 185.1

Hawkesbury Heights Yellow Rock 50.4

Freemans Reach, Glossodia and Wilberforce 108.7

Appin, Wilton and Douglas Park 56.1

Agnes Banks and Londonderry 40.7

Diamond Bay/Vaucluse Sewage Transfer Scheme 18.2

Growth works to service urban development – water and wastewater 592.4

The Sydney Catchment Authority is also contributing to improvements in wastewater in the Sydney area. The SCA provides grants to local governments to: Fast track council sewerage projects. The SCA’s Accelerated Sewerage Program provides

$37.7 million funding over nine years to upgrade existing systems for treating, transporting and irrigating sewage, as well as new sewerage systems for previously non-sewered residential areas.

Help them fulfil their responsibilities for regulating on-site sewerage systems. There are some 16,000 on-site sewerage systems in the catchments.

Undertake performance assessments of council sewage reticulation systems.384

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Lower Hunter region wastewater supply system Hunter Water provides wastewater services to almost 500,000 people in the Lower Hunter region. Over the last few years, Hunter Water has also assumed responsibilities for operations in Dungog and parts of Singleton around Branxton to Whittingham.385 Figure 6.2 shows the location of Hunter Water’s wastewater infrastructure. Figure 6.2: Location of Hunter Water’s wastewater infrastructure386

Table 6.3 identifies the key wastewater characteristics of Hunter Water. Of its 18 wastewater treatment plants, three discharge via ocean outfalls – Burwood Beach, Belmont and Boulder Bay – and 15 discharge either to local creeks and rivers or are reused by industry or irrigators.387 Table 6.3: Hunter Water key wastewater characteristics (at 30 June 2009)388 389

Asset Units

Properties where sewer is available 219,764

Properties connected to sewer 211,015

Total sewer mains in service (km) 4625.6

Length of sewer main per liable property (m) 21.9

Number of sewage pumping stations 380

Number of wastewater treatment plants 18

Hunter Water’s planned or underway wastewater projects include: Wastewater Treatment upgrades (includes treatment plants at Dora Creek, Boulder Bay,

Branxton, Burwood Beach, Paxton, Farley, Morpeth, Raymond Terrace and Kurri Kurri) Aberglasslyn Wastewater Transportation System Upgrade Cardiff No.1 Wastewater Pump Station Upgrade Clarence Town Sewerage Scheme Dudley Charlestown Wastewater Transportation System Upgrade Edgeworth Wastewater Transportation System Upgrade Fern Bay Sewerage Scheme Islington Sewer Main Replacement Millfield and Ellalong Sewerage Scheme

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Morpeth Wastewater Transportation System Upgrade Newcastle Wastewater Transportation System Upgrade Shortland Wastewater Transportation System Upgrade Windale Gateshead Wastewater Transportation System Upgrade.390

All except the Clarence Town Sewerage Scheme are capacity expansion projects. The Clarence Town Sewerage Scheme will connect 420 Clarence Town homes and businesses with the Hunter Water sewer services. They currently use septic tanks and other on-site wastewater disposal systems. The new sewage reticulation system consists of 12km of gravity sewer mains, 4km of pressure mains, two sewage pumping stations, and a wastewater treatment plant and reuse site. The scheme is expected to be completed by mid-2011.391 Non-metropolitan water systems In NSW there are 280 non-metropolitan wastewater supply schemes.392 Wastewater for non-metropolitan areas is the responsibility of local government under the Local Government Act 1993, and is provided by local water utilities consisting of: 96 general purpose local government councils One water supply and sewerage county council.393

The challenges and proposed reforms for these local water utilities were detailed in the Water section. In 2008/09, some 95.2%394 of the non-metropolitan urban population (i.e. 1,670,000 people) had a reticulated sewerage service. The growth in coverage is illustrated in Figure 6.3. Much of this growth is attributed to the Country Towns Water Supply and Sewerage Program. Figure 6.3: Non-metropolitan urban population with reticulated sewerage395

Levels of treatment There are three levels of wastewater treatment: Primary treatment. This treatment consists of sedimentation (sometimes preceded by

screening and grit removal) to remove gross and settleable solids. The remaining settled solids, referred to as ‘sludge’, are removed and treated separately.

Secondary treatment. This treatment removes 85% of biochemical oxygen demand (BOD) and suspended solids via biological or chemical treatment processes. Secondary-treated reclaimed water usually has a BOD of <20 mg/L and suspended solids of <30 mg/L, but this can increase to >100 mg/L due to algal solids in lagoon systems.

Tertiary treatment. This treatment removes a high percentage of suspended solids and/or nutrients, and is followed by disinfection. It may include processes such as coagulation, flocculation and filtration.396

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Wastewater pricing Water and wastewater tariff structures in NSW are described in the Water section. Figure 6.4 provides a comparison of sewerage bills by city. Figure 6.4: Annual wastewater costs for residential customers for utilities with 100,000 plus connected properties 2008/09397

6.2.2 Recycled water system description NSW’s recycled water infrastructure consists of: Recycled water treatment plants Reservoirs Pumping stations Recycled water trunk mains Duel reticulation mains (also known as third pipe or purple pipe mains) that distribute the water

to premises for garden watering, toilet flushing, laundry and industrial purposes. The selection and management of recycled water systems in NSW aligns with the 2006 Australian Guidelines for Water Recycling: Managing Health and Environmental Risks. This is based on a risk management approach that incorporates the concept of producing recycled water of a quality that is ‘fit-for-purpose’. Recycled water can be used as a source of potable water, typically by injecting it into a water reservoir. This is called indirect potable reuse. The NSW Government currently has no plans to use recycled water for this purpose, but aims to use recycled water to replace potable water supply used for non-drinking purposes by industrial, agricultural and, to a smaller extent, domestic customers. The prime driver for recycling water in NSW is to create water that can be a substitute for potable water. Uses for recycled water include irrigation, industrial processes and non-potable domestic uses. Benefits of recycled water include reducing the volume of nutrient-rich water entering coastal and riverine ecosystems, and supplying nutrient-rich solids for agricultural purposes. Sydney recycles about 5.3%398 of its wastewater compared to Adelaide, which recycles 31%,399 giving Adelaide the highest recycling percentage of all Australian capital cities. Figure 6.5 shows the growth in recycling water in NSW.

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Figure 6.5: Percent of wastewater recycled400 401

Details on recycled water for each water utility are: Local water utilities. In 2008/09, 79% of utilities recycled water and together produced 38GL of

recycled water.402 Sydney Water. In 2008/09, Sydney Water produced 25.4GL of recycled water.403 Of this, 8GL

was used for irrigating farms, golf courses, sportsgrounds, parks and a racecourse. Hunter Water. In 2008/09, Hunter Water produced 5.091GL of recycled water.404 It delivered

recycled water to Eraring Power Station, several municipal golf courses, Kurri Kurri TAFE and a variety of agricultural water users.405

The main categories of recycled water users are irrigators (e.g. golf courses, parks, gardens), agricultural users (e.g. farming, woodlots), industrial users (e.g. power stations, coal terminals, coal washeries) and residential users. In the Hunter Region, industry accounts for nearly 50% of the consumptive use of the recycled water. Figure 6.6 shows the location of recycled water irrigation schemes in Sydney, the Blue Mountains and the Illawarra. Recycled water can also be substituted for surface water being used for environmental flows. In late 2010, Sydney Water will commission the infrastructure that will enable 18GL/year of recycled water being released into the Hawkesbury–Nepean River below Penrith Weir. This water will be substituted for surface water that is currently released from Warragamba Dam to maintain environmental flows. The infrastructure, known as the Western Sydney Replacement Flows, connects the Penrith and Quakers Hill sewage treatment plants to a new plant at St Marys where the wastewater is further treated.406 A smaller but growing use of recycled water is for domestic use via dual reticulation systems. Several areas in NSW are, or soon will be, provided with dual reticulation systems. These include: Thornton North, North Cooranbong and Gilleston Heights in Hunter Water’s service area407 Rouse Hill and Sydney Olympic Park/Newington in Sydney Water’s service area. Rouse Hill is

Australia's largest residential recycled water scheme currently supplying 18,000 houses with the scheme eventually servicing 36,000 homes. On average, houses in the Rouse Hill scheme use 40% less potable water than the Sydney average. The Rouse Hill Recycled Water Plant was expanded in 2008 and can supply up to 4.7GL/year of recycled water.408

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Figure 6.6: Map of recycled water irrigation schemes in Sydney, the Blue Mountains and the Illawarra409

Another form of wastewater recycling is via sewer mining. This is the process of extracting wastewater as it flows along a sewer, treating it to produce recycled water that is used locally, and discharging the remaining wastewater back to the sewers. Sewer mining faces a number of challenges including the high cost of the produced recycled water, finding a suitable wastewater source that has the required flow rate and composition, ensuring that the volume of extracted sewage and returned concentrates does not impact on the sewerage network downstream, and managing the risks of the produced recycled water. The water utilities are encouraging sewer

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mining in their areas, although there are some exclusion zones that are normally where the sewage flows are already operating, or are committed to proposed water recycling schemes. In Sydney, sewer mining occurs at: Sydney Olympic Park for uses onsite and at Newington Estate Pennant Hills Golf Club to irrigate the golf course Kogarah Council for irrigating parks, playing fields and the Beverley Park Golf Course Workplace6, opposite Star City Casino in Pyrmont, used for toilet flushing and irrigation of the

site.410 Further sewer mining schemes are proposed at: Blackmores, Warriewood Ku-ring-gai Council Macquarie University, North Ryde North Ryde Golf Club Space, 1 Bligh Street Sydney Darling Walk, Darling Harbour Sydney Airport, Mascot Caltex and Koppers, Kurnell.411

6.2.3 Policy and governance There is no formal NSW Government sewerage strategy. The NSW Government’s objectives for sewerage are expressed through a number of policy, legislative and operational documents, with the overriding ones being to reduce environmental damage from wastewater and to utilise wastewater as a resource. The regulatory controls for metropolitan wastewater systems are described in the Water section with the addition that wastewater systems are licensed by the Department of Environment, Climate Change and Water. DECCW licenses the operation of the wastewater pipe network and the wastewater treatment plants.412 The licences are issued under the Protection of the Environment Operations Act 1997. The licences states both quality and quantity conditions for discharge from each wastewater treatment works and are reviewed every three years. The licences also specify operational controls and performance reporting for the pipe network and wastewater pumping stations.413 The governance of recycled water has changed significantly in the last few years, making it easier to produce and use recycled water. The 1993 NSW Guidelines for Urban and Residential Use of Reclaimed Water has been replaced by the Australian Guidelines for Water Recycling: Managing Health and Environmental Risks (Phase 1) which introduced a nationally-consistent approach to the management of the use of recycled water from sewage, greywater and stormwater sources. This has resulted in the NSW Office of Water using the Australian Guidelines framework for assessing Section 60 applications for approval to treat and supply recycled water under the Local Government Act 1993 and Section 292 applications for approval to treat and discharge recycled water under the Water Management Act 2000.414 The NSW Government has developed guidelines to foster the development of private recycled water schemes. Called the Interim NSW Guidelines for the Management of Private Recycled Water Schemes (2008), the guidelines replaced the NSW Health’s Interim Guidance for Greywater and Sewage Recycling to Multi-Unit Dwellings and Commercial Premises (2004).415 A recent important development has been the production of the supporting regulations to the Water Industry Competition Act 2006. The Act seeks to encourage competition in the water industry and to encourage innovative recycling projects. It establishes a licensing regime for private sector providers of reticulated drinking water, recycled water and sewerage services and creates a

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framework for third-party access of water and sewerage infrastructure. In May 2009, the first licence was issued, which was to construct and operate a recycled water plant as part of the Rosehill Recycling Scheme in Western Sydney. Over time, more licences will be issued resulting in increased provision of recycled water.

6.2.4 Sector trends Growth in recycled water Recycled water use will increase significantly over the next decade and specific targets are: 70GL by 2015, 100GL by 2032 for Greater Sydney.416 25.4GL of recycled water was produced in

2008/09.417 8GL by 2013/14 for Hunter Water.418 5.091GL of recycled was produced in 2008/09.419

Figure 6.7 shows the expected growth in recycled water in greater Sydney, with the largest uses of this water to be for environmental flows and irrigation by 2015. Figure 6.7: The expected growth of recycled water in greater Sydney420

Specific planned or underway large recycled water projects include: Kooragang Industrial Water Scheme and the Vintage Recycled Water Scheme in Hunter

Water’s service area421 Rosehill, Camellia and Smithfield large industrial users, and large industrial users in Kurnell

including Caltex and Continental Carbon, and schemes at Pennant Hills Golf Club and Kogarah Council.

Areas where dual pipe systems are planned include: Ropes Crossing, Hoxton Park, the North West and South West Growth Centres, in Sydney

Water’s service area422 Gillieston Heights in Hunter Water’s service area.423

6.3 Performance Sewerage performance measures relate to: Frequency of mains sewer blockages, typically caused by fats and tree roots, and can lead to

sewage spills, particularly during heavy rains Frequency of sewage spills, which occur when the sewerage system cannot contain the sewage

flow, with the result that overflows or spills occur

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Responsiveness to service failures, notably sewer spills and chokes424 Compliance with discharge licences.

About 75% of blockages and chokes in Sydney are caused by tree roots according to Sydney Water. Addressing the problem requires cleaning, repairing and relining. Figure 6.8 illustrates the blockages for NSW utilities, and shows that there has been a reduction in chokes over the last few years in Sydney Water with no notable improvement for Hunter Water and local water utilities. Figure 6.8: Sewer main chokes and collapses425 426 427

From a national perspective, Hunter Water and Sydney Water are mid-ranking in main breaks and chokes performance compared to similar systems as seen in Figure 6.9. Figure 6.9: Sewer main breaks and chokes per 100km of sewer main428

There are different mechanisms for overflows in dry and wet weather. In dry weather, overflows are caused by chokes and blockages stopping flow. In wet weather, overflows are caused by water entering the wastewater system via cracks in pipes or illegal stormwater connections to sewers, causing the capacity of the wastewater system to be exceeded. An increased frequency of heavy rain events normally increases the number of overflows. Both Sydney Water and Hunter Water have a high number of sewer overflows compared to other systems nationwide as seen in Figure 6.10.

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Figure 6.10: Sewer overflows to the environment per 100km of sewer main429

From an asset management perspective, preventive maintenance for breaks and blockages is difficult as it requires CCTV inspections or other expensive methods. Priority is given to areas where blockage rates have been high or where critical sewers exist. Due to its high cost, widespread preventative maintenance is impractical so the primary approach for sewerage infrastructure maintenance for reticulation pipes is described as run to failure. Another indicator of wastewater system performance is conformance with sewage effluent quality licence conditions, notably the biochemical Oxygen Demand (BOD) and suspended solids conditions. As seen in Figure 6.11, compliance for BOD licence conditions has ranged from 92% to 100% for local water utilities over the last seven years.430 Figure 6.11: Sewerage compliance with Biochemical Oxygen Demand licence conditions*431

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As seen in Figure 6.12, compliance with suspended solids licence conditions has ranged from 92% to 100% for local water utilities over the last seven years.432

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Figure 6.12: Sewerage compliance with suspended solids licence conditions*433

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6.3.1 Environmental sustainability A significant environmental challenge for wastewater infrastructure is to reduce nutrient content in wastewater discharge, notably nitrogen and phosphorus. Figures 6.13 and 6.14 show that Sydney Water has made significant improvements in reducing nitrogen and phosphorus in its discharges. The reduction is due to the upgrading of its sewage treatment plants and decommissioning of poorly performing plants. Currently, Sydney Water’s discharges make up just 2% and 15%434 of the phosphorus and nitrogen that enters the lower Hawkesbury–Nepean each year. The rest comes with diffuse sources such as agricultural runoff and stormwater. When rainfall occurs, stormwater flows to sewage treatment plants increase, resulting in a corresponding increase in phosphorus and nitrogen loads being discharged to receiving waters. Figure 6.14: Total mass of phosphorus discharged to streams and rivers from inland sewage treatment (Tonnes per annum, 2008/09)435

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Figure 6.14: Total mass of nitrogen discharged to streams and rivers from inland sewage treatment (Tonnes per annum, 2008/09)436

Another environmental improvement across NSW has been the biosolid reuse. As seen in Figure 6.15, the percentage of biosolid reuse has increased from 43% in 1998/99 to 100% in 2008/09 for local water utilities’ sewage treatment plants.437 Some 99% of all biosolids are captured by Sydney Water and used for agricultural or horticultural purposes.438 Figure 6.15: Biosolid resuse at local water utilities’ sewage treatment plants439

6.4 Future challenges The challenges to achieving improvements in wastewater and recycled water infrastructure are: Addressing climate change risks for sewerage infrastructure. Climate change impacts for

sewerage infrastructure occur as a result of: Rising sea levels, which result in seawater ingress into sewerage networks, causing salt load

increases in sewage, flow increases, and concrete corrosion Ongoing drought, which reduces the volume of flow, causing chokes and treatment

challenges Intense rains, which cause capacity problems Rising temperatures, which can increase odour complaints Reduction in sewage flows

Both Sydney Water and Hunter Water are addressing these issues via their climate change and sustainability strategies.

Ensuring that demand for recycled water continues. Demand for recycled water is principally driven by its cost. Continual assistance by governments may be required to ensure that the cost of recycled water does not rise higher than potable water.

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Improving the operations and assets of local water utilities. See Potable water section. Providing new services to coastal areas. See Potable water section. Development and implementation of integrated water cycle management plans. See

Potable water section.

6.5 Report Card rating

Infrastructure Type NSW 2010 NSW 2003 National 2005 National 2001

Wastewater C+ C- Metropolitan urban C- Non-metropolitan urban

C+ C-

Based on considerations of planning, funding, and infrastructure capacity and condition, NSW’s wastewater and recycled water infrastructure has been rated C+. This rating recognises that there have been improvements in wastewater infrastructure and asset management across both metropolitan and non-metropolitan areas resulting in a noticeable improvement in the environmental impact of wastewater. There has also been an increased reuse of wastewater, which is reducing demand for potable water. Positives that have contributed to the rating are: Increased reuse of recycled wastewater Effective and efficient operation of the metropolitan wastewater systems Effective and efficient response to sewerage blockages Upgrades to wastewater treatment plants resulting in both decreased discharges to the

environment and increased reuse of water Improved proactive asset management processes.

Negatives that have contributed to the rating are: The financial and asset quality problems facing a number of local water utilities The lack of State Government progress/direction/action in relation to the 2008 Non-Metropolitan

Water Inquiry.

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7 Stormwater

7.1 Summary

Infrastructure Type NSW 2010 NSW 2003 National 2005 National 2001

Stormwater C D C- D

This rating recognises that stormwater design and management is of a high quality in both new and infill developments. This is primarily due to water sensitive urban design becoming standard practice, and good land use planning. Significant problems remain in areas serviced by older stormwater systems, resulting in chronic localised flooding. These problems cannot be rectified easily due to their significant cost and community impact. Since the last Report Card, the major stormwater sector developments in NSW have been: The incorporation of stormwater into integrated catchment planning A shift in focus of stormwater management from flood and drainage functions to water quality

and reuse Introduction of BASIX throughout NSW An increase in the amount of stormwater harvested An increase in the number of floodplain risk management plans The introduction of a Stormwater Management Service Charge levied by local governments Widespread use of Water Sensitive Urban Design principles.

Challenges to improving stormwater infrastructure in NSW include: Providing appropriate stormwater infrastructure to ensure that all urban areas have adequate

drainage and flood protection Maintaining and improving asset quality The impact on stormwater volumes arising from increased urban density Accelerating the implementation of water sensitive urban design principles Addressing climate change risks Increasing stormwater use Working cooperatively where stormwater catchment areas span multiple local government

areas Development and implementation of integrated water cycle management plans.

7.2 Infrastructure overview This section focuses on urban stormwater infrastructure as it relates to runoff from local areas via gutters, pipes, open drains and overland flows. It does not consider infrastructure related to mainstream flooding, caused by the passage of floodwaters down a catchment, or to coastal flooding.

7.2.1 System description Stormwater is rainfall that runs off urban areas, typically roofs, roads and impervious manmade surfaces. NSW’s stormwater infrastructure comprises: Engineered pipes, culverts, channels and retarding basins Natural creeks, waterways and wetlands Stormwater water quality management and re-use infrastructure.

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The engineered stormwater system is made up of: Minor drainage systems, which consist of kerbs and gutters, side entry pits and underground

pipes. Except in unusual circumstances, they are designed to convey runoff for rainfalls up to the 5-year Average Recurrence Interval (ARI). That is, runoff from a rainfall event that only occurs once in every 5 years on average.

Major drainage paths, which consist of natural river and creek systems, open channels, roadways, and other open areas. They are intended to carry a rare flood, typically up to a 100-year ARI.

Stormwater infrastructure contributes to a number of quite different objectives including: Runoff control. The infrastructure should carry away rainfall from a site so that it does not cause

erosion or other environmental damage, and not cause flooding elsewhere. Flood control. The infrastructure should carry away large volumes of water following the

overflow of the minor drainage system, preventing local flooding. Water quality. The infrastructure should remove pollutants that enter the stormwater system.

Pollutants originate from many different sources and range from fuel and oil from roads, to litter dropped on streets and sediment from building sites.

Water reuse. The infrastructure could provide a source of water suitable for non-potable uses. Urban amenity. The infrastructure could provide a source of water for urban ponds, lakes and

parks. Waterway health. Runoff in unmodified catchments is normally released over a longer period of

time and has lower peak discharges than in modified catchments, resulting in healthier water environments in unmodified catchments. The infrastructure should deliver water to waterways that mimic natural conditions in terms of quantity and quality. Particularly important is slowing the flow of water through the stormwater system. This results in the quantities of suspended solids and nutrients being reduced as these settle out or are absorbed, and erosion damage is reduced. In less modified catchments, the run-off water is released over a longer period of time and has lower peak discharges, thus maintaining healthier water environments.

Managing stormwater has evolved considerably over the last few decades. In the past, the focus of stormwater systems was on minimising local flooding risk, and consequently, systems were designed to remove stormwater as quickly as possible. This resulted in large open drains that are costly to build and maintain, are a safety hazard, and cause damaging effects to the receiving waters. Today, the focus is on stormwater systems that both minimise the stormwater impacts on aquatic ecosystems and utilise stormwater as a water resource. This has been achieved by incorporating stormwater into the integrated catchment planning. Integrated catchment planning brings together urban design, open space and development control, and aims to solve existing flood problems and stop future flooding problems, as well as improving the environment and amenity. By placing conditions on developments, such as allowing for future expansion of the drainage network, preventing development in flood prone areas, and requiring the retention of runoff on site, the impacts of runoff and hence flooding can be reduced. Core to this are implementing Water Sensitive Urban Design (WSUD) principles in project design. WSUD involves techniques to treat, store, and infiltrate stormwater runoff onsite rather than simply facilitating rapid discharge of stormwater to the environment. WSUD measures include rainwater tanks, green roofs, infiltration systems, permeable pavements, urban water harvesting, swales and constructed wetlands. WSUD has become standard practice for all new developments in NSW.440 The growing emphasis on water quality management has seen the increased provision of retention facilities, wetlands, ponds and lakes, and structural devices to improve water quality, such as gross pollutant traps, litter baskets and sediment traps. These are called Stormwater Quality Improvement Devices (SQIDs).

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While the focus of stormwater management is now on improving the environmental impact of stormwater, stormwater infrastructure to prevent flooding remains important. Significant effort has been made by the NSW Government and local governments over the last decade to addressing these flooding risks, due to the high social and economic costs of flooding. Rural and urban flooding costs about $250 million each year.441 Developments over the last decade that have led to an improvement in flood management have included: Development of a Flood Prone Land Policy Revision of the Floodplain Development Manual (2005). A major change in this edition was to

redefine ‘flood prone’ and ‘flood liable’ previously defined as below the 100-year flood level and now recognised as including all land that is subject to inundation by floods up to and including the Probable Maximum Flood (PMF). Thus, all land between the 100-year flood level and the PMF is now considered to be within the floodplain.

Producing a series of Floodplain Risk Management documents to support the implementation of the Floodplain Development Manual.

The State and Australian Government provision of funding and technical assistance to local government to prepare and implement floodplain risk management plans.

Today, over 100 floodplain risk management plans have been produced and their location is shown in Figure 7.1. Figure 7.1: Completed and adopted Floodplain Risk Management Plans442

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Current stormwater reuse NSW is increasingly harvesting its stormwater as a way to create non-potable water and reduce pollution in its waterway. This harvested water is used for irrigation, industrial uses, toilet flushing and watering of parks, sports ovals and house gardens. The harvesting is either via larger scale stormwater infrastructure and or, at the household level, by rainwater tanks. Up to 2009, some 90 large scale stormwater harvesting projects have been funded in the Sydney and Central Coast areas, which have saved 2GL/year. Major stormwater harvesting schemes include: Blackmans Swamp stormwater harvesting project for the city of Orange. This $5 million project

completed in 2009 is believed to be Australia’s first large scale, indirect-to-potable stormwater harvesting scheme. It produces up to 2.1GL/year, which is 40% of the city's total water needs. It involves capturing a portion of the high flows in Blackman’s Swamp Creek during storm events, and transferring these into the nearby Suma Park Dam. The water is then treated by the Council’s main water filtration plant.443

The Sydney Olympic Park scheme, which treats stormwater and recycles it through separate pipes to irrigate sports fields and for water features. Some recycled stormwater is also used by residents of nearby Newington to flush toilets and water gardens. The scheme saves 850ML/year.444

To facilitate reuse, in 2006 the NSW Government produced the Managing Urban Stormwater Harvesting and Reuse Guidelines. This provides guidance on the planning and design aspects of stormwater harvesting projects. Governments have also funded a range of projects under: The NSW Government’s Stormwater Trust, a $4 million project that has funded 10 pilot projects,

together saving up to 13ML of water annually. The NSW Government’s Urban Sustainability Fund/Grants Program, a $80 million program that

started in 2006.445 Australian Government’s Stormwater Harvesting and Reuse Program and Water Smart

Australia Program. Rainwater tanks Rainwater tanks collect stormwater from roofs. An estimated 10%446 of residents in Sydney have rainwater tanks. The uptake of rainwater tanks has accelerated following the introduction of the NSW Government’s rainwater tank rebate. This provides a rebate for the installation of rainwater tanks plus an additional rebate if it is connected to toilets or washing machines. Some 48,000 rebates have been paid since 2002.447 Only about 10% of rebated customers have connected for indoor use.448

7.2.2 Policy and governance NSW does not have a specific stormwater policy, however, its expectation for stormwater is defined in a range of water policies and legislation. Key objectives for stormwater infrastructure management include: Requiring local governments to manage stormwater within a catchment basis Increase the productive use of stormwater Manage the environmental impacts of stormwater.

A key tool for doing this is the requirement that local governments, the Sydney Water Corporation, Hunter Water Corporation, and the Roads and Traffic Authority (RTA) produce stormwater management plans. The objective of the plans is to improve the health and quality of the State's urban waterways by facilitating a cooperative approach to stormwater management on a catchment basis, identifying priorities, and establishing a program of actions identified on a catchment basis that can be integrated with governments’ management planning processes under the Local

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Government Act. The plan is not intended to be a flooding or drainage management plan. The plan should contain proposed annual expenditure over a three- to five-year period that is compatible with the proposed expenditure on stormwater management.449 To assist stormwater managers improve their stormwater management practices, the NSW Government has produced a series of guidance documents called Managing urban stormwater: soils and construction. These provide guidance on erosion and sediment control during construction, and other land disturbance activities. There are many organisations involved in stormwater management, policy and regulation. Those directly involved in operational activities are: Local governments. Under the provisions of the Local Government Act, local governments

have responsibility for the construction and maintenance of drainage infrastructure and the management of community lands including drainage reserves, parks and beaches. Key operational responsibilities are to maintain the structural integrity of the assets and their hydraulic capacity by preventing the accumulation of gross pollutants, silt and weed growth. They also have stormwater responsibilities under the Protection of the Environment Operations Act 1997 for regulation, and planning under the Environmental Planning and Assessment Act 1979. They own most of the stormwater assets on public land, notably gutter and drains.

Private land owners. The infrastructure on private land is the responsibility of the land owners. Private developers. Developers are responsible for constructing the stormwater network within

their developments. Metropolitan water supply authorities. The authorities are responsible for some trunk drains

and they construct, control and maintain them. Details of the two authorities are: Sydney Water’s stormwater assets span 27 local government areas in the greater Sydney

metropolitan area, and provide drainage services for more than 474,000 properties or 25% of metropolitan Sydney, mostly in the inner-west and inner south-west suburbs of Sydney. It owns 443km of stormwater drains, less than 5% of the total metropolitan stormwater network.450

Hunter Water has 100km of drains that span three major Hunter region councils – Lake Macquarie, Cessnock and Newcastle.451

RailCorp. RailCorp is responsible for the drainage systems on railway corridors. Roads & Traffic Authority (RTA). The RTA is responsible for drains that pass stormwater

across State roads and stormwater management on its freeways. It provides funding to local councils to assist in the management of regional roads and this includes managing stormwater infrastructure on the road network.

NSW Maritime. NSW Maritime is responsible for collecting litter and other gross pollutants from Sydney Harbour.

Since 2006, local governments have been able to levy a stormwater management service charge. The purpose of the charge is to raise additional revenue to cover the costs of providing new/additional stormwater management services. The levy is authorised under amendments to the Local Government Act 1993 and the Local Government (General) Regulation 2005. The rate is set at $25 per residential property and $25 per 350m2 for urban business land.452 Local governments can also levy developer charges under the Local Government Act 1993 for stormwater infrastructure. Both Sydney Water and Hunter Water levy charges on landowners for trunk drain operations and maintenance. These charges are determined by IPART. The statutory requirements for stormwater harvesting schemes are governed by the Environmental Planning and Assessment Act, which sets out the requirements for environmental impact assessment for development consent. If a scheme involves water extraction, requirements under the Water Management Act 2000 may be relevant.

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7.2.3 Sector trends Growth in harvesting stormwater Stormwater will increasingly provide a significant source of new water, however, it still presents financial, environmental and safety challenges as follows: Stormwater varies in quality, and in the pollutants that it carries Water storage requires large areas if ponds are used, or expensive storage mechanisms such

as tanks and aquifers There is a lack of a framework for the ownership, pricing, treatment, distribution, and health and

safety issues associated with stormwater. Given the higher cost of manufacturing recycled water from stormwater compared with current dam produced potable water, any further expansion in stormwater harvesting systems may only occur if it is subsided by government, and regulation favours recycled water over potable water.

7.3 Performance Performance measures for stormwater systems relate to their: Ability to convey minor storm events and safely convey major storm events or

eliminate/minimise flooding and consequential damage to private property or critical infrastructure

Ability to maintain the long-term sustainability of natural systems from a water quality perspective, by minimising the discharge of pollutants and generally improving the quality of stormwater discharge

Structural health, including integrity, age and maintenance quality. Assessing the performance of the stormwater system is difficult for two reasons. Firstly, it cannot be evaluated in isolation as it is affected by land use and building development policies that control building in flood prone areas and the uptake of WSUD. Secondly, there is no consolidated data on stormwater assets and performance, such as the quality of stormwater runoff entering our natural waterways. Inspection of stormwater pipes across the system is an economically-prohibitive activity and not normally undertaken except in areas with a relatively high incidence of blockages or other failure. The most comprehensive data available relates to the structural health of the infrastructure. Each local government in its Stormwater Management Plan, Annual Sustainability Report or other document identifies it. For example, Yass Valley Council stated that it had 14.1km of urban piped stormwater drainage and 417 urban drainage structures, and in 20078/09 spent $49,191 on stormwater maintenance and $42,974 on capital expenditure.453 It also identified the condition of its stormwater assets as seen in Figure 7.2. Physical stormwater asset failure is linked to two main causes. Firstly, the age of the asset. The design life of most concrete-based stormwater assets is between 20 and 80 years, as seen in Table 7.1. Much of the NSW’s stormwater system is approaching the end of its design life. Secondly, root intrusion causes pipe blockages and this increases with drought conditions.

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Figure 7.2: Stormwater asset condition of Yass Valley Council454

Stormwater capacity failure occurs when the design flow of some parts of the stormwater system is exceeded. This is particular problem in older suburbs that have either no underground stormwater systems or systems that are well below the capacity required by current standards. This problem is further exacerbated by the increased runoff arising from increased impervious areas of infill developments in these areas. Table 7.1: Stormwater asset and design life455

Asset Design life

Stormwater pipes Lined channels Stormwater sumps Manholes Dams Weir structures Gross pollutant traps Retarding basins

50–80 years 50–80 years 20–50 years 20–50 years 50–80 years 50–80 years 20–50 years

50–100 years

Other local governments provide additional qualitative forms such as that in Table 7.2. Table 7.2: Assessment of stormwater drainage and flooding by Gosford City Council456

Measure Condition Description

System state Poor Much of the Council’s stormwater infrastructure is inadequate, i.e. is old and undersized. Many areas still do not have a formalised stormwater system. However, the Council’s knowledge of the extent of the flood problem is improving.

Pressure on the system

Increasing Higher density infill development is placing pressure on existing stormwater systems and natural watercourses. Maintenance and asset replacement of stormwater infrastructure is not keeping up with the rate of deterioration. The State Government now requires the Council to identify the Probable Maximum Flood event floodplain, Overland Flow Paths and to address Sea Level Rises.

Response to problems

Fair The Council spends in the order of $4m per year on flood mitigation and drainage proposals, however, this is insufficient to address the $160m plus of outstanding works, which is growing each year as more areas are studied and problem areas identified. In addition, State and Australian Government grants are expected to be reduced in coming years. The Council is looking to Water Sensitive Urban Design principles to plan and implement more sustainable stormwater management practices. The Council’s floodplain management initiatives are good. Effective planning controls ensure that further development is compatible with the level of flood risk.

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While there is no comprehensive set of data on which to assess the performance of the stormwater system across the State, the following observations can be made based on available information: Much of urban stormwater infrastructure was built between 1900 and 1950, making its mean

age over 50 years. This infrastructure is not built to the current standard in terms of capacity, meaning that flooding occurs more frequently in these areas. In addition, the condition of the system is deteriorating so that blockages and collapses are occurring more frequently, again leading to a reduction in capacity and flooding.

When subdivisions occurred prior to the 1970s, the allowance made overland flow paths, floodways and drainage reserves was generally inadequate. The consequence of this is that following significant rainfall events the runoff cannot escape, resulting in flooding.

Much of the stormwater system has limited ability for stormwater pollution control devices to be installed at a low cost.

Some parts of the stormwater systems carry wet weather sewage overflow. The rate of stormwater asset renewal and maintenance is insufficient to maintain it at its current

level, let alone improve it to contemporary standards. There has been an increase in funding for stormwater projects since the introduction of the

Stormwater Management Service Charge. The backlog of stormwater projects across the State would require hundreds of millions of

dollars to eliminate. Data on stormwater assets has improved.

7.3.1 Environmental sustainability NSW’s stormwater runoff has been a major contributor to inland and coastal waterway degradation in the past. However, over the last decade there has been significant improvements to stormwater systems that have reduced the amount of pollutants discharged to the point where the 2009 NSW State of the Environment report found that ‘the ecosystem health of the NSW marine environment is good overall as is recreational water quality, particularly in dry years’. It noted that while instances of contamination from stormwater runoff do exist, the impacts tend to be localised and of limited effect.457 The principal source of pollutants into waterways is rainfall. Large rainfall events result in more pollutants being washed into the stormwater system as well as leading to sewage overflows which also enter the stormwater system. This is illustrated by the reduction in coastal water quality over 2007/08, which was a year of above-average wet weather. Coastal water quality is monitored at 131 recreational sites in Sydney, the Lower Hunter and the Illawarra under the Beachwatch and Harbourwatch program. The program measures two indicator bacteria – faecal coliforms and enterococci – against the criteria for swimming guidelines. Figure 7.3 illustrates the water quality performance over the five years. While the water quality in 2007/08 was less than in previous years, it was a 93% improvement over 1998/98.458 This reduction reflects the long-term improvements in stormwater and wastewater systems.459

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Figure 7.3: The percentage of Beachwatch and Harbourwatch sites complying with swimming water quality guidelines more than 90% of the time460

Only about 8% (572 calls) of pollution incident reports to the Environmental Line set up by the Department of Environment, Climate Change and Water related to stormwater pollution incidents in 2008/09. The change in complaints over the last five years is illustrated in Table 7.3. Table 7.3: Percentage of calls to Environment Line reporting stormwater pollution incidents461

Incident type 2004/05 2005/06 2006/07 2007/08 2008/09

Stormwater 11% (1,078) 9.2% (746) 10% (671) 10% (695) 8% (572)

As well as infrastructure improvements, the reduction in pollution from stormwater is also due to community education on stormwater pollution, and environmental policies such as the NSW Diffuse Source Water Pollution Strategy.

7.4 Future challenges The challenges to achieving improvements in stormwater infrastructure are: Providing appropriate stormwater infrastructure to ensure that all urban areas have

adequate drainage and flood protection. Many older urban areas do not have adequate stormwater drainage and protection from flooding.

Maintaining and improving asset quality. The number of stormwater assets continues to increase, as do problems arising from the increase in impervious areas in older suburbs, and the approaching end of life for many assets. This will require an increase in funding for stormwater maintenance and renewal. A particular problem that needs to be addressed is the failure to provide a maintenance budget with the installation of new gross pollutant traps. Without continual cleaning, these traps are ineffective. The amount of investment in stormwater assets needs to reflect the fact that construction costs are rising faster than CPI.

Securing a long-term funding mechanism that covers both upgrading and replacing stormwater infrastructure. The current funding mechanism for stormwater does not provide sufficient funds to update and replace existing infrastructure, particularly in those areas that suffer from chronic flooding. A new funding mechanism is required to address this problem.

Impact on stormwater volumes arising from increased urban density. With increasing urban density arising from the urban infill policy of the NSW Government, the number of impervious areas will also increase. This will result in higher volumes of stormwater runoff. This has the potential to overwhelm the existing infrastructure, which has been designed for the current level of runoff. It also has the potential to erode waterways and destroy ecological habitats, as well as to increase the total volume of pollutants such as nutrients, sediment and litter, being carried into local waterways, ponds and lakes. The stormwater implications of infill projects need to be given higher priority during project development.

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Accelerating the implementation of water sensitive urban design principles. Reducing stormwater runoff is one of the benefits of water sensitive urban design (WSUD). The use of WSUD needs to be accelerated.

Addressing climate change risks. Climate change science indicates that there will be more extreme rainfall events, resulting in more frequent and more severe instances of overland flooding, particularly due to both the heavier rainfall and the large amount of blockage-causing debris that builds up due to less frequent flushings. Managing this risk involves identifying future rainfall patterns, locating areas that are vulnerable to overland flooding, and changing the design specifications of stormwater systems to accommodate the changed rainfall pattern.

Increasing stormwater use. Stormwater is a major new water source. Water businesses and developers have implemented projects to capitalise on it. However, the projects can be expensive and are only viable in certain circumstances, making their widespread use uneconomic and impractical.

Working cooperatively where stormwater catchment areas span multiple local government areas. Stormwater management across catchments spanning several local government areas requires cooperation. It can be difficult to achieve a consensus as each solution imposes different costs and benefits on different groups.

Development and implementation of integrated water cycle management plans. See Potable water section.

7.5 Report Card rating

Infrastructure Type NSW 2010 NSW 2003 National 2005 National 2001

Stormwater C D C- D

Based on considerations of planning, funding, and infrastructure capacity and condition, NSW’s stormwater infrastructure has been rated C. This rating recognises that stormwater design and management is of a high quality in both new and infill developments. This is primarily due to water sensitive urban design becoming standard practice, and good land use planning. Significant problems remain in areas serviced by older stormwater systems, resulting in chronic localised flooding. These problems cannot be rectified easily due to their significant cost and community impact. Positives that have contributed to the rating are: The introduction of the Stormwater Management Service Charge The inclusion of stormwater into integration catchment planning The growth in stormwater harvesting The acceptance of WSUD principles as standard operating practice Increased focus on the return to natural channels.

Negatives that have contributed to the rating are: Limited funds provided for stormwater infrastructure renewals, replacements and augmentations Aging of stormwater infrastructure Inadequate stormwater infrastructure in many older urban areas.

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8 Irrigation

8.1 Summary

Infrastructure type NSW 2010 NSW 2003 National 2005 National 2001

Irrigation C Not rated C- D-

This rating recognises there have been significant improvements to irrigation infrastructure over the last decade resulting in increased water efficiency and irrigation operations. The relevance of existing infrastructure and future infrastructure improvements will depend on water availability decisions to be made on the Murray Darling Basin cap this year. Since the last Report Card, the major irrigation sector developments have been: Prolonged drought across the Murray Darling basin The increasingly challenging conditions for irrigators due to substantially less water and higher

average temperatures Recognition that historic over-allocation and climate change means that consumptive water in

the Basin needs to reduce Commitment to develop the Murray Darling Basin Plan Development of a Floodplain Harvesting Policy.

Recently completed and in-progress major infrastructure projects include: A range of irrigation scheme efficiency projects.

Challenges to improving irrigation infrastructure include: Adapting irrigation to a sustainable water supply.

8.2 Infrastructure overview

8.2.1 System description NSW irrigation infrastructure comprises: Water storages and weirs Constructed open channels Natural streams Pipelines, pumps, water meters On-farm irrigation systems

Together, these systems store, distribute and drain irrigation water. For the purposes of this section, irrigation covers application of water to cultivated land or open space for the growth of vegetation or crops. It does not include garden and park irrigation, as this type of use is addressed under the Stormwater or Wastewater sections. This section does not take into consideration groundwater extraction infrastructure relevant to irrigation water. Murray Darling Basin Irrigation in NSW is concentrated in the Murray Darling Basin, which is divided up into the river system and surface water-sharing plan areas shown in Figure 8.1.

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Irrigation

125

Irrigation infrastructure makes up only a small proportion of the value of the farms’ capital with the largest being the land, followed by the water entitlements. Irrigation infrastructure and equipment account for: 2% for irrigated broadacre farms 3% for irrigated dairy farms 9% for irrigated horticulture farms.467

The long-term average rainfall in the Basin is 530,000GL, of which only 4% becomes runoff or stream flow. The rest is evaporated or transpired by plants, or taken up by soils or groundwater. Rainfall is consistently greater in the south east of the Basin due to less variability and higher rainfall.468 The amount of water in the Basin varies considerably each year as seen in Figure 8.3. The principal reason for the significant inflow fluctuations is variability in rainfall. Figure 8.3: Murray system inflows (including the Darling), 1892/2008469

Large-scale irrigation in the Basin has only been possible with the development of large water storages. These provide a more consistent reliable flow of water that mitigates the variability of inflows into the Basin’s rivers. The water storages were mostly built from the mid-1950s to 1990. Storages over 1,000GL are at Dartmouth, Hume, Eildon, Burrendong, Blowering, Copeton, Wyangala and Burrinjuck. The public storages account for 79% of the Basin’s total storage capacity, with the rest mainly being large on-farm storages in the Eastern Mount Lofty Ranges of SA, and the northern Basin.470 While the majority of water extracted for irrigation is surface water, groundwater is used extensively in some areas.471 Groundwater accounted for 14% of water used for agriculture in the Basin in 2005/06,472 with the largest extractions in the Murrumbidgee (218GL), Namoi (185GL) and Lachlan (144GL) catchments.473 Figure 8.4 shows the major irrigation storages and rivers in the Basin.

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Figure 8.4: Major irrigation storages and rivers in the Basin474

While irrigation occurs across all NSW Basin regions, Figure 8.5 shows that the majority of irrigated land is located in the Murrumbidgee and Murray irrigation regions. Figure 8.5: Land use across the Murray Darling Basin475

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Table 8.1 identifies the characteristics of NSW irrigation regions. Table 8.1: Irrigation region profiles476

Region Irrigated area (’000 ha) Volume applied (ML)

Border Rivers–Maranoa Balonne (Q) 76 412,530

Condamine (Q) 69 192,781

Border Rivers–Gwydir 93 526,254

Namoi 94 434,137

Central West 45 209,274

Western 17 101,548

Lower Murray Darling 18 109,252

Lachlan 60 22,952

Murrumbidgee 281 1,499,684

Murray 307 1,192,592

NSW irrigation service providers There are over 1,000477 irrigation infrastructure service providers in NSW and they provide one or more of the following services: Irrigation water distribution. Water is diverted from rivers at bulk water offtakes and then

distributed to their clients within their schemes. Irrigation infrastructure construction, renewal and maintenance. The infrastructure provides the

distribution mechanism for the water. Natural resource management. Planning and implementation of natural resource management

is typically implemented via a Land and Water Management Plan. There are many different types of organisations that provide infrastructure services, with the main ones being listed in Table 8.2. Table 8.2: Irrigation company types and organisations478

Irrigation company type Organisations

Irrigation Corporations Coleambally Irrigation Limited Jemalong Irrigation Limited Western Murray Irrigation Limited Murray Irrigation Limited Murrumbidgee Irrigation Limited

Private Irrigation Districts (PIDs) Buddah Lake Irrigators Association Eagle Creek Pumping Syndicate Hay Private Irrigation District Moira Private Irrigation District West Corurgan Private Irrigation District The Narromine Irrigation Board of Management Many small PIDs

Private Water Trusts Bama Irrigation Trust Bringan Irrigation Trust Bullatale Creek Waters Trust Bungunyah Koraleigh Irrigation Trust Glenview Irrigation Trust Goodnight Irrigation Trust Little Merran Creek Water Trust Pomona Irrigation Trust West Cadell Irrigation Trust

Joint Water Supply Authorities There are about 245 joint water supply schemes

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Irrigation water access and the Basin Plan Water is allocated to irrigations through: Water access entitlements. Entitlements provide permanent access to a share of consumptive

water in an area, as defined under the area’s water plan. Temporary water allocations. This is the volume of physical water from the consumptive pool

that the irrigator has access to. For example, if an irrigator has an access entitlement of 1GL and in a year, a 70% allocation is made for all irrigators, then the irrigator’s temporary water allocation is 700ML. Entitlements vary in their reliability, location and timing. In NSW, there are two main classes of entitlement: High security, meaning that the entitlements are high reliability as they are given priority access

to water. General security, meaning that the entitlements are low reliability as they only receive the

remaining water.479 Both entitlements and allocations can be traded. The amount of water allocated for irrigation has been based on historical use and has resulted in over-extractions. To develop a sustainable level of extraction, the Murray Darling Basin Authority (MDBA) is developing the Basin Plan to establish sustainable diversion limits by 2011. When each State’s existing water-sharing plans expire (beginning in 2014 for NSW), the Basin Plan’s new sustainable diversion limits (SDLs) will come into effect.480 These new SDLs are expected to be much lower than the current extraction volumes because of the greater need for maintaining healthy ecosystems in the Basin and because of the anticipated decline in inflows due to climate change.481 To reduce the impact of the anticipated reduction in water availability for irrigators and to immediately increase environmental flows, the Australian Government is currently undertaking a range of water sustainability activities under the 10-year Water for the Future Plan, with the most important in the Basin being: Purchasing water entitlements and allocations from existing owners under the $3.1 billion

Restoring the Balance Program. Investing in more efficient irrigation delivery systems and redirecting the water savings to the

environment under the $5.8 billion Sustainable Rural Water Use and Infrastructure (SRWUI) Program.

From an infrastructure perspective, the SRWUI program is the most significant. The Australian Government has made in-principle funding of $1.358 billion for the SRWUI program in NSW. In-principal support means that projects have to pass a due diligence process ensuring that a project delivers value for money in achieving substantial and lasting returns of water for the environment, and securing a long-term future for irrigation communities.482 The irrigation supported projects are: The On-Farm Irrigation Efficiency Program. This program is funded by up to $300 million for

projects that will increase water use efficiency of irrigated agriculture in NSW. This project, to be implemented by Industry & Investment NSW, will be achieved by investing in management, information and technological farm infrastructure where it improves water use efficiency, makes water savings, and increases water-related productivity of the irrigated farming system.

Regulated River Metering. This program is funded by up to $90 million and is for the replacement of 6,000 existing meters used to measure the amount of water irrigators taken from NSW regulated rivers, with the new high-tech meters to be owned by State Water. New meters will be highly accurate, tamper-proof and low maintenance, reducing inaccurately metered extractions and minimising water theft. This project will be jointly implemented by State Water and the NSW Office of Water.

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Groundwater and Unregulated River Metering. This program is funded by up to $131 million and is for the installation and upgrading of metering for groundwater and unregulated water sources. The project, implemented by the NSW Office of Water, will install or upgrade about 9,500 meters. It will provide more accurate information on water usage.

Healthy Floodplains. This program is funded by up to $50 million for the delivery of a project to reform the management of water on floodplains through modifications of floodplain structures and control of extractions. This project will be implemented jointly by the NSW Office of Water and the Department of Environment, Climate Change and Water.

The Private Irrigation Infrastructure Operator Program. This program is funded by up to $650 million and is for water-saving upgrades of private infrastructure. The Australian Government will manage this project and work directly with NSW irrigator groups.483 In 2010, Coleambally Irrigation Cooperative Limited, Murrumbidgee Irrigation Limited, Marthaguy Irrigation Scheme, Tenandra Scheme and Trangie-Nevertire Irrigation Scheme each received between $10 million and $115 million to improve scheme efficiencies including channel lining of known hot spots, on-farm upgrades, installation of water management technologies and provision of stock and domestic pipelines.484

Another program helping to accelerate the transformation of the irrigation sector and Basin communities to adapt more broadly to a future with less water, is the Strengthening Basin Communities program. Floodplain harvesting Flood waters are an important source of water for many irrigators as well as being critical to replenishing the floodplain and wetland environments. To date, this valuable water has not been covered by any water extraction category such as an access licence or harvestable right. Consequently, the NSW Government has been developing a NSW Floodplain Harvesting Policy that will bring the resource into a statutory licensing and approvals framework under the Water Management Act 2000. The policy proposes that the amount of floodwater available for extraction in NSW be capped and shared among existing water users, and all works undertaking floodplain harvesting extractions will require an approval from the NSW Office of Water. The policy was in draft form at the time of this report’s writing.485 Large water service providers in NSW There are four rural water service providers of irrigation in NSW, defined as suppling over 4GL/year. They are: Coleambally Irrigation Co-operative Limited Murray Irrigation Limited Murrumbidgee Irrigation Limited State Water.

The first three manage irrigation areas, while State Water Corporation captures, stores and releases bulk water throughout regional and rural NSW. Figure 8.6 displays these irrigation areas.

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Figure 8.6: Location of rural water service providers in NSW486

Table 8.3 identifies the characteristics of each service provider. Table 8.3: Key irrigation characteristics of rural water service providers (2007/08)487

Coleambally Irrigation

Co-operative Limited

Murray Irrigation Limited

Murrumbidgee Irrigation Limited

State Water

Number of individual services 3 3 1 1

Number of storages 20

Number of weirs 69

Regulated rivers (km) 7,920

Unlined channels (km) 112 2,950 2,419.4

Lined channels (km) 404 161.1

Natural waterways (km) 70.0

Pipes (km) 108.2

Drainage – unlined channels (km) 549 1465 2,279.0

Drainage – lined channels (km) 162 20.3

Drainage – natural waterways (km) 70.0

Drainage – pipes (km) 4.6

Total carriers (km) 1,227 5,062.4 7,920

Volume supplied at customer service points (ML)

56,140 69,293 276,233.0 1,446,994

8.2.2 Policy and governance The NSW Government’s vision for irrigation infrastructure is that it stores and distributes water efficiently and at a sustainable level considering variable inflows from droughts and climate change. The use, flow and control of all surface water and groundwater in NSW rest with the State Government within the Murray Basin Cap. This cap is volume of water that can be diverted from the rivers for consumptive uses. The detailed governance framework for irrigation water is illustrated in Figure 8.7.

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Figure 8.7: NSW water governance arrangements relevant for irrigation488

8.2.3 Sector trends Increasing difficulty in getting value from infrastructure investment in irrigation infrastructure A 2010 Productivity Commission report found that Government-subsidised investment in irrigation infrastructure was not as cost-effective or efficient as water buybacks. The report found that for infrastructure projects financed under the Living Murray Initiative, these projects resulted in the recovered water costing almost 40% more than water recovered by directly purchasing water entitlements. One of the reasons for this was that given the rising scarcity of water over the last few decades, irrigators had already undertaken those infrastructure modernisation projects that provided the greatest returns. The report also identified other drawbacks of subsidising irrigation infrastructure investment, including that it can lead to gold-plating assets that may subsequently become stranded due to the reduction in water availability, and it is inequitable for those who have already made such investments privately at full cost.489 Changing inflows as a result of climate change Climate change is expected to have a significant impact on the availability of surface water and, to a lesser extent, groundwater. Climate change is likely to lead to increased average temperatures, which increases evaporation and transpiration rates, and to more variable rainfall patterns including droughts. Climate change may also increase the frequency of bushfires that reduce runoff rates. Across the Basin, inflows are expected to reduce on average with lower rainfall volumes in winter and higher volumes in summer, particularly in the north. The CSIRO forecasts that for a median climate change scenario, there will be an 11% decline in surface water availability by 2030 made up of a 9% decline in the north and 13% in the south.490 Figure 8.8 shows the forecasts by region.

Water Management Act 2000 Water Act 1912

Water Access Licence (WAL) Register

Minister for WaterMinister for Lands

Access Licence Dealing Principles Order 2004

Water access licences

Department of Environment, Climate Change and Water Land & Property Management Authority

Water-sharing Plan (incl. water trading rules)

Water licences

Water licence holders

Approvals (water use, works)

Water Access Licence holders

Irrigation Corporations Individuals/ businesses

LAS licensing system

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Figure 8.8: Change in average surface water availability by region for a median climate change scenario in 2030491

Improvements in irrigation infrastructure Irrigation infrastructure upgrades typically include lining channels, converting open channels into pipes, installing automated water management systems, and laser grading paddocks for efficient water spread. Given the increasing cost of water and its scarcity over the last decade, irrigators have had a strong incentive to invest in efficient infrastructure. The National Water Commission’s 2010 report into rural water service providers identifies that irrigators have been investing in new technology as illustrated by the rate of growth in pipe length and remotely controlled customer service points (CSPs) as illustrated in Figure 8.9. With the increase in the amount of funding made available to irrigators under the Sustainable Rural Water Use and Infrastructure, NSW irrigators will continue to improve their infrastructure where they consider it is financially viable to do so. Figure 8.9: Examples of trends in irrigation infrastructure upgrades (national figures)492

8.3 Performance Performance is judged as the level of service provided compared to the agreed or designed standard of service, based on measures such as: Delivery system efficiency. The delivery system efficiency declines as the amount of water lost

increases. Water loss can occur through evaporation of water lost to the atmosphere; seepage of the movement of water through the beds of irrigation channels; leakage of water through channel banks and structures; operational losses due to theft, outfalls, system fill, unmetered diversions and inaccurate metering;493 and outdated irrigation delivery systems.

Availability of assets to hold, supply and distribute water. Response to reported leaks.

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Detailed and comparable performance information of NSW irrigation water service providers only exist for three organisations – Coleambally Irrigation Co-operative Limited, Murray Irrigation Limited and Murrumbidgee Irrigation Limited. Selected indicators for these are presented in Table 8.4. As there is no consolidated information on all irrigation service providers and the unique circumstances of each, it is not possible to draw conclusions on the performance of NSW irrigation. However, several observations can be made: Infrastructure improvements over the last decade have been significant NSW has some of the most modern systems and some of the systems with the most

conventional open unlined channels that have low delivery system efficiencies Investment in infrastructure in some locations has been constrained due to uncertainty about

future water availability and return on investment. Table 8.4: Selected irrigation indicators for 2008/09494

Coleambally Irrigation Co-operative Limited

Murray Irrigation Limited

Murrumbidgee Irrigation Limited

Environmental management plan or system in place for the reporting period

Yes Yes Yes

Certified environmental management plan or system

No No No

Maintenance expenditure as a percentage of current asset replacement cost

4% 0.4% 0.9%

Economic real rate of return -5.28% Not available -2.8%

Capital expenditure per current asset replacement cost

2.2% 1.4% 3.5%

Supply network delivery efficiency (%) 61% 74% 70%

8.3.1 Environmental sustainability The extraction of water from the Basin for irrigation has resulted in stress on water-dependent ecosystems. This stress increases during dry conditions when environmental flows decrease significantly.495 This problem is likely to be exacerbated with the onset of climate change.496 An audit of river health was untaken by the Murray Darling Basin Commission and it concluded that only one river in the Basin was in good health, as seen in Table 8.5. The Basin Plan is expected to result in reduced irrigation diversions which should increase river health. Table 8.5: River health in the Murray Darling Basin497

Catchment MDBC Sustainable Rivers Audit Health Ratinga

Historical average surface water availabilityb

(GL/year)

Northern Basin

Paroo Good 445

Border Rivers Moderate 1,208

Condamine-Balonne Moderate 1,363

Moonie Moderate 98

Barwon Darling Poor 2,088

Gwydir Poor 782

Namoi Poor 965

Warrego Poor 420

Macquarie–Castlereagh Very poor 1,567

Southern Basin

Ovens Poor 1,776

Murray Poor – very poor 11,162

Eastern Mount Lofty Ranges na 120

Campaspe Very poor 275

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Catchment MDBC Sustainable Rivers Audit Health Ratinga

Historical average surface water availabilityb

(GL/year)

Goulburn–Broken Very poor 3,233

Lachlan Very poor 1,139

Loddon Avoca Very poor 285

Murrumbidgee Very poor 4,270

Wimmera Very poor 219 * SRA ratings are composite measures of a range of indicators of river health * Based on the climate from mid-1895 to mid-2006 and the current level of water resource development

8.4 Future challenges The challenge in achieving improvements in irrigation infrastructure is adapting irrigation to the sustainable water supply. The Basin Plan is likely to recommend a reduction in consumptive water usage meaning that the volume of water available to irrigators will decline. This means that water efficiency needs to increase, water needs to be used on the most valuable agriculture produce, and more opportunistic irrigation needs to occur. One tool to achieve this is improving and adapting irrigation infrastructure. This may be difficult due to the physical constraints on existing infrastructure or the high cost of replacing it.

8.5 Report Card rating

Infrastructure type NSW 2010 NSW 2003 National 2005 National 2001

Irrigation C Not rated C- D-

Based on considerations of planning, funding, and infrastructure capacity and condition, NSW irrigation infrastructure has been rated C. This rating recognises there have been significant improvements to irrigation infrastructure over the last decade resulting in increased water efficiency and irrigation operations. The relevance of existing infrastructure and future infrastructure improvements will depend on water availability decisions to be made on the Murray Darling Basin cap this year. Positives that have contributed to the rating are: Ongoing incremental improvements in irrigation infrastructure New irrigation improvement programs funded by governments.

Negatives that have contributed to the rating are: Lack of certainty about future water availability inhibiting long-term infrastructure investment.

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ENERGY

Energy policy The NSW Government’s priorities for energy as identified in the State Plan are to ensure a reliable electricity supply, and develop a clean energy future. The table below identifies the targets and measures for each priority.498

Priority Target Performance measure

Ensure a reliable electricity supply

Achieve average electricity reliability for NSW of 99.98% by 2016

Proportion of normalised customer minutes subject to unplanned electricity outages each year

Develop a clean energy future

Achieve 20% renewable energy consumption by 2020

Proportion of electricity consumed in NSW generated from renewable sources

Implement 4,000GWh of annual electricity consumption savings through NSW energy efficiency programs by 2014

Total electricity consumption savings through NSW energy efficiency programs

The achievement of the goal to ensure a reliable electricity supply is intended to be by: The NSW Government introducing laws to protect vital electricity supply cables TransGrid and the distribution companies investing $18 billion in electricity network

infrastructure over the 2009/10 to 2013/14 period, including some $800 million in the CityGrid project

The NSW Government working with the private sector to back-up power systems in Central Sydney.499

The achievement of the goal to develop a clean energy future is intended to be by: Developing renewable energy sources by introducing a Solar Bonus Scheme, creating six wind

energy precincts, and working to secure a large solar power plant for NSW under the Australian Government’s Solar Flagships program

Improving energy efficiency through the $150 million Energy Efficiency Strategy, and implementing the Energy Savings Scheme, setting mandatory targets for energy retailers to deliver energy savings for customers by reducing demand

Facilitating smart power distribution grids through supporting bids for large-scale pilots of smart grid technology that allow whole suburbs to reduce electricity costs and demand under the Australian Government’s Smart Grid Smart City program

Facilitating the introduction of Lower Carbon Transition Fuels by supporting distributed co-generation and tri-generation, supporting natural gas supply and pipeline projects across NSW, and investing $100 million to support development of carbon capture and storage and other technologies to reduce emissions from coal-fired power generation.500

NSW’s energy sector is governed by a combination of State and national organisations. The key ones are: Australian Energy Market Commission (AEMC). The AEMC became responsible for rule-

making, market development and policy advice on the National Electricity Market (NEM) and natural gas pipelines services and elements of the broader natural gas markets from 1 July 2009.

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Australian Energy Regulator (AER). The AER has responsibility for the enforcement of and compliance with the National Electricity Rules, as well as responsibility for the economic regulation of electricity transmission and distribution. The AER issues infringement notices for certain breaches of the National Electricity Law and Rules, and is the body responsible for bringing court proceedings in respect of breaches.501 The AER is also the economic regulator for National Gas Law covering natural gas transmission and distribution pipelines in all States and Territories and enforces the National Gas Law and National Gas Rules. The AER took responsibility for economic regulation of the gas distribution networks from 1 July 2008.502 The AER is part of the Australian Competition and Consumer Commission (ACCC).

Australian Energy Market Operator (AEMO). The AEMO operates the National Electricity Market (NEM) as well as the retail and wholesale gas markets of south-eastern Australia from 1 July 2009.

Independent Pricing and Regulatory Tribunal (IPART). IPART is responsible for administering licensing within the energy industry and monitoring compliance with licence requirements. IPART's roles and functions in relation to electricity and gas are set out in the National Electricity (New South Wales) Act 1997, the Electricity Supply Act 1995, the Gas Supply Act 1996 and the Gas Pipelines Access (NSW) Act 1998. IPART ceased being the regulator for electricity and gas networks in NSW on 1 July 2009, transferring responsibility to AER and AEMC.

Industry & Investment NSW (NSW Department of Industry & Investment). This department is responsible for setting NSW energy policy and regulations including licence conditions, contestability requirements and reporting.

NSW Department of Planning. The Department is responsible for environmental assessment of network proposals under the Environmental Planning and Assessment Act, 1979 (EP & A Act) and relevant planning instruments, in particular the State Environmental Planning Policy.

NSW Office of Fair Trading. The Office is responsible for monitoring the safety of customer electrical installations under the Electricity (Consumer Safety) Act and Electricity (Consumer Safety) Regulation and authorising accredited service providers under the Electricity Supply Act and Electricity Supply (General) Regulation. It is also responsibility for certain regulatory activities under the Gas Supply Act 1996.

Energy and Water Ombudsman NSW (EWON). EWON is a consumer service resolving complaints about all electricity and gas suppliers in NSW and some water suppliers

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9 Electricity

9.1 Summary

Infrastructure Type NSW 2010 NSW 2003 National 2005 National 2001

Electricity C- B C+ B-

This rating recognises that transmission and distribution systems performance has improved in the last few years and the committed medium-term investment will lead to further improvements. Of concern is the uncertain future of new baseload generation caused by uncertainty over the future of gas prices, carbon costs and government decisions. If new generation capacity is not constructed, NSW’s power needs will not be able to be supplied from within the State. Since the last Report Card, the major electricity sector developments in NSW have been: A significant growth in electricity demand Rising electricity prices Increase in the utilisation of infrastructure to the point where further increases are difficult

without the construction of major new infrastructure Significant increase in capital investment by transmission and distribution companies Transfer of economic regulation for electricity transmission and distribution from IPART to AER An increase in renewable energy supply Major electricity supply disruptions in the Sydney CBD in April 2009.

Recently completed and in-progress major infrastructure projects include: CityGrid CBD electricity upgrade Commissioning major gas-powered generators at Colongra, Uranquinty and Tallawarra Upgrades at Eraring, Bayswater and Mount Piper Power Stations Upgrade of the Bayswater to Mount Piper transmission line.

Challenges to improving electricity infrastructure include: Renewing ageing infrastructure Implementing significant demand management measures to constrain peak demand growth Capturing the opportunities of smart network technology Building new generation plants Building economic baseload generation Ensuring retail competition.

9.2 Infrastructure overview

9.2.1 System description Electricity infrastructure refers to stationary electricity networks that comprise interconnected electricity transmission and distribution systems, together with connected generating systems, facilities and loads. It includes non-renewable and renewable generation. It excludes mobile generators and non-grid-connected electricity systems. The State’s physical electricity infrastructure comprises: Generation Transmission networks

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Distribution networks Retail companies.

Figure 9.1 illustrates the infrastructure components of an electricity network. Figure 9.1: Infrastructure components of the electricity network503

The physical elements work within a market structure called the National Electricity Market (NEM). The NEM spans Victoria, Queensland, NSW, ACT, SA and Tasmania. Over 275 registered generators across the NEM offer to supply power and their production is bought by retailers. The central coordination of the dispatch of electricity from generators is the responsibility of the AEMO. Figure 9.2 illustrates the inter-relationship between the physical and financial components on the NEM. While generation and retail has been opened to competition, due to the nature of transmission and distribution networks, these are regulated monopolies. Figure 9.2: Structure of the National Electricity Market504

electricity settlement payments electricity settlement payments

* currently no customers submit demand side bids

load dispatch instructions*

purchase bids*

physical electricity flows

plant dispatch instructions

supply offers

transmission network distribution network

consumers AEMO determines the amount of

power required

generators

financial contracts

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Generation NSW has around 18,000MW of installed electricity generation capacity (which includes Snowy Mountain hydroelectric generators) with Queensland and Victorian interconnectors providing an additional 1,100MW and 1,500MW respectively.505 Over 90% of NSW-installed capacity is generated by black coal-power stations. Other fuel sources include gas, wind, distillate and photovoltaic. Figure 9.3 identifies the sources of electricity in NSW compared with the other States. Figure 9.3: Installed capacity by fuel type with Snowy Mountain generators extracted from the NSW figures, as at June 2008 506

Table 9.1 identifies the major generation plants in the State. Most of the large power stations were built prior to 1990 and are expected to reach their end of their technical life within the next 20 years. Munmorah is expected to close in winter 2014 unless a major overhaul/re-powering occurs.507 Table 9.1: Major existing NSW power stations (greater than 30MW)508

Power station Location Owner Technology Installed capacity

(MW)

Commission date

Current technical

life

Bayswater Hunter Macquarie Generation

Steam/Coal 2,720 1985/86 2035

Eraring Lower Hunter Eraring Energy Steam/Coal 2,640 1982/84 2030

Tumut Snowy Snowy Hydro Hydro 2,116 1959-1973

Liddell Hunter Macquarie Generation

Steam/Coal 2,080 1971/73 2025

Murray* Snowy Snowy Hydro Hydro 1,500 1967-1969

Mount Piper Central West Delta Electricity Steam/Coal 1,400 1992/93 2040

Vales Point Central Coast Delta Electricity Steam/Coal 1,320 1978/79 2030

Wallerawang Central West Delta Electricity Steam/Coal 1,000 1976/80 2030

Colongra Central Coast Delta Electricity Open Cycle Gas Turbine

668 2009 2040

Uranquinty Wagga Wagga Origin Energy Open Cycle Gas Turbine

648 2008

Munmorah Central Coast Delta Electricity Steam/Coal 600 1969 2013/14

Tallawarra Wollongong TRUenergy Combined Cycle Gas Turbine

435 2009

Shoalhaven Nowra Eraring Energy Hydro 240 1977 2040

Smithfield Smithfield Marubeni Gas Cogen 160 1997

0

2

4

6

8

10

12

14

NSW QLD VIC WA SA Snowy TAS NT

Inst

alle

d ca

paci

ty ('

000

MW

)

Non-hydro renewable

Oil and other

Hydro

Natural gas

Coal

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Power station Location Owner Technology Installed capacity

(MW)

Commission date

Current technical

life

Redbank Hunter Redbank Project Coal Tailings 145 2001

Capital Wind Farm

Tarago Renewable Power Ventures

Wind 141 2009

Blowering Snowy Snowy Hydro Hydro 80 1969

Guthega Snowy Snowy Hydro Hydro 60 1955

Appin Mine Illawarra EDL Group Coal Seam Methane

56 1996

Warragamba Sydney Eraring Energy Hydro 50 1959

Tower Mine Illawarra EDL Group Coal Seam Methane

41 1996

Broadwater North Coast Delta Electricity BaGasse 30

Condong North Coast Delta Electricity BaGasse 30

Cullerin Upper Lachlan Origin Energy Wind 30 * in Victorian region of the NEM

About 6% of NSW electricity generation is derived from renewable sources, and the contribution of each is: 88% hydro 5% biomass 5% landfill methane 1% wind 1% solar.509

Table 9.2 details the capacity of renewable generation in NSW and other jurisdictions. Table 9.2: Capacity of renewable generation (MW) at 31 December 2008510

Fuel type NSW & ACT1

VIC QLD SA WA TAS NT Snowy TOTAL

Hydro 3,966.1 620.4 161.4 2.5 30.1 2,279.6 0.0 3,676.0 7,060.0

BaGasse 15.5 0.0 362.6 0.0 6.0 0.0 0.0 0.0 384.1

Biomass 3.9 0.2 36.5 3.5 1.0 0.0 0.0 0.0 45.1

Black liquor 20.0 54.5 2.0 0.0 0.0 0.0 0.0 0.0 76.5

Geothermal 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.0 0.1

Landfill gas 50.9 35.3 16.6 20.9 22.8 3.9 1.1 0.0 151.4

Sewage gas

3.5 18.1 4.5 5.5 1.8 0.1 0.0 0.0 33.5

Solar2 1.5 0.5 0.3 0.3 0.3 0.0 1.4 0.0 4.3

Wave 0.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.5

Wind 16.7 191.9 12.5 482.4 202.6 142.3 0.1 0.0 1,048.4

Total 4,078.4 920.9 596.4 515.1 264.6 2,425.9 2.6 8,804.0 1. Includes Snowy region. 2. Solar capacity does not include solar hot water installations.

The NSW Government renewable energy goal, as stated in the State Plan, is to achieve 20% renewable energy consumption by 2020.511 To accelerate the uptake of wind energy, the NSW Government is creating six wind energy precincts – New England Tablelands, Upper Hunter, Central Tablelands, NSW/ACT Cross Border Region, Cooma–Monaro and the South Coast – with streamlined planning assessments and dedicated coordinators.512 To increase rooftop photovoltaic (PV) systems, the NSW Government introduced a feed-in tariff scheme called the NSW Solar Bonus Scheme on 1 January 2010. The scheme pays a gross tariff (i.e. the consumer is paid for all the electricity that they generate). The tariff is set at 60c/kWh. The

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feed-in tariff applies to customers who consume less than 160MWh of electricity per annum and have a PV system or wind turbine up to 10kW in capacity.513 The Scheme aims to result in 10,000 new installations each year.514 The Scheme will be reviewed in 2012, or when the installed capacity of renewable energy generators participating in the Scheme reaches 5MW, whichever occurs first.515 The costs paid to customers benefiting from the scheme are recovered from all electricity customers via a distributor levy. Retailers pay their customer the appropriate tariff through an additional line in their quarterly bill, and then recoup this cost by billing the distributor.516 This subsidy by all electricity customers will result in an increase in household electricity bills of $1.90 to $7.47 per annum depending on take-up.517 Details of feed-in tariff schemes for other jurisdictions are listed in Table 9.3. Table 9.3: Feed-in tariff rates in other Australian jurisdictions518

Jurisdiction Current status Nature of scheme* Rate Duration

NSW Commenced in January 2010 Gross 60c/kWh 7 years

VIC Commenced 1 November 2009 Net 60c/kWh 15 years

QLD Commenced 1 July 2008 Net 44c/kWh 20 years (subject to review)

WA Commencing 1 July 2010 Net 40c/kWh 10 years519

NT Commenced 1 July 2009 in Alice Springs only

Net 45.76c/kWh (capped at $5 per day, then reverts to 23.11c/kWh)

To be determined

ACT Commenced in March 2009 Gross 50.05c/kWh reducing to 45.7c/kWh in July 2010

5 years

SA Commenced on 1 July 2008 Net 44c/kWh 20 years * Nature of the scheme options: Gross tariffs which are where the consumer is paid for all the electricity their system generates, and net tariffs which are where the consumer is only paid for the generated electricity they export to the grid, not for the proportion of generated electricity they use themselves.

Transmission NSW’s transmission network can be divided into: The intrastate network linking generators to distribution networks and major end users Interconnectors that link NSW’s intrastate network with the transmission network of Victoria and

Queensland. Intrastate transmission network NSW’s intrastate transmission network is owned, operated and managed by TransGrid, a NSW State-owned corporation. It is also responsible for planning and developing the NSW transmission system within the State and to facilitate operation of the National Electricity Market. It has assets worth over $4.2 billion.520 Table 9.4 provides details of its assets. Table 9.4: TransGrid’s transmission network assets (as at June 2009)521

Assets Asset

High Voltage Overhead (km) 12,445

High Voltage Underground (km) 47

Substation and switching stations 85

Structures 36,543

NSW’s intrastate transmission network is illustrated in Figure 9.4.

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Figure 9.4: NSW transmission network522

The transmission network carries loads to six main areas as identified in Table 9.5. Table 9.5: NSW load areas and their indicative peak loads523

Load area Indicative peak load (MW)

The NSW north, supplied from the Hunter Valley, Newcastle and over Queensland to NSW Interconnector (QNI)

1,000

Newcastle area (this includes aluminium smelters with a load greater than 1,000MW) 2,000

Greater Sydney 6,000

Western Area 600

South Coast 700

South and South West 1,600

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Electricity transmission networks are regulated due to their monopolistic nature, meaning that they operate within regulatory arrangements established in the National Electricity Law and National Electricity Rules, and administered set by the AER. TransGrid’s current regulatory period runs from 1 July 2009 to 30 June 2014. Interconnectors Interconnectors connect the transmission networks of different NEM regions. They enhance competition by allowing multiple generators to compete for supply, as well as improving security and reliability of supply. The interconnectors are: Queensland NSW interconnector (QNI) commissioned in 2002 Terranora (NSW–Qld) interconnector, previously called Directlink Victoria–NSW interconnector.

Distribution Electricity is delivered to consumers by the following three State-owned distribution companies: EnergyAustralia, which covers eastern Sydney, the Central Coast, the Newcastle area and the

Hunter Valley Integral Energy, which covers Greater Western Sydney, the Blue Mountains, the Southern

Highlands and the South Coast Country Energy, which covers the remainder of NSW.

The distributors’ supply regions are identified in Figure 9.5 and their infrastructure characteristics are listed in Table 9.6. Figure 9.5: NSW Distribution supply regions524

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Table 9.6: Distributors’ infrastructure characteristics (June 2009)

Characteristics Country Energy525 EnergyAustralia526 Integral Energy527

Distribution Customer Numbers (Total) 786,241 1,591,372 859,718

Maximum Demand (MW) 2,332 5,918 3,798

Energy Received by the distribution network to year end (GWh)

13,076 32,289 18,235

System Loss Factor (%) 7.9 4.66 5.18

Transmission System (km) 0 885 N/A

Transmission Substation (Number) 17 40 41 N/A

Sub-transmission System (km) 12,277 3,685 3460

Substation - Zone (Number) 321 177 151

Substation - Distribution (Number) 132,212 29,974 29,219

High Voltage Overhead (km) 144,5462 10,290 11,325

High Voltage Underground (km) 1,7952 7,071 3,413

Low Voltage Overhead (km) 26,3082,3 21,156 8,891

Low Voltage Underground (km) 4,897 6,459 6,490

Pole (Number) 1,373,649 502,126 311,756

Street Lights (Number) 143,753 249,292 185,177

Being a monopoly service, electricity distribution networks are regulated by the AER. The regulatory period for all three distributors runs from 1 July 2009 to 30 June 2014. Retail Full retail competition for NSW electricity customers was introduced in January 2002, meaning that all customers can choose a retailer from which to buy their electricity. There are 21528 licensed electricity retailers in the State as of March 2010, 11529 of which sell to small customers. Some 81% of small retail customers in NSW are supplied by Country Energy, EnergyAustralia and Integral Energy.530 There are two types of tariffs for small customers – unregulated retail tariffs offered by all retailers, and regulated tariffs offered only by the three host retailers, which are Country Energy, EnergyAustralia and Integral Energy. The regulated tariffs were intended to be a transitional measure during the development of retail markets, and the NSW Government has agreed to eliminate it where effective competition has been demonstrated. Since 2004, this regulated tariff has been made under a Voluntary Transitional Pricing Agreement (VTPA) by each host retailer. In 2009, the NSW Government stated that it would keep this tariff at least until 30 June 2013. This decision was justified on the basis of protecting consumers.531 In 2011, the AEMC will undertake a review of the effectiveness of competition in NSW’s electricity and gas retail markets.532 Electricity demand Over the last decade, electricity demand has increased annually on average by 1.9%.533 The peak summer demand growth has been increasing faster at 3.3%534 with a major contributor being the increased use of reverse cycle air-conditioning in homes. For instance, in Integral Energy’s supply area a decade ago, only 25% of households had air-conditioning, but today some 70% have it.535 Because of the air-conditioning growth, peak electricity demand has now shifted from winter to summer.536 Electricity demand increases on workdays compared with weekends, and during periods of high and low temperatures.537

9.2.2 Policy and governance A key component of the NSW Government’s vision for the electricity sector is reflected in its agreement to the national electricity objective. This objective is to promote efficient investment in, and efficient operation and use of, electricity services for the long-term interests of consumers of

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electricity with respect to price, quality, safety, reliability and security of supply of electricity; and the reliability, safety and security of the national electricity system.538 The overarching regulatory framework for the NSW network is provided through the National Electricity Rules which are made under the National Electricity Law. The National Electricity Law is applied as law in NSW by the National Electricity (New South Wales) Act 1997. The National Electricity Rules provide the detailed standards that govern participation in, and the operation of, the NEM. They specify a range of technical performance criteria that network service providers must observe while planning, designing and operating their networks. The role of the NSW and Australian Governments in controlling electricity infrastructure is now very constrained compared to the past, as they have transferred control to independent regulators and authorities within a market framework. However, Governments can influence the direction of the electricity industry through the Ministerial Council on Energy and the setting of Rules by the AEMC. In addition, Governments can indirectly influence both costs and demand through mechanisms such as applying a price to carbon and encouraging energy efficiency. Key documents to guide the development of electricity networks in NSW are summarised in Table 9.7. Table 9.7: Key electricity planning documents

Document Description

Annual Planning Report and Network Management Plan (for transmission)

TransGrid prepares an Annual Planning Report, which provides information on NSW energy demand projections; emerging constraints in the NSW network; information on completed, committed and planned augmentations; and proposed network developments over the next five years. This information allows the market to identify potential demand management solutions and allows TransGrid to implement appropriate network solutions. TansGrid’s Network Management Plan outlines its approach to managing existing network assets.539

Electricity System Development Review (ESDR)

Each of the distributors produces an ESDR that identifies emerging constraints for each sub-transmission and zone substation, and provides an indicative solution.

Electricity Statement of Opportunities (ESOO)

An ESOO is published annually by AEMO and provides a 10-year forecast to help market participants assess the future need for electricity generating capacity, demand side capacity and augmentation of the network to support the operation of the NEM. It includes a year-by-year annual supply-demand balance for the regions as a snapshot forecast of the capacity of generation and distribution.

National Transmission Statement (NTS) & National Transmission Network Development Plan (NTNDP)

These documents are published by AEMO in its role as the National Transmission Planner for the electricity transmission grid. The annual network development plans guide investment in the power system. In 2009, an interim NTS was produced, which replaced the previous Annual National Transmission Statement produced by NEMMCO. This document will be superseded by the NTNDP in 2010. The NTNDP will provide historical data and projections of network utilisation and congestion, summarise emerging reliability issues and potential network solutions, and present information on potential network augmentations and non-network alternatives and their ability to address the projected congestion.540

The key electricity supply legislation in NSW is the Electricity Supply Act 1995. This Act establishes a competitive retail market in electricity, confers on network operators such powers as are necessary to enable them to construct, operate, repair and maintain their electricity networks, regulates network operations and electricity supply in the retail market, and encourages safety. Following a number of electricity blackouts to the Sydney CBD, notably in March 2009 and May 2009,541 the NSW Government introduced the Energy Legislation Amendment (Infrastructure

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Protection) Act 2009. It requires that energy (electricity and gas) distribution network operators are members of the Dial Before You Dig Scheme, meaning that they have to provide contractors with information on the location and type of underground powerlines in the vicinity of any proposed excavation work.542 The Act also requires contractors undertaking excavation work to contact Dial Before You Dig and obtain relevant information, with failure to do so resulting in a maximum fine of $2,200. Any person who damages vital electricity cables could face criminal charges or negligence proceedings, especially if they have not sought advice through the Dial Before You Dig hotline. In addition, the Act requires all government buildings to regularly test their back-up power systems, and the NSW Government will be putting in place a best practice program for private sector CBD landlords.543

9.2.3 Sector trends Reform of the NSW electricity sector Table 9.8 lists the major developments in electricity reform since 2006. Table 9.8: Major developments in NSW electricity sector reform since 2006

Date Event

2006 The electricity market operator, MEMMCO, forecast that NSW would require 372MW of additional generation to meet existing demand by 2010/11.544

11 September 2007 The government commissioned Inquiry into Electricity Supply in NSW, undertaken by Professor Tony Owen, and made the recommendation that the NSW Government should divest itself of all State ownership on both retail and generation.545

10 December 2007 In response to the Owen report, the NSW Government announced that it would: • Lease existing electricity generators to private operators, while keeping them in public

ownership • Retain the ‘poles and wires’ assets of the State-owned companies Country Energy,

EnergyAustralia and Integral Energy in Government ownership, while their retail functions would move to private operators

• Introduce safeguards to protect and create jobs, keep prices as low as possible and protect the environment.

10 April 2008 Following the release of the Consultative Reference Committee (headed by Barrie Unsworth), the NSW Government stated that it would produce a $272 million electricity safety net package containing rebates for pensioners and help for low-income families.546

4 June 2008 The Premier, Hon Morris Iemma, introduced in the Legislative Assembly the Electricity Industry Restructuring Bill 2008 to provide for the restructuring of part of the NSW electricity industry by authorising and facilitating any of the following transfers of assets to the private sector: • The lease of the power stations of an electricity generator and the transfer of the rest of its

business • The transfer of the retail business of an electricity distributor.547 The Premier also introduced a cognate bill, the Community Infrastructure (Intergenerational) Fund Bill 2008, to establish a fund into which the net proceeds of the restructuring would be paid and from which funds for capital works projects would be drawn.

19 June 2008 The Parliament passed the Auditor-General (Supplementary Powers) Bill 2008 to require the Auditor-General to review the Government’s program for restructuring the NSW electricity industry. On 21 August 2008, the Auditor-General tabled his report.

28 August 2008 The Treasurer, Mr Costa, introduced the Electricity Industry Restructuring Bill (No 2) 2008 and the Electricity Industry Restructuring (Response to Auditor-General Report) Bill 2008. The leader of the Opposition in the Council, the Hon Michael Gallacher, advised in his second reading speech that the Opposition would not support the Bills. The effective result of this was that the Bills would not pass the House.548

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Date Event

1 November 2008 The NSW Government announced its Energy Reform Strategy, which consisted of: • Selling the retail arms of the three State-owned energy corporations (Country Energy,

EnergyAustralia and Integral Energy) • Selling the seven power station development sites around NSW • Contracting the electricity trading rights of the nine State-owned power stations to the

private sector (the ‘Gentrader model’) • Maintaining public ownership of existing power stations • Maintaining public ownership of electricity transmission and distribution networks.549

March 2009 The NSW Government released the Energy Reform Strategy: Defining an Industry Framework, which identified a range of implementation considerations to be resolved, and the Government undertook to seek market feedback to inform its final policy decisions on a range of transaction implementation issues.

September 2009 The NSW Government released the Energy Reform Strategy: Delivering the Strategy, which set out the Government’s final policy position on key reform and transaction implementation issues for the generation trading rights, retail businesses and development sites. This document also set out next steps and anticipated timelines for implementing the energy reforms.

Major network investment project NSW distribution and transmission companies are planning to invest $18 billion in electricity network infrastructure from 2009/10 to 2013/14. This is the largest energy infrastructure program in the State’s history. For the three distributors, it will involve $14 billion of capital investment, an 80% increase from the past regulatory period 2004/05 to 2008/09 when it was $8 billion.550 It will result in a significant expansion of assets. For instance, TransGrid's asset base will expand by 27% over the 2009/10 to 2013/14 period compared with 4% over the 2004/05 to 2008/09 period.551 A significant reason for the growth is that over the last two decades, the focus has been on fine-tuning to maximise the utilisation of existing assets rather than building new ones. An illustration of this is that over the last 20 years there have only been a few major transmission lines built despite the massive increase in electricity consumption.552 As the load continues to grow and constraints arise, there is now little option but to construct major new infrastructure. Table 9.9 details the capital expenditure over the 2009/10 to 2013/14 period for NSW transmission and distribution companies. Table 9.9: Capital expenditure between 2009/10 and 2013/14 for NSW transmission and distribution companies approved by AER ($ millions)

2009/10 2010/11 2011/12 2012/13 2013/14 Total

TransGrid553 523.3 447.1 549.7 505.2 379.7 2,405.1

Country Energy554 715.7 757.5 776.5 779.1 797.2 3,826.0

EnergyAustralia distribution555

1,132.7 1,281.7 1,422.2 1,377.1 1,423.3 6,637.7

EnergyAustralia’s transmission556

263.7 174.2 245.3 320.4 197.0 1,200.5

Integral Energy557 570.7 618.7 550.9 500.9 480.3 2,721.4

This expansion has been justified because of the need to: Augment the networks to accommodate the growth in maximum demand for energy Replace ageing assets Improve network security and reliability.558 559

Growing electricity demand Electricity demand is driven by economic activity, population growth, price, domestic air-conditioner penetration, the comparative cost of natural gas, and several less important factors. For residential growth, key driver is population and hence household numbers. For commercial loads, the most

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significant drivers are economic activity and population growth.560 The electricity 10-year growth rate is estimated to be 1.5%561 per annum and projections for future growth are shown in Figure 9.6. Figure 9.6: Energy projections for different economic growth scenarios562

The peak electricity rate continues to grow at a faster rate than average growth rate. The summer peak (10% POE rate)f rate is forecast to be 2.2% and winter 2.0%.563 Table 9.10 details the forecast growth in electricity demand and customer numbers over the 2009/10 to 2013/14 period for NSW distribution companies. Table 9.10: Distributors’ customer numbers and energy forecasts for 2009/10 to 2013/14564

Forecast 2009/10 2010/11 2011/12 2012/13 2013/14 Average annual growth 2009/14a

Country Energy’s customers (number)565

1,321,286 1,339,074 1,357,118 1,375,421 1,393,989 1.3%

EnergyAustralia’s customers (number)566

2,073,691 2,087,691 2,102,703 2,117,640 2,132,584 0.6%

Integral Energy’s customers (number)567

860,392 866,018 873,565 885,078 896,496 1%

Country Energy’s energy forecast (GWh)568

12,092 12,147 12,202 12,556 12,314 0.5%

EnergyAustralia’s energy forecast (GWh)569

27,948 28,041 27,989 27,673 27,477 –0.1%

Integral Energy’s energy forecast (GWh)570

17,373 17,313 17,526 17,967 18,202 0.7%

The importance of growth drivers varies with distributors, but the ones experienced by all are: Population growth Growth in air-conditioning loads Obligations to meet N-1 reliability requirements Replacement of the ageing infrastructure.

f Probability of Exceedence (POE) refers to the probability that a forecast maximum demand figure will be exceeded.

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Growth factor – Population Electricity demand is directly related to population growth and growth varies significantly between NSW supply areas. Population growth in the supply area of Integral Energy is highest in the State and its population is expected to grow by 6% by 2013/14, while the maximum demand for electricity is forecast to increase by 33% by 2013/14. Its supply area is served with rural and semi-rural feeders but is now becoming urbanised. This means that customers now expect improved reliability performance in these areas.571 In Country Energy’s supply area, population growth is pronounced only along the coastal strip and this population has a high penetration of air-conditioning.572 Meeting this peak demand growth is difficult using non-network options, meaning that new infrastructure has to be built to service the loads. Growth factor – Air-conditioning The uptake of air-conditioning has resulted in peak demand growing faster than average demand. As meeting peak demand is a primary driver of network capital investment, the growing peakier load pattern means that more assets are required to service demand that only exists for very short times each year. This is leading to a deteriorating load factor, as seen in Figure 9.7. Figure 9.7: Integral Energy forecast system load factor573

Growth factor – n-1 reliability requirements The NSW Government has introduced mandatory licence conditions on distributors that have imposed additional infrastructure requirements. The conditions contain new planning design security levels that include ‘n-1, 1 minute’ reliability standards for sub-transmission lines and zone substations supplying loads greater than to specified minimums, e.g. 15 MVA in urban and non-urban areas. An ‘n-1’ reliability standard allows for maximum forecast demand to be supplied when any one of the ‘n’ elements of a network is out of service. An ‘n-1, 1 minute’ standard allows for a risk that there will be some loss of supply for up to 1 minute to provide, for example, automatic switching to alternative supply arrangements.574 These requirements were first introduced in 2005, and revised effective from 1 December 2007. The NSW Government requires that the new conditions be met by 2014, resulting in the distributors and TransGrid initiating a number of new projects.575 Growth factor – Ageing infrastructure Many transmission and distribution assets in NSW are reaching the end of their useful life. This is because much of the network was built from the 1960s through to the 1980s, and many assets have a design life of about 50 years as seen in Table 9.11. It needs to be noted that the actual life

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depends on the design, equipment specification and maintenance. Just because assets are ageing, it does not imply that they will fail. But, generally, there is a relationship between asset age and declining performance and increased operating expenditure due to more preventive and corrective maintenance. EnergyAustralia has the oldest energy distribution network in Australia, with many assets over 50 years old.576 For TransGrid, some 35% of substations and switching stations were commissioned before the 1970s.577 Table 9.11: Design life of assets578

Asset Design life of assets

Transmission and zone substations and switching stations 45

Power transformers 50

Transmission and sub-transmission steel tower lines 60

Transmission and sub-transmission pole lines (concrete poles) 55

Transmission and sub-transmission underground cables 45

Distribution substations and switching stations (ground mounted) 45

Distribution substations (pole mounted) 45

Distribution overhead lines (concrete poles) 55

Distribution overhead lines (wooden poles) 45

Distribution underground cables 60

Metering equipment 25

Substation secondary systems (SCADA and protection systems, excluding cabling) 15

Substation control building 40

Communications systems 10

Street lighting 20

Growth in generation There are currently three new generation projects either committed or under construction in NSW that have a total capacity of 362MW according to Australian Bureau of Agricultural and Resource Economics.579 There are another 23 fossil-fuel and 14 renewable energy projects that are in the less developed category.580 A comparison of advanced energy projects underway in NSW and the other States shows that NSW has attracted about 28% of all new plants being developed in Australia.581 Given the existing and committed investment in new electricity generation plant in NSW, AEMO considers that NSW has sufficient capacity to meek both peak and average demand until 2013/14. After this date, additional capacity will be required to meet demand. AEMO 10-year predictions of the supply and demand balance are provided in Figure 9.8. The region is forecast to experience a reserve deficit from 2015/16.582 Figure 9.8: NSW supply–demand balance583

14000

14500

15000

15500

16000

16500

17000

2010

/11

2011

/12

2012

/13

2013

/14

2014

/15

2015

/16

2016

/17

2017

/18

2018

/19

Cap

acity

(MW

)

Additional Capacity required

Allocated Installed Capacity

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As part of the Electricity Reform strategy, the Government intends to sell the generation development sites of the State-owned generators. These include sites suitable for gas-fired generation (peaking and combined cycle) and ‘dual fuel’ sites, which are suitable for the development of either coal- or gas-fired generation capacity. They are detailed in Table 9.12. Table 9.12: State-owned generator sites to be sold584

Development Site Owner Size (MW) Fuel Progress

Bamarang Delta Electricity 300-450 Gas Full Development Approval (DA)

Tomago Macquarie Generation 500-790 Gas Full DA

Marulan EnergyAustralia 350 Gas Director-General’s (DG’s) requirements issued

Marulan Delta Electricity 300-450 Gas DG’s requirements issued

Munmorah Delta Electricity 700 Gas/coal Planning process underway

Bayswater B Macquarie Generation 2000 Gas/coal Planning process underway

Mt Piper extension Delta Electricity 2000 Gas/coal Planning process underway

Figure 9.9 identifies their location in relation to major gas supply pipelines and electricity transmission lines. Figure 9.9: NSW generation development sites585

9.3 Performance

9.3.1 NEM reliability and security The performance of the National Electricity Market is based on the criteria of: Reliability, the availability of adequate bulk supply to meet consumer demand. The current

standard for reliability is that there should be sufficient generation and bulk transmission

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capacity so that no more than 0.002% of the annual energy of consumers in any region is at risk of not being supplied; that is, unserved energy (USE) is less than 0.002%.

Security, the continuous operation of the power system within its technical limits. For the NSW region of the NEM, the USE reliability criterion for a rolling 10-year average has been met. Over the last decade, the State’s USE was 0.0%.586

9.3.2 Generation The key performance measure for a generational plant is its ability to deliver a reliable supply when required. Its availability is affected by the number of internal plant planned outages (e.g. for maintenance and renewals), internal plant forced outages (e.g. plant breakdowns) and external forced outages (e.g. fuel unavailability, third party industrial actions). Internal plant outages usually increase with a plant’s age, and when major upgrades occur. Table 9.13 contains the most recent availability figures, which show that NSW plants are in the mid-high range for planned outages and forced outages. Older generators generally have higher requirements for maintenance and higher rates of failure than new plants. Table 9.13: Availability factors for generation1587

Equivalent availability factor (%) Forced outage factor (%)

Planned outage factor (%)

State 2006/07 2007/08 2006/07 2007/08 2006/07 2007/08

NSW & ACT 86.4 85.2 4.2 4.3 9.4 10.5

Victoria 90.3 90.6 4.0 3.5 5.7 6.0

Queensland 93.1 88.9 3.3 3.8 3.6 7.3

South Australia 85.9 95.2 6.9 0.2 7.1 4.6

Western Australia 82.1 81.5 3.3 7.5 14.6 11.0

Tasmania 90.3 87.0 0.9 4.2 8.8 8.9

Northern Territory 84.1 89.7 4.6 3.6 11.3 6.7

Other performance indicators of generation, listed in Table 9.14 consist of: System load factor, the ratio of the average load supplied during the year to the maximum

load. It measures the fluctuation in demand. Capacity factor, the ratio of the actual output of a power plant over the year and its output if it

had operated at full nameplate capacity for the entire time. Reserve plant margin, the total plant capacity available less the actual maximum demand for

electricity in a particular year, expressed as a percentage of maximum demand. Table 9.14: Technical indicators: generation1588

System load factor (%) Capacity factor (%) Reserve plant margin2 (%)

State 2006/07 2007/08 2006/07 2007/08 2006/07 2007/08

NSW & ACT 63.6 61.5 66.1 69.0 9.0 5.0

Victoria 59.6 56.0 68.5 68.3 11.9 3.3

Queensland 65.1 69.3 65.6 60.0 21.0 38.1

South Australia 50.9 47.1 40.8 42.5 22.0 16.6

Western Australia 52.1 53.5 38.4 37.2 45.3 51.5

Tasmania 69.6 71.1 38.9 36.3 58.2 57.4

Northern Territory 64.5 65.2 44.26 41.1 48.8 60.4

Australian weighted average 60.6 60.2 60.5 59.7 18.7 21.0

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9.3.3 Transmission Technical service standards for TransGrid are: Reliability. This is a measure of frequency and duration of power supply loss due to a

temporary failure of TransGrid’s plant. The measure of reliability is the number of system minutes of lost network supply.

Availability. This is a measure of the readiness of TransGrid’s plant to effectively transfer energy from the generators to the distributors. Availability reduces with planned outages for scheduled maintenance and capital construction or replacement programs, and with unscheduled outages from plant failures.

Average Outage Restoration Time. This is a measure of the time taken to return equipment to service after an unplanned outage. It is calculated by totalling the durations of unplanned outages that are longer than one minute, and dividing the total by the number of those outages.

Quality of Supply. This is a measure of electricity quality including power frequency voltage, voltage fluctuations, voltage waveform distortion, voltage unbalance and fault clearance times.589

Table 9.15 sets out TransGrid’s performance for the last three years. Availability measures have been below target which TransGrid claims is due mainly to a large quantity of capital work for transmission line rebuilds, pole replacements and transformer replacements.590 Table 9.15: TransGrid’s performance measures

Performance measure 2006/07591 2007/08592 2008/09593 Target594

System minutes unsupplied 1.19 0.37 0.47 *

Transmission line availability 99.44 98.55 98.44 99.50595

Transformer availability 98.16 97.69 98.42 99.00596

Reactive plant availability 99.96 98.97 98.96 98.60597

Outage (unplanned) Average Duration (minutes)

613 843 862 1,500598

* TransGrid’s target for system minutes unsupplied is now specified in terms of numbers of large and small events incurred, not as a particular value.

9.3.4 Distribution Technical performance of the distribution network is measured by reliability and quality of supply. Performance measures for these are: System Average Interruption Duration Index (SAIDI). The sum of the duration of each

sustained customer interruption (in minutes), divided by the total number of distribution customers. SAIDI excludes momentary interruptions (one minute or less duration).

System Average Interruption Frequency Index (SAIFI). The total number of sustained customer interruptions, divided by the total number of distribution customers. SAIFI excludes momentary interruptions (one minute or less duration).

Quality of supply. The quality of supply factors consist of voltage (e.g. sustained overvoltage and undervoltage) voltage variation (e.g. fluctuations, dips, switching transients), current (e.g. direct current, harmonic content and inter-harmonics) and other qualities (e.g. signalling reliability, noise and interference, level of supply capacity).

Table 9.16 provides Normalised SAIDI figures, which exclude severe weather events. This provides a better insight into the underlying quality of the network. There has been an overall improvement trend in SAIDI for Integral Energy and Country Energy, which reflects positively on network improvement strategies. The increase in SAIDI for EnergyAustralia over the last year was due to two large network failures that affected parts of the Sydney CBD in April 2009.

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Table 9.16: Normalised SAIDI for NSW distributors

2004/05 2005/06 2006/07 2007/08 2008/09

EnergyAustralia SAIDI599 90.4 90.2 102.0 100.3 108.5

Integral Energy SAIDI600 93 99 94 98 89

Country Energy SAIDI601 299 304 242 225 267

Figure 9.10 compares SAIDI across the nation. Figure 9.10: System Average Interruption Duration Index (SAIDI) across Australia602

Table 9.17 provides SAIFI figures for NSW distributors. EnergyAustralia’s increase in 2008/09 is also due to the Sydney CBD disruptions in April 2009. Table 9.17: SAIFI for NSW distributors

2004/05 2005/06 2006/07 2007/08 2008/09

EnergyAustralia SAIFI603 1.20 1.15 1.15 1.16 1.31

Integral Energy SAIFI604 1.2 1.2 1.2 1.2 1.1

Country Energy SAIFI605 2.82 2.55 2.39 2.28 2.37

Table 9.18 identifies the national comparisons. Table 9.18: System average interruption frequency index (SAIFI)606

State 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08

Queensland 3.0 2.8 2.7 3.4 2.7 3.1 2.1 2.4

NSW 2.5 2.6 1.4 1.6 1.6 1.8 1.9 1.7

Victoria 2.1 2.0 2.0 2.2 1.9 1.8 1.9 2.1

South Australia 1.7 1.6 1.8 1.7 1.7 1.9 1.8 1.5

Tasmania 2.8 2.3 2.4 3.1 3.1 2.9 2.6 2.6

NEM weighted average

2.4 2.4 1.9 2.2 1.9 2.1 2.0 1.9

Western Australia 3.3 3.3

Quality of supply performance measures are defined in the Electricity Distribution Code. Monitoring and reporting of compliance against these performance factors is based on the distributors’ monitoring program and customer complaints received by it. Table 9.19 identifies the number of customer complaints about quality of supply issues. The most common complaints were voltage fluctuations, sustained undervoltage and overvoltage, voltage dips and supply failures.607 While EnergyAustralia and Integral Energy’s complaints are decreasing, this is not the case for Country

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Energy. Country Energy considers that complaints continue to increase due to higher community expectations in reliability and quality of supply, as well as improvements in the recording of complaints.608 Increases in complaints may also be attributed to the introduction of more sensitive and less tolerant electronic equipment. Country Energy also considers that the use of split system air-conditioning units installed without consideration of existing supply limitations contribute to complaints, and that the major cause of voltage fluctuations is an increasing number of air-conditioners installed with poor start characteristics.609 Table 9.19: NSW distributors’ customer complaints for quality of supply (complaints per 1,000 distribution customers)

2004/2005 2005/2006 2006/2007 2007/2008 2008/2009 Proportion of complaints

relating to quality of supply

Country Energy610 2.9 3.3 2.7 3.0 4.2 75%

EnergyAustralia611 0.93 0.99 1.06 0.89 50%

Integral Energy612 4.45 4.25 3.95 2.12 1.89 74%

All distributors have been working to improve the security of network assets and the prevention of theft, notably copper theft. An example of this is EnergyAustralia’s ongoing rollout of a $90 million security and surveillance campaign.613

9.3.5 Environmental sustainability Electricity consumption in NSW produces over 79 million tonnes of greenhouse gas emissions per year. This is over 37% of the State’s greenhouse gas emissions.614 The NSW Government has a range of initiatives to both reduce electricity consumption and increase renewable energy uptake. These include: A feed-in tariff for PV and small wind generators The NSW Greenhouse Gas Reduction Scheme, establishing a local market for emissions

reductions and greenhouse credits. Under the scheme, mandatory annual targets based on NSW per capita greenhouse emissions must be met by electricity retailers.

The Energy Savings Scheme, creating financial incentives to reduce electricity consumption by encouraging the adoption of cost-effective energy-saving practices by households and businesses. It requires electricity retailers to pursue additional energy efficiency measures in households and businesses. The energy savings target started on 1 July 2009 at 0.4% of electricity sales in NSW and increases to 4% by 2014.

The Climate Change Fund, which provides rebates for energy-saving measures such as solar hot water and insulation, and a range of other funding programs for energy savings in schools, businesses and public facilities.

Under the Building Sustainability Index (BASIX), home builders, developers and some renovators in NSW, are required to meet targets to reduce energy consumption.615

Specific environmental improvements pursued by electricity sector participants include: Reducing the carbon footprint and waste output of the organisation Educating customers on ways to reduce energy consumption Demand management measures.

Demand management initiatives are actively being pursued as a way of deferring network augmentation that would otherwise be required to meet demand growth and network security requirements. Demand management options include: Improved energy efficiency devices and systems

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Thermal insulation Renewable energy sources such as solar Alternative reticulated energy sources such as natural gas Tariff incentives Load interruption and reduction incentives Arrangements to transfer load from peak to off-peak times Energy storage systems Standby generators Power factor correction equipment.616

A major development in advancing demand management was completed in 2008 by EnergyAustralia and involved producing a comprehensive knowledge base of demand management technologies and practices with the potential to reduce electricity demand in the Sydney inner metropolitan area. An example of successful demand management was the introduction of a portfolio of 350MW of demand reduction to the Newcastle–Sydney–Wollongong load area in the summer of 2008/9, which enabled the completion of the Western 500kV Upgrade project to be deferred to summer 2009/10.617 A number of demand management projects are actively being pursued by TransGrid618 and the distributors.

9.4 Future challenges The challenges to achieving improvements in electricity infrastructure are: Renewing ageing infrastructure. Much of the distribution network is nearing the end of its

design life. A significant rise in the level of upgrades and renewals of network infrastructure will be needed, requiring a large pool of labour resources.

Implementing significant demand management measures to constrain peak demand growth. Peak demand is currently growing faster than average demand. Peak demand growth needs to be reduced to the level of average demand growth to improve network reliability and security, and maximise asset utilisation. Achieving significant reduction in demand, particularly given air-conditioning demand on hot days, will be a major challenge.

Capturing the opportunities of smart network technology. There is a need to prepare for an increasingly intelligent network, with proliferating network-integrated digital technologies, and growing numbers of small and micro generators such as solar/photovoltaic and wind linking into the network. Electricity providers are currently planning for smart grid networks that provide real-time information on electricity supply and the ability to remotely control the network. Increased initiatives, such as EnergyAustralia’s research and development activities via its university Intelligent Network Centre of Excellence program, are required both to accelerate the development and deployment of smart network technology.

Building new generation plants. An assumption in the Electricity Reform Program is that new generation will be built if the reforms occur. However, new generation in the scale and type required may not be constructed by the private sector due to market problems such as a lack of confidence in the long-term electricity demand and supply forecasts, concern over sovereign risk, and uncertainty about revenues and costs. While market mechanisms theoretically will result in new generation construction, there is a significant risk that over-relying on the market to deliver this will result in insufficient electricity supplies at certain times, and erratic prices.

Building economic baseload generation. Due to uncertainty over carbon pricing, baseload coal-fired plants are not being developed. Instead, gas-fired plants are being built as they are quicker and cheaper to construct, and less subject to carbon pricing. However, their cost of generation is far more sensitive to gas prices, which are likely to become more volatile due to the internationalisation of Australian gas prices. Providing economic baseload generation will become increasingly important as NSW’s existing coal-fired plants reach their technical end of life. All options should be considered in the provision of baseload power, including renewable and nuclear power.

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Ensuring retail competition. The sale of State-owned retail electricity activities has the potential to transfer the existing monopolies from State to private ownership. There is a considerable risk that competition will not be enhanced following the reforms, resulting in no competitive tension between suppliers and no downward pressure on prices.

9.5 Report Card Rating

Infrastructure Type NSW 2010 NSW 2003 National 2005 National 2001

Electricity C- B C+ B-

Based on considerations of planning, funding, and infrastructure capacity and condition, NSW’s electricity infrastructure has been rated C-. This rating recognises that transmission and distribution systems performance has improved in the last few years and the committed medium-term investment will lead to further improvements. Of concern is the uncertain future of new baseload generation caused by uncertainty over the future of gas prices, carbon costs and government decisions. If new generation capacity is not constructed, NSW’s power needs will not be able to be supplied from within the State. Positives that have contributed to the rating are: Growth in renewable generation in the State Significant expansion in investment in network infrastructure Sound transmission and distribution networks New requirements for n-1 reliability and introduction of enhanced Dial Before You Dig

arrangements. Negatives that have contributed to the rating are: Ageing transmission and distribution infrastructure Ageing of many of the major generation units Peak demand is rising faster than average demand Congestion and network constraints in certain areas of the transmission network Increasing population and increasing electricity demand resulting in a predicted reserve deficit

after 2012/13 Inadequate attention given to demand management.

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10 Gas

10.1 Summary

Infrastructure Type NSW 2010 NSW 2003 National 2005 National 2001

Gas C Not rated C+ C

This rating recognises that the gas transmission and distribution systems are in a sound condition, and increases in gas exploration, production and pipeline capacity have increased supply. However, as future supply and demand for gas is highly uncertain due to government policy, the internationalisation of domestic gas prices, and the construction of new gas-fired generation plants along the east coast of Australian, it is impossible to determine if the infrastructure is appropriate for future demand. Since 2005, the major gas sector developments have been the: Increased quantity of gas required for gas-powered generation Transfer of economic regulation for gas distribution from the IPART to the AER Reduction in cross-subsidies paid by large gas customers resulting in real price reduction for

large customers and price increases for small customers Supply of gas from Queensland to NSW via the Ballera and Moomba pipeline (QSN Link) Increased exploration and development of coal seam gas reserves.

Recently completed and in-progress major infrastructure projects include: Construction of the QSN Link Construction of the Sydney Primary Loop to improve security of supply to the Sydney basin Expansion in capacity of the Moomba–Sydney Pipeline, Eastern Gas Pipeline and NSW–

Victoria Interconnect. Challenges to improving gas infrastructure include: Planning gas infrastructure to meet demand Expanding the distribution network.

10.2 Infrastructure overview

10.2.1 System description Gas infrastructure refers to reticulated natural gas infrastructure. NSW’s gas infrastructure comprises the following components: Production Transmission Distribution Retail companies.

This section does not cover liquefied petroleum gas (LPG), biomass and other fuel gases. Figure 10.1 illustrates the entities and physical flows in the State’s natural gas sector. Producers extract and process the gas, and sell gas directly to large customers, retailers or traders. Supply is also provided from interconnecting pipelines and storage providers. Transmission pipelines carry the gas under high pressure to city gates (also known as gate stations/custody transfer meters)

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that control and measure the gas flow into the distribution network. The odorant is normally added at the city gates to make the detection of gas leaks easier. The distribution network takes the gas from the gates and distributes it via high, medium and low pressure pipelines to the customer’s meter/regulator set. The customer pays the retailer for the gas. The retailer buys the gas from producers, and pays the transmission and distribution businesses for transporting the gas.g Retailers must balance their purchase and sale contracts to ensure security of supply. Retailers also operate customer call centres and implement customer demand curtailment in the event of major gas shortages. Figure 10.1: Schematic of natural gas entities and physical flows

Production Natural gas can be divided into two categories - conventional natural gas which is found in underground reservoirs of trapped rock, and coal seam gas, which is located in coal seams. There are currently no commercially viable reserves of conventional natural gas within NSW.619 Consequently, natural gas consumed in NSW is imported from other States. Principally, it comes from three basins: Cooper/Eromanga Basin, which spans SA, NT and Queensland Surat-Bowen Basin, which spans Queensland and NSW Gippsland Basin, which spans the State’s south east and Victoria.

Imports from Queensland’s Surat-Bowen Basin only started in January 2009 following the commissioning of the QSN Link pipeline between Ballera and Moomba.620 A small component of NSW’s gas consumption comes from coal seam gas. This is supplied from the Camden Gas Project, located 50km south west of Sydney. The project has been supplying gas since 2001 and provides about 5PJ/year.621 This accounts for 4.5% of gas delivered in NSW. The locations of the existing sources of coal seam gas are shown in Figure 10.2.

g The charges are known as transmission use of system (TUOS) and distribution use of system (DUOS).

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Figure 10.2: Sources of gas and major pipelines in eastern Australia622

The supply of gas from different sources is changing, notably due to the declining reserves in the Cooper/Eromanga Basin and the increase in coal seam gas from Queensland. There are considerable coal seam gas reserves in NSW, primarily located in the Clarence-Morton, Gunnedah and Gloucester basins, which may be commercially exploited. Exploration in these basins is underway. The locations of coal seam gas projects are illustrated in Figure 10.3.

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Figure 10.3: Coal seam gas projects in NSW623

The coal seam gas reserves in NSW have risen significantly over the last few years as exploration increases, as seen in Figure 10.4. Figure 10.4: 2P coal seam gas reserves in NSW basins624

Over the next few years, several production projects are expected in NSW coal seam gas basins. Each will require wells, processing facilities and high pressure gas pipelines to connect the supply to existing pipelines or customers. Proposed projects include: Gloucester Gas Project (AGL), located near Stratford, 100km north of Newcastle, which will

supply gas to Sydney625 Bulga area of the Hunter Valley (AGL)626 Eastern Star Gas development of the Narrabri, which includes exporting LNG via Newcastle

port.627 Clarence-Moreton basin projects (Metgasco).

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Transmission and storage The vast majority of gas in NSW is imported via the following three main transmission pipeline systems: Moomba–Sydney Pipeline, which transports gas from the Cooper/ Eromanga Basin, and from

the Surat-Bowen Basin via the QSN Link into Sydney and some major regional centres via lateral branches. It interconnects with the Central West Pipeline (CWP) and the Central Ranges Pipeline (CRP).

Eastern Gas Pipeline, which transports gas from the Gippsland Basin via Longford and Orbost, and via the VicHub interconnect facility, along the eastern seaboard to Sydney.

NSW–Victoria Interconnect, which is a bi-directional pipeline linking the Moomba–Sydney Pipeline to Victoria’s Gas Principal Transmission System. The Interconnect imports gas from Victoria to NSW in summer, and the reverse in winter.628

Below is a description of the recent and ongoing expansions of these pipelines. Moomba–Sydney Pipeline. In 2008, a $100 million five-year expansion program commenced.

The project will increase capacity by around 20% to meet winter peak demand, and provide flows for new gas-fired electricity generation projects such as Uranquinty near Wagga Wagga.629

Eastern Gas Pipeline. A $41 million capacity expansion of the pipeline was completed in 2010.630 The project involved installing an additional compressor at the Longford Compressor Station. The upgrade increased capacity of the pipeline from 250TJ/d to 268TJ/d.631

NSW–Victoria Interconnect. A partial looping of the Young to Culcairn pipeline was completed in 2010. This duplication increases gas storage and capacity to meet future demand.632

Upgrades to pipeline infrastructure in Victoria connecting to the Interconnect were also completed in 2010 increasing the import capacity to NSW from 35TJ/day to 51TJ/day during winter.h

These and other pipelines are seen in Figure 10.5. Figure 10.5: NSW’s major pipelines gas transmission network633

h The upgrade involved installing two new compressors at the Wollert Compressor Station; up-rating pipeline operating pressure of the Wollert to Euroa pipeline; and installing flow reversal capability at the Springhurst Compressor Station. Australian Energy Market Operator, 2009, 2009 Gas Statement of Opportunities for Eastern and South Eastern Australia, pp. 4-18.

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Details on the pipelines are contained in Table 10.1. Table 10.1: Main natural gas pipelines in NSW and ACT634

Route Year commissioned

Length (km)

External diameter

(mm)

Pipeline operator

Pipeline owner

Moomba (SA) to Wilton (NSW)

1976 1,300 864 APA Group APA Group

Wilton to Sydney 1976 52 864 Jemena Jemena

Wilton to Wollongong 1979 32 508 Jemena Jemena

Young to Wagga Wagga lateral

1981 131 324/89 APA Group APA Group

Dalton to Canberra 1981 52 273 APA Group APA Group

Horsley Park to Central Coast/Newcastle

1982 214 508 Jemena Jemena

Young to Orange/Oberon/Lithgow

1987 270 168 APA Group APA Group

Junee to Narrandera/Leeton/Griffith

1993 180 114/168 APA Group APA Group

Wodonga to Wagga Wagga 1998 145 457 APA Group APA Group

Marsden to Dubbo 1998 255 219/168 APA Group APA Group

Eastern Gas Pipeline (Longford (Vic) to Horsley Park)

2000 795 457 Jemena Jemena

Illabo to Tumut 2001 64 219 Country Energy Gas

Country Energy

Hoskinstown to Canberra (ACT)

2001 22 273 ActewAGL ActewAGL

Central Ranges Pipeline System

2006 300 168/219 APA Group 2 Central Ranges Pipeline 2

Sydney Primary Looping 2007 30 500 Jemena Jemena

There are a number of proposed major pipeline projects, which reflects the growing demand for natural gas. These are listed in Table 10.2. Table 10.2: Proposed major natural gas pipeline projects635

Project name Proponent Capacity (PJ/year)

Length (km) Status Proposed commissioning

Hunter Gas Pipeline Hunter Gas Pipeline

- 36 – Newcastle to Kurri Kurri

Advanced planning

2011

Lions Way Pipeline Metgasco 18 145 – Casino to Ipswich

Proposed -

Narrabri to Bayswater Macquarie Generation, Eastern Star Gas

300 Proposed -

Narrabri to Central Ranges Gas Pipeline

Eastern Star Gas

125 Proposed -

Queensland Hunter Gas Pipeline

Hunter Gas Pipeline

85 833 – Wallumbilla (Qld) to Newcastle (NSW)

Advanced planning

2012

Wagga Wagga to Young

ERM Power 50 On hold

Wellington Power Station Pipeline

ERM Power 900 Advanced planning

2009/10

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Project name Proponent Capacity (PJ/year)

Length (km) Status Proposed commissioning

Gloucester Coal Seam Gas pipeline

Lucas Energy/ Molopo Australia

15-22 98km – Gloucester to Hexham

2010

Newstead to Bulla Park APA Newstead (Qld) to Bulla park (NSW)

Distribution NSW has six distribution networks as illustrated in Figure 10.6. They are:i NSW Gas Distribution Network, owned by Jemena Gas Networks (NSW) Ltd (formerly Alinta

AGN Ltd) ActewAGL Distribution network, owned by ActewAGL Distribution Albury and Murray Valley distribution networks, owned by Albury Gas Company Tweed Heads distribution network, owned by APT Allgas Energy Pty Ltd Central Ranges System, owned by APA Group Wagga Wagga distribution network, owned by Country Energy Gas Pty Limited.

Figure 10.6: NSW’s six distribution networks636

Details of the distribution networks are listed in Table 10.3.

i A natural gas network operator is defined as one that holds a Reticulator’s Authorisation under the Gas Supply Act.

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Table 10.3: Size, area serviced and consumers for NSW distribution networks 2008/2009637

Area serviced Lengths of mains (km)

2008/2009 Customers number638

NSW Gas Distribution Network. The network is divided into five networks: • Jemena (Sydney North) • Jemena (Sydney South) • Jemena (Sydney West) • Jemena (Coastal) • Jemena (Country) It services: • Sydney • Newcastle/Central Coast • Wollongong

23,800 1,040,000639 (66.37%)

Central Ranges System The network services Tamworth.

180 0.13%

Wagga Wagga distribution network. The network is divided into nine natural gas distribution districts of • Culcairn • Temora • Wagga Wagga • Walla Walla • Cooma • Tumut • Henty • Bombala • Gundagai

622 18,300640 (2.31%)

ActewAGL Distribution network. The non-ACT service areas are: • Queanbeyan and Palerang • Capital Region (Bega Valley, Bombala, Boorowa, Cooma, Monaro,

Crookwell, Eurobodalla, Goulburn, Gunning, Harden, Mulwaree, Snowy River, Tallanganda, Tumut, Yass and Young)

• Shoalhaven (Nowra)

578.972641 23,000642 (1.35%)

Albury distribution network. The network services the Albury area consisting of Thurgoona, Lavington, Jindera and Howlong.

Not available 2.08%

Tweed Heads distribution network. The network services Tweed Heads. Not available 0.11%

NSW’s gas distribution networks are regulated, meaning that a determination at the beginning of the regulatory period sets the price increases over that period, access terms and conditions, tariffs and services, extensions, expansions, trading, capacity management and tariff policies which third parties (retailers) may access. With the commencement of the National Gas Law on 1 July 2008, responsibility for economic regulation was transferred from the IPART to the AER.643 The regulator period for the distribution networks and their ownership is detailed in Table 10.4. Table 10.4: Regulatory period for NSW gas distribution networks644

Distribution network Current regulatory period Owner and key shareholders

NSW Gas Distribution Network 1 July 2005/30 June 2010 Jemena (Singapore Power International (Australia))

Central Ranges System 2006/2019 APA Group

Wagga Wagga distribution network

1 July 2005/30 June 2010 Country Energy (NSW Govt). Country Energy has stated that it intends to sell its gas network operations in southern NSW by the end of 2010.645

ActewAGL Distribution network

2005/2010646 ActewAGL Distribution is a joint venture between the ActewAGL Retail Partnership and the ActewAGL Distribution Partnership. The ActewAGL Distribution Partnership comprises Jemena ATA Pty Ltd and the ACT Government owned ACTEW Corporation.

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Distribution network Current regulatory period Owner and key shareholders

Albury distribution network 31 December 2012647 The Albury Gas Company (AGC) is a subsidiary of Envestra Limited.

Tweed Heads distribution network

Not available APT Allgas Energy Pty Ltd is owned by APA.

The gas networks have been growing very slowly in the last few years as seen in Table 10.5, and in 2008/09 grew by just 196km. This growth is mostly attributed to being driven by the demand for new connections not served by the existing infrastructure. It includes new subdivisions, in-fill developments and established households connecting to gas. The only large new area supplied with natural gas in the last few years has been Tamworth, with the construction of the Central Ranges System in 2006.648 Table 10.5: NSW network length and growth649

Year Total network length (km) Network growth (km)

08/09 26,696 196

07/08 26,500 513

06/07 25,987 435

05/06 25,552 215

04/05 25,337 274

NSW Gas Distribution Network The NSW Gas Distribution Network has its origins in 1837 when manufactured gas was supplied to Sydney.650 With the commissioning of the Moomba–Sydney Pipeline in 1976, natural gas became available. The network owner, Jemena Gas Networks (NSW) Ltd, has appointed Jemena Asset Management as the network’s asset manager. The assets are managed under a rolling six-year Asset Management Plan with the current one covering the period from April 2009 to March 2015. The network’s gas distribution assets for the network are listed in Table 10.6. Table 10.6: Gas distribution assets of the NSW Gas Distribution Network651

Asset Class Volume

Trunk mains (km)* 267km

Primary mains (km) 143km

Secondary mains (km) 1,417km

Medium and low pressure mains (km) 22,078km

Trunk receiving stations (including POTS) 53

Primary regulating stations (PRS) 14

District regulator sets (SRS, MPRS, LPRS) 575

Residential gas meters 969,348

I & C meter sets 28,903

A map of the network is illustrated in Figure 10.7.

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Figure 10.7: Map of the NSW Gas Distribution Network652

There are two trunk mains – the northern trunk made up of four pipeline sections between Wilton-Newcastle, and the southern trunk consisting of just the Wilton–Wollongong pipeline.653

Table 10.7 identifies the number of customers connected to the NSW Gas Distribution Network and their gas consumption. It shows that the majority of the network’s gas supplied is consumed by 414 large customers. Table 10.7: Customers and load by region during 2008/2009 for the NSW Gas Distribution Network654

Region Customers who use 10TJ or more per year Customers who use less than 10TJ per year

Load (TJ) Number Load (TJ) Number

Sydney 294 36, 597 823,061 27,275

Newcastle 60 18,884 89,480 2,378

Wollongong 13 5,976 55,479 1,377

Country 47 4,161 84,590 3,957

Total 414 65,618 1,052,610 34,987

Capital expenditure for the 2005/10 is detailed in Table 10.8. It identifies Jemena Gas Networks (NSW) Ltd’s forecast expenditure, expenditure approved by IPART in the 2005/2010 access arrangement, and the actual expenditure. Table 10.8: Forecast and actual/estimated capital expenditure for 2005/06 to2009/10 for the NSW Gas Distribution Network ($m, 2009/10, real)655

2005/06 2006/07 2007/08 2008/09 2009/10 Total

Forecast (IPART approved) 141.5 117.7 113.2 98.6 92.6 563.4

Actual/estimated 99.6 131.7 108.3 101.3 115.6 556.6

Difference 41.9 –14.0 4.9 –2.7 –23.0 6.8

Jemena Gas Networks (NSW) Ltd’s capital expenditure was substantially less than that approved. It identified that the variance was due to: A substantially lower number of new customers than forecast. Between 2005/06 and 2008/9,

the number of new connections was 38% less than forecast, meaning that less market expansion and capacity development investment was required.656

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Higher than forecast expenditure on: Replacement and renewal of ageing high pressure facilities The Sydney Primary Loop project. This project addressed a major security of supply issue in

Sydney. Customers in the Sydney basin east of Jemena’s trunk main had previously been supplied from a single feed, 550mm primary main extending from Horsley Park to Botany. This infrastructure, in the form of the Sydney Primary Main and Horsley Park TRS, presented a single point of failure. The Sydney Primary Loop project involved the construction of approximately 28km of 500mm diameter steel primary gas main and ancillary works.657

Mines subsidence mitigation projects The upgrade of high pressure facilities required by the pressure upgrade to the Moomba–

Sydney Pipeline. Reduced expenditure on system reinforcement projects due to substantially lower utilisation of

the network than forecast and deployment of innovative technology to increase capacity of existing system and defer reinforcement requirements.658 In particular, the anticipated growth in certain areas of metropolitan Sydney and the Central Coast did not occur allowing for the deferral and/or re-staging of projects.659

Reduced capital availability due to the need to divert capital to the Sydney Primary Loop project.660

The economic asset life and remaining life of the NSW Gas Distribution Network is detailed in Table 10.9. Not only is failure more likely as assets age, but it is normally more costly to monitor the condition of older assets. For example, the majority of primary mains were constructed 25 to 30 years ago and were not designed to allow for pigging, the process used for cleaning and in-line inspection.j Table 10.9: Economic asset life and remaining life of the NSW Gas Distribution Network661

Asset class Economic asset life (years) Remaining asset life (years)

Trunk pipeline (Wilton-Newcastle) 80 48.10

Trunk pipeline (Wilton-Wollongong) 80 42.82

Country POTS 50 35.36

Contract meters 20 9.23

Tariff meters 20 10.60

Meter reading devices 20 19.30

Fixed plant 50 37.47

HP mains 0 58.74

MP mains 50 28.98

HP services 50 26.35

MP services 50 36.00

Total system assets 35.36

Wagga Wagga distribution network Gas has been available in Wagga Wagga since the late 1880s. Table 10.10 identifies the number of customers connected to the Wagga Wagga distribution network and their gas consumption. It shows that the around 43% of total gas sales are to several large customers.

j Pigging involves sending a tool (pig) internally through a high pressure main, usually without disruption to the flow of gas. The flow of gas and the pressure drop across the pig, to move the pig through the pipeline. Pigging is used for cleaning and for ultrasonic in-line inspection. Australian Energy Regulator, 2010, Jemena Access arrangement proposal for the NSW gas networks 1 July 2010 – 30 June 2015, pp. 30-31.

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Table 10.10: Customers and load for2005/06 to2009/10 for the Wagga Wagga distribution network662

Customers (No), Volume (GJ) 2005/06 2006/07 2007/08 2008/09 2009/10 forecast

Volume load

Small Customers 17,084 17,188 17,811 17,954 18,099

Medium Customers 178 181 178 183 188

Large Customers 10 9 10 12 12

Total Volume Customers* 17,272 17,378 17,999 18,149 18,299

Small Load 692,708 607,920 642,068 653,255 656,872

Medium Load 186,854 163,983 173,194 176,178 177,154

Large Load 44,542 39,090 41,286 56,285 56,491

Total Volume load 924,104 810,992 856,547 885,718 890,517

Contract load (Bomen, Central and Fringe Zones)

Total Contract Customers 15 16 17 15 15

Total Contract Load 627,876 628,662 705,879 682,043 681,694

Total Load 1,551,980 1,439,654 1,562,426 1,567,761 1,572,211

Capital expenditure for 2005/10 is detailed in Table 10.11. It identifies Country Energy’s forecast expenditure, expenditure approved by IPART in the 2005/2010 access arrangement, and the actual expenditure. Table 10.11: Forecast and actual/estimated capital expenditure for 2005/06 to 2009/10 ($m)663

Capital Expenditure Jan to Jun 2006 2006/07 2007/08 2008/09 2009/10 forecast Total

Forecast (IPART approved) 827 1,603 1,692 1,909 2,089 8,120

Actual/estimated 1,727 2,191 3,816 3,594 4,225 15,554

Difference (900) (588) (2,124) (1,685) (2,136) (7,434)

Country Energy’s expenditure was significantly higher than that forecast. It identified that the variance was due to: Unexpected growth in new customer connections as a result of substantial growth in the Wagga

Wagga housing market. There was a 64% increase in new customer connections above the levels forecast.664

Increased expenditure in replacing cast iron and galvanised iron steel pipes, and simultaneously converting the upgraded areas to medium high pressure (80-250kPa). This increase in pressure was required due to problems caused by long-term demand growth.665

The need to rebuild the Bomen receipt point ($1.5 million), which receives gas from the main NSW–Victoria Interconnect transmission pipeline supplying Wagga Wagga. The upgrade was required to cope with the increased pressure in the transmission pipeline, which was increased from 3,000-5,500kPa to 8,500-10,000kPa because of the commissioning of the 640MW Uranquinty gas-fired power station from August 2008.

A major meter replacement program, commenced in 2007/08 in order to comply with regulatory requirements.666

The Wagga Wagga distribution network contains: 112km of galvanised steel, the majority being constructed between 1950 and 1980 35km of cast iron mains constructed between 1950 and early 1990s.667

These pipes have a median asset life of 50 years, and over the next few years a growing proportion will require replacement.668 Country Energy has proposed that it will replace 2% of the galvanised steel/cast iron mains each year.669 The economic asset life and remaining life of the Wagga Wagga distribution network is detailed in Table 10.12.

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Table 10.12: Economic asset life and remaining life of the Wagga Wagga distribution network as of 30 June 2010670

Asset class Economic asset life (years)

Remaining asset life (years)

System Assets

High Pressure 80 59

Medium-High Pressure 50 35

Medium-Low Pressure 50 25

Low Pressure 50 31

Services 50 30

Meters & Regulators 15 8

District Regulators 40 18

Gate Stations 50 45

SCADA and Telemetry 20 12

Non-system Assets 5 1

Other networks Details of the ActewAGL Distribution network are contained in the 2010 ACT Infrastructure Report Card. The other NSW networks are not discussed further, due to their small size. Retail As of May 2010, there are 13 licensed retailers in NSW of which the following six are active in the residential and small business customers: AGL Energy Country Energy Origin Energy ActewAGL Retail EnergyAustralia TRUenergy.671

The NSW gas retail market became fully contestable from January 2002,672 meaning that customers can choose their gas supplier. Retail gas prices are not regulated except for a regulated tariff provided by the host retailer. Since 2004, this regulated tariff has been made under a Voluntary Transitional Pricing Agreement (VTPA) by each host retailer. This current agreement, which expires on 30 June 2010, states that retailers will limit the tariff’s price increase to the change in the Consumer Price Index (CPI) over the previous calendar year.673 The regulated tariffs were intended to be a transitional measure during the development of retail markets, and the NSW Government has agreed to eliminate it where effective competition has been demonstrated. In 2009, the NSW Government stated that it would keep this tariff at least until 2013. This decision was justified on the basis of protecting consumers.674 In 2011, the AEMC will undertake a review of the effectiveness of competition in NSW’s electricity and gas retail markets.675 Demand There are three main gas markets in NSW. They are: Electricity generation. About 20% of total sales gas in NSW is used for electricity

generation.676 Industrial/commercial. Gas is used by commercial and industrial organisations in food

production, paper manufacturing, automotive, glass and cement manufacturing, metal smelting, and tyre production. A number of large customers also use gas for cogeneration, producing onsite power and process heat.

Domestic sales. Gas is used for residential space and water heating, and cooking. The key driver of residential demand is winter temperatures and winter peak demands are around 50% higher than summer peak demand.677

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Figures on consumption and customer number growth are detailed in Table 10.13. Over the last five years, the number of consumers has grown by over 14%. However, the last three years have the lowest number of new customers connected to the networks.678 Table 10.13: NSW natural gas consumption and customer number growth679

Year Consumers Consumer growth New customers connected Gas Delivered (PJ)

08/09 1,121,4172 62,566 25,864 109.5

07/08 1,058,851 26,319 25,895 105.7

06/07 1,032,532 23,031 26,928 103.6

05/06 1,009,501 32,998 32,666 102.0

04/05 976,503 27,978 37,775 102.4

Prices NSW retail gas prices are seen in Figure 10.8. It is not possible to assess the prices paid by industrial and large commercial customers as price information is generally not publicly available. This is because these customers sign confidential, long-term take-or-pay contracts, which can last for up to 30 years, but now more commonly last for 10 to15 years. The major change in NSW gas prices over the last decade has been the removal of cross-subsidies paid for by larger consumers. This means that retail gas prices have increased more than large customer gas prices.680 For instance, NSW retail gas customers have experienced real gas price increases of 24% between 2000/01 and 2007/08.681 Figure 10.8: Retail gas prices for Australian States682

Gas prices in NSW are made up of four components: gas commodity and transmission costs retail operating costs retail margin distribution network costs (i.e. the fees imposed by distribution network operators), which

account for about 45% of customers’ total retail gas bills.683 Gas prices are expected to rise significantly in the short-term in response to increases in distribution network costs. The latest determination of network costs by the AER for the next regulator period allows the following real increases: 34.3% in 2010/11 for Jemena Gas Networks (NSW). 33.6% in 2010/11 and 2.5% per annum for 2011/12 to 2014/15.20 for Country Energy’s

network.684

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The impact of the increase in network charges can be significant. For instance, they will result in an average increase for retail gas from Jemena of around 15% in real terms in 2010.685

10.2.2 Policy and governance The NSW gas network is part of an interconnected eastern Australian network. The overarching regulatory framework for this network is provided through the National Gas Law (NGL) and National Gas Rules (NGR), which took effect on 1 July 2008. The NGL governs third party access to natural gas pipeline services and some broader elements of natural gas markets. The NGR covers operation of the National Gas Market Bulletin Boardk which publishes pipeline capacity, forecasts demand and market information, and the future operation of the Short Term Trading Market, which sets a daily wholesale price for natural gas.686 Planning for gas infrastructure is principally the responsibility of the private sector owners of the infrastructure, rather than the NSW Government. To assist owners in developing plans, the Australian Energy Market Operator (AEMO) produces the National Gas Statement of Opportunities (NGSOO). This is an annual document that provides demand and supply data so that owners are better able to develop capital investment plans. The roles of the NSW and Australian Governments are limited, as their previous controlling powers have been transferred to independent regulators and authorities within a market framework. However, they can indirectly influence costs and demand through applying a price to carbon and encouraging energy efficiency. Key NSW gas legislation consists of: Gas Supply Act 1996 (NSW). The Act requires that a person who operates a gas distribution

pipeline be authorised, and that the authorisation holder pay an annual authorisation fee. Gas Supply (Gas Meters) Regulation 2002. This Regulation requires that gas be metered,

and imposes obligations in relation to the testing of gas meters prior to installation and when in service.

Gas Supply (Safety and Network Management) Regulation 2008. This Regulation requires that organisations design, construct and operate their networks in accordance with specified standards, maintain emergency response capabilities, establish gas-fitting rules, implement Safety and Operating Plans that must be audited annually, and undertake certain actions in relation to gas quality and gas testing.687

Market Operations Rules (NSW Gas Supply Continuity Scheme) 2008. This scheme, made under the Gas Supply Act 1996, was introduced to ensure a more reliable gas supply to residential and business customers. The need for the scheme arose after the disruption to gas supply following the Load Shedding Event of 22-24 June 2007. This incident resulted in approximately 250 large customers in NSW and the ACT being asked to curtail their natural gas consumption in response to shortfalls in the supply of gas into these regions via the Moomba–Sydney Pipeline over a prolonged period.688 The purpose of the Scheme is to ensure that the gas demand and supply imbalances that normally occur within the NSW natural gas system do not become large enough to threaten the operation of the system. Under the Scheme, Market Operations Rules (NSW Gas Supply Continuity Scheme) 2008 apply to the owners and operators of natural gas transmission pipelines and shippers of natural gas on those pipelines as well as natural gas distributors and retailers.689 The Scheme uses market-based mechanisms to secure gas supply and Demand Side Management (DSM) to meet a relevant gas short-fall event and puts in place additional incentives for participants in the gas market to manage gas supply to avoid these events.690

k The National Gas Market Bulletin Board facilitates trade in gas and tracks capacity flows on all major gas production fields, major demand centres and natural gas transmission pipeline systems.

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Pipelines Act 1967. The Act requires that a person who constructs or operates a pipeline must be licensed.

Pipelines Regulation 2005. This Regulation requires that the organisation design, construct and operate its licensed pipelines in accordance with specified standards, establish and implement Environment Management and Safety and Operating Plans, report pipeline incidents and submit periodic reports, and ensure that Safety and Operating Plans are audited each year.691

10.2.3 Sector trends Uncertainty about supply and demand Over the next decade, demand and supply for gas in NSW is expected to change significantly due to a combination of: Changes in gas demand from gas-powered generation (GPG). The demand for gas by GPG

will increase if more plants are built and operate more frequently. Impact of carbon pricing. The introduction of a carbon pricing regime will change the relative

attractiveness of gas and gas-fired electricity. Reform of the NSW electricity market. The sale of development sites may lead to more GPG. Increasing international demand for gas. Demand for gas worldwide is increasing, as is its

price. With the development of LNG export infrastructure and the development of gas network across eastern Australia allowing gas to be exported, the domestic price of gas will become aligned with the international price.

Other policy settings, such as the renewable energy target and mandatory energy performance standards.

Domestic customer changes will have little impact on demand. As a general trend, demand per customer is likely to reduce in winter due to an increased use of solar water heating, an increase in the efficiency of appliances, and the reduction in the use of space heating due to climate warming. Jemena Gas Networks (NSW) estimates that: Customer numbers will increase from 1.1 million in 2010/11 to 1.3 million in 2014/15,

representing annual growth of 3.2% Maximum daily load for demand customers will decrease from 327.9TJ in 2010/11 to 326.0TJ in

2014/15, representing annual reduction of 0.1% Total gas load for volume customers will increase from 32.4 PJ in 2010/11 to 34.8 PJ in

2014/15, representing annual growth of 1.8%.692

Table 10.14 details the forecast in load growth between 2010/11 and 2014/15 for NSW Gas Networks. Table 10.14: Forecast load by customer type and tariff between 2010/11 and 2014/15 for NSW Gas Networks693

2010/11 2011/12 2012/13 2013/14 2014/15

Residential (TJ) 20,475 20,513 21,059 21,558 21,992

Small business 11,961 11,966 12,128 12,451 12,777

Total load volume customers 32,435 32,480 33,187 34,010 34,769

Demand customers 63,590 64,149 62,570 62,829 62,933

Total load all customers 96,025 96,629 95,757 96,838 97,702

Table 10.15 details the forecast in load growth between 2010/11 and 2014/15 for the Wagga Wagga distribution network.

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Table 10.15: Load by customer type and tariff between 2010/11 and 2014/15 for Wagga Wagga distribution network694

Customers (No), Volume ( 2010/11 2011/12 2012/13 2013/14 2014/15

Volume load forecasts

Volume customers (number) 18,449 18,599 18,749 18,899 19,049

Total volume load (GJ) 895,278 900,925 904,682 909,326 913,929

Contract load forecasts

Contract customers (number) 15 15 15 15 15

Bomen zone load (GJ) 496,372 496,193 496,013 495,834 495,655

Central/Fringe zone load (GJ) 184,972 184,802 184,632 184,461 184,291

Total contract load (GJ) 681,344 680,995 680,645 680,295 679,946

Total load (GJ) 1,576,622 1,581,920 1,585,327 1,589,621 1,593,875

Contract MDQ

Bomen zone MDQ (GJ) 3,099 3,099 3,099 3,099 3,099

Central/Fringe zone MDQ (GJ) 1,084 1,084 1,084 1,084 1,084

Country Energy expects that there will be 150 new customer connections per year, which involves constructing an additional 25m of mains per new customer.695 Significant growth in NSW Gas Network’s capital expenditure Jemena Gas Network (NSW) has proposed to increase its capital expenditure between 2010/11 and 2014/15 to $851m, a 66% real increase on the 2004/05 to 2009/10 period.696 The major components of this expenditure are: Wakehurst Parkway augmentation. This involves building a new secondary main to Warringah

to support an increasingly complex and loaded system that serves the length of Sydney’s northern beaches.

Emu Plains Primary Mains. This project involves installing a new primary main across the Nepean River at Emu Plains to provide the capacity needed to connect new customers in the Blue Mountains, and to improve the reliability of supply to existing customers.

Package off-take stations in country areas. This project consists of upgrading several package off-take stations and bath heaters for the Marsden to Dubbo and Junee to Griffith laterals, to accommodate increasing operating pressures on the Moomba–Sydney Pipeline.697

Part of the increase in capital works is due to the postponement of growth and capacity expansions projects that were intended to be undertaken over the previous few years.

10.3 Performance

10.3.1 Transmission Key performance indicators for transmission pipelines are capacity, network integrity, reliability and safety. AEMO has identified that while gas reserves are sufficient to meet annual demand projections to 2029, including LNG export, the increasing demand for gas will place pressure on the transmission pipelines and production infrastructure used to supply gas.698 In NSW, as the winter peak demand is around 50% higher than summer peak days, winter is the period in which demand will first exceed supply. AEMO estimates that the capacity of pipelines serving NSW will be exceeded from 2012 under winter peak day 1 in 20 POE conditions and from 2018 under 1 in 2 POE conditions.699 Probability of Exceedence (POE) refers to the probability that a forecast maximum demand figure

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will be exceeded. A forecast 1 in 20 POE maximum demand figure will, on average, be exceeded only one year in every 20. The demand supply balance is illustrated in Figure 10.9. Figure 10.9: Moomba–Sydney Pipeline and Eastern Gas Pipeline winter 1 in 20 POE forecasts700

The Energy Branch of Industry and Investment NSW produces a yearly performance report on the performance of NSW licensed pipeline operators in implementing the safety management systems required by the Pipelines Act 1967. There are 31 currently-operating pipeline licences, which include both major transmission and other pipelines defined in the next section as distribution assets. Table 10.16 identifies the trends in pipeline safety descriptors. It shows that the safety has not changed significantly over the last four years. Table 10.16: Safety descriptors of licensed pipelines701

Year Near miss per 1,000km

Incidents per 1,000km

Loss of containment per 1,000km

Ignitions per 1,000km

Damage per 1,000km

2005/06 1.77 0 0.22 0.22 0

2006/07 0.41 0.83 0 0 0.41

2007/08 2.27 0.62 0.21 0 0.21

2008/09 2.05 0.62 0.41 0 0

10.3.2 Distribution In assessing the performance of a gas distributor network, it is necessary to consider multi-year trends rather than single years. This is because gas distribution infrastructure is sensitive to environmental conditions, such as heavy rain entering low pressure pipes, and the renewal program, which increases the number of planned interruptions in the short-term but reduces them significantly in the medium to long term. Two key factors in assessing the quality of a distribution network are reliability and network integrity. Reliability is measured in terms of the average frequency and duration of supply interruptions, which can be either planned or unplanned. Planned interruptions occur when a supply is deliberately disconnected to undertake maintenance or construction work. Unplanned interruptions mainly occur because of leakages or damaged pipes requiring immediate repair. Unplanned outages are often caused by third parties damaging pipes, or by water entering low pressure pipes.702 Key reliability measures are:

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System Average Interruption Duration Index (SAIDI). SAIDI measures the total minutes, on average, that a customer could expect to be without gas over the reporting period. Total SAIDI comprises both planned and unplanned minutes-off-supply.

System Average Interruption Frequency Index (SAIFI). SAIFI measures the number of occasions per year when each customer could, on average, expect to experience an interruption. It is calculated as the total number of customer interruptions, divided by the total number of connected customers averaged over the reporting period.703

Planned interruptions are mainly due to mains replacements. Unplanned interruptions are due to third party damage, infrastructure failure and inadequate maintenance/installation. Figure 10.10 compares SAIFI figures of Jemena Gas Networks (NSW) (JGN) and ActewAGL’s networks to other distribution networks around Australia. Figure 10.10: SAIFI for network around Australia704

Network integrity can be measured by the quantity of leaks (loss of containment) and unaccounted-for gas. Levels generally reflect the distributors’ quality of operational and maintenance activities. Figure 10.11 compares all leaks per kilometre of mains for distributors around Australia.

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Figure 10.11: All leaks per km mains for distributors around Australia705

Unaccounted-for gas (UAFG) is a measure of the difference between the gas entering the system and the amount delivered. This difference indicates how much of the gas injected into the network is lost in transit. This can be due to system leaks, theft, inaccurate meters, differences in times that meters are read, accounting errors, gas compressibility factors, temperature or heating value discrepancies, line pack differences, and losses in commissioning of new or replacement pipes.706 It is estimated that approximately 80-90% of the UAFG can be attributed to gas leakage.707 Table 10.17 identifies the volume of unaccounted-for gas for NSW networks. The decrease in UAFG over the last two years is primarily due to the reduction in accidental damage to network assets caused by third parties such as construction workers. This has been achieved by network operators working more closely with third parties. The introduction of the Energy Legislation Amendment (Infrastructure Protection) Act 2009 should continue this trend.708 Table 10.17: Quantity of gas entering, and leaving NSW networks and unaccounted-for gas709

2003/04 2004/05 2005/06 2006/07 2007/08 2008/09

Gas entering distribution system (PJ)

104.8 104.7 106.3 108.0 111.5

Gas delivered (PJ)710 102.4 102.0 103.6 105.7 109.5

Unaccounted-for gas (%) 2.27 2.53 2.60 2.11 1.83

Figure 10.12 compares UAFG for distributors around Australia.

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Figure 10.12: Unaccounted-for network around Australia 711

Performance indicators on distribution network integrity and safety is stated in Table 10.18.

Table 10.18: Network integrity and safety for NSW distribution networks712

Reporting Period

Third Party

reported leaks per

10km

Third Party reported leaks per

1000 consumers

Percentage of network

leak surveyed

Leaks found from

survey per 10km

Mechanical damage per

10km

Mechanical damage per

1000 consumers

Emergency exercises

2004/05 4.04 10.49 24.92 3.75 0.99 2.58 8

2005/06 4.86 12.31 31.95 8.49 0.92 2.34 12

2006/07 6.11 15.38 22.10 16.01 0.95 2.39 14

2007/08 4.77 11.94 19.88 7.35 0.87 2.18 19

2008/09 5.20 12.38 23.02 8.20 0.81 1.92 22

The Energy Branch of Industry and Investment NSW produces a yearly performance report on the performance of natural gas distribution networks in NSW. In the 2009 report, it stated that the operators of the natural gas distribution networks have demonstrated a high level of performance in the network integrity, reliability, and safety aspects of operation. It noted that the averages for the Key Performance Indicators (KPI) indicate that all assets are being maintained to a very high standard.713

10.3.3 Environmental sustainability Natural gas as an energy source has significant environmental benefits compared with electricity generated from coal. For example, coal used in producing electricity generates 80% more carbon dioxide emissions than natural gas. Jemena Gas Networks (NSW) is actively promoting the environmental benefits of natural gas, referring to it as the most environmentally-friendly fossil fuel. Key to its marketing is supporting the Natural gas: the natural choice campaign. This campaign is designed to increase the awareness of gas as an environmentally-friendly energy source, together with targeted incentives paid directly to appliance installers to encourage the uptake of gas appliances where upfront costs present a barrier to the purchase of gas appliances. Gas companies have also sought to minimise the risks of their operations, and in particular to reduce their environmental risk. Examples of this include:

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Minimising ground disturbance by using common trenching with other utilities, and directional boring to prevent damage to the root systems of trees

Using long-life materials to minimise the need for future maintenance activities Minimising line purging operations and if necessary, using flaring to minimise the environmental

impact.

10.4 Future challenges The challenges to achieving improvements in gas infrastructure are: Planning gas infrastructure to meet demand. Given the uncertainty over the demand of

natural gas arising from the introduction of a carbon tax, other policy settings such as the Mandatory Renewable Energy Target (MRET) and the internationalisation of the domestic natural gas price, it is very difficult for infrastructure owners to be confident in their decisions about investment.

Expanding the distribution network. The growth of the network has slowed. Expanding the network through servicing urban infill and unserved areas is expensive. Growing the network may require additional incentives for network operators that recognise the environmental benefits of natural gas.

10.5 Report Card Rating

Infrastructure Type NSW 2010 NSW 2003 National 2005 National 2001

Gas C Not rated C+ C

Based on considerations of planning, funding, and infrastructure capacity and condition, NSW’s gas infrastructure has been rated C. This rating recognises that the gas transmission and distribution systems are in a sound condition, and increases in gas exploration, production and pipeline capacity have increased supply. However, as future supply and demand for gas is highly uncertain due to government policy, the internationalisation of domestic gas prices, and the construction of new gas-fired generation plants along the east coast of Australian, it is impossible to determine if the infrastructure is appropriate for future demand. Positives that have contributed to the rating are: Existing high quality transmission pipelines Good network integrity, reliability and safety of distribution networks Ongoing replacement of aged pipelines Increased exploration and development of coal seam gas reserves Expansion in capacity of the Moomba–Sydney Pipeline, Eastern Gas Pipeline and NSW–

Victoria Interconnect Increased capital expenditure on the NSW Gas Network.

Negatives that have contributed to the rating are: Uncertainty over future gas demand Very slow growth in domestic natural gas penetration Short-term transmission pipeline capacity concerns.

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11.1 Summary

Infrastructure type NSW 2010 NSW 2003 National 2005 National 2001

Telecommunications C- Not rated Not rated B

This rating recognises that the mobile and broadband provision is generally very high in the metropolitan areas, but is of variable quality in regional areas. The twisted copper pair network, upon which ADSL services rest, is reaching its limits and the rollout of fibre, broadband wireless and satellite under the NBN will enable the next evolution of broadband services to be provided. Backhaul networks are in good condition and competitive provision will be improved through the NBN blackspots program. In 2007, Engineers Australia rated telecommunications in the Telecommunications Infrastructure Report Card 2007. It used Local Government Statistical Divisions as the geographic basis for rating fixed and mobile infrastructure. Below were the ratings.

Developments since the 2007 Telecommunications Infrastructure Report Card have included: Continued demand for high-speed broadband services Continual growth in mobile phone ownership Increased competition in the provision of telecommunication services Improved provision of backhaul fibre and microwave links Increased capability of mobile telephone networks including increases in coverage, reliability,

function and capacity. Major in-progress infrastructure projects include: The Australian Government’s National Broadband Network (NBN) Project NSW Government projects including the Community Broadband Development Fund.

Challenges to improving telecommunications infrastructure include:

Statistical Division Name Fixed Infrastructure Rankings (2007)

Mobile Infrastructure Rankings (2007)

Sydney B B

Hunter E D

Illawarra D D

Richmond-Tweed D E

Mid-North Coast D E

Northern D D

North Western E E

Central Western D E

South Eastern D D

Murrumbidgee D E

Murray E E

Far West F F

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Implementing the NBN Creating a value proposition for ubiquitous high-speed broadband Selecting optimal technologies for the future Generating broadband consumer demand to justify infrastructure investment by

telecommunication providers Recognising that a visionary approach to telecommunications infrastructure is required as

telecommunications will be instrumental in delivering future economic growth and social benefit Utilising Government-owned communications infrastructure Strengthening the resilience of the telecommunications backbone Capitalising on smart network roll-out.

11.2 Infrastructure overview

11.2.1 System description The telecommunications infrastructure of NSW consists of infrastructure that delivers customer access networks (CAN) and backhaul transmission networks. The key elements rated in this chapter are: Fixed line CAN infrastructure Mobile CAN infrastructure Backhaul infrastructure.

The provision of telecommunications services operates within a market structure comprised of: Carriers. The owner of a network used to supply carriage services to the public. Carriage service providers. The organisations that use a carrier service to supply

telecommunications services to the public using a carrier-owned network. Internet service providers (ISPs) are carriage service providers.

Content service providers. The organisations that supply radio and TV broadcasting and on-line services to the public.

This chapter does not address satellite telecommunication infrastructure or content service providers. Private telecommunication systems that have no impact on public telecommunications are also not considered. Table 11.1 lists the infrastructure that this section assesses. Table 11.1: Infrastructure assessed in the Report Card714

Type Purpose Technologies

• Customer Access Network (CAN)

• Fixed line • Mobile • Fixed wireless

Connects customer to an aggregation point

• Copper twisted pairs • DSL Access Multiplexers (using twisted pairs,

possibly in the form of ULL or LSS) • Coaxial access part of hybrid fibre-coaxial

(cable TV) systems • Access fibre networks (fibre to the

premises/home) • Cellular 2G, 2.5G and 3G mobile networks • WiMAX technologies

Backhaul Connects aggregation points to major nodes in capital cities or regional centres, and provides high-capacity links between capital cities, or from regional centres to capital cities

• Transmission fibre • Fibre trunks • Microwave links • Satellite links

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Fixed line CAN infrastructure The fixed line CAN represents the link between the telephone exchange and the customer. Fixed line infrastructure includes twisted pair copper wire, and fibre to the home/premises, and it provides telephony, data transfer and internet connections. Copper wire is the standard medium for connecting fixed line services to end-user premises. The largest fixed line CAN owner in NSW is Telstra. Mobile CAN infrastructure Mobile CAN infrastructure provides mobile telephone, data and multimedia services to mobile handsets. There are four mobile carriers operating in NSW. These networks use either 2G/2.5G or 3G services. 2G/2.5G (henceforth known as GSM) networks in NSW are operated by: Telstra Optus Vodafone.

3G networks in NSW are operated by: Telstra’s Next G Network Hutchinson ‘3’ (Hutchinson/Telstra network) Optus/Vodafone (shared network).

The GSM networks were primarily designed for voice services, but are capable of supporting data services at a lower rate than 3G networks. The 3G network allows much higher data transfer rates than the GSM networks, allowing consumers to access a wider range of applications. The 3G technology allows carriers to offer a wider range of service to consumers and achieve a more efficient use of spectrum that allows for greater network capacity. 3G networks provide access to data and the internet through either a mobile handset or a data card that is inserted into a computer. As of May 2010, the 3G networks can provide peak download speeds of up to 42Mbps and upload speeds of up to 5.8Mbps.715 l However, it should be noted that mobile broadband capacity is typically shared amongst multiple simultaneous users and is therefore subject to contention. The growth in mobile phones has been substantial over the last decade as seen in Figure 11.1, which shows that the number of mobile phones has exceeded fixed-line phones since 2000.

l The ACCC has recently expressed concern about coverage and speed claims made by internet and mobile phone providers. See for example, Broadband Internet speed claims and the Trade Practices Act—Information paper, 2007 www.accc.gov.au/content/index.phtml/itemId/779405 and ACCC Media release, MR 328/07, December 2007.

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Backhaul infrastructure Backhaul infrastructure connects telecommunication aggregation points to major nodes in capital cities or regional centres, and provides high-capacity links between capital cities, or from regional centres to capital cities. Backhaul is provided by fibre or microwave technologies, and while fibre-based infrastructure provides the highest bandwidth, construction is more capital intensive. There is no publicly available, consolidated map of backhaul infrastructure in NSW. Some backhaul providers do make details available but others do not. The 2007 Telecommunications Infrastructure Report Card stated that there were at least 13 long-haul fibre systems and 10 alternative paths connecting Sydney with other capital cities. This diversity provides multiple routes that theoretically allows traffic to be continuously carried, however the shifting of traffic between paths may not occur for technical or commercial reasons. It also found that there were diverse links to and from all Statistical Divisions (NSW has 11 Statistical Division which are defined by the Australian Bureau of Statistics) of NSW except for the Far West.724

11.2.2 Policy and governance The Australian Government’s strategic vision for telecommunications reflects that while telecommunications can be an enormous contributor to economy, lifestyle, health and safety, telecommunication provision and innovation is primarily driven by market forces. The NSW Government has committed to using the power of telecommunications to improve the quality of life for the entire community of NSW through: Delivering broadband and flexible telecommunications for the more efficient and effective

delivery of all government services, including education and health Ensuring that telecommunications supports a ‘Connected Society’ by allowing all people to

enjoy equitable access to services National leadership in the deployment of telecommunications to position NSW at the forefront of

the information economy Partnering with industry to promote an innovative and competitive telecommunications sector in

NSW.725 The NSW Government, in its Statement on Innovation, has outlined the upgrading of knowledge and information infrastructure as a goal of the Government’s policy. The NSW Government has outlined that this objective should be achieved through supplementing and supporting the private sector.726 Both governments seek to increase broadband provision in under-served regions. In July 2009, the Australian Government released its Australia’s Digital Economy: Future Directions paper that aims to develop the digital economy. The NSW telecommunication documents are: NSW Government Statement on Innovation (2006). This identifies the five key goals and

actions of the Government’s innovation policy including the development of telecommunications infrastructure.

A Strategy to Accelerate Innovation in NSW, Outline for Policy Development (2006). This paper by Professor Jonathan West of the Australian Innovation Research Centre provided the advice from which the NSW Government developed its Statement on Innovation.

Beyond the Bush Telegraph: Meeting the Growing Communications Needs of Rural and Regional People (2009). This report, produced by the Legislative Assembly Standing Committee on Broadband in Rural and Regional Communities, outlines the problems and solutions to achieving better telecommunications services in rural and regional NSW.

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Australia’s telecommunications industry is subject to a regulatory framework defined by the Telecommunications Act 1997. Its core aim is to promote the long-term interests of end-users of telecommunications services. The framework relies on industry self-regulation to develop codes and standards in all areas that apply to the sector. However, Government regulators have powers to intervene if industry self-regulation is not working effectively in specific instances. The key types of framework documents developed under self-regulation are: Industry Codes, that are rules or guidelines governing particular aspects of telecommunications,

developed by industry Industry Standards, that are rules or guidelines similar to industry codes, but determined by the

Australian Communications and Media Authority (ACMA) Technical Standards that cover the technical parameters of customer equipment, such as

cables and networks.727 Two other key elements of the regulatory framework are the: Telecommunications (Consumer Protections and Service Standards) Act 1999, which legislates

a number of consumer protection matters, particularly the Universal Service Regime, the National Relay Service, and continued access to untimed local calls

Trade Practices Act 1974, which includes two telecommunications-specific parts, Parts XIB and XIC, covering anti-competitive conduct provisions and a telecommunications-specific access regime respectively.m

The radio spectrum framework is defined in the Radiocommunications Act 1992 that sets out the tools to manage the spectrum including frequency planning, licensing and technical standards. In September 2009, the Australian Government announced that it would be making major telecommunication reforms, as the existing telecommunications anti-competitive conduct and access regimes are cumbersome, open to gaming and abuse, and provide insufficient certainty for investment. The proposed reforms involve: A structural separation of Telstra that primarily involves separating the network

operations/wholesale functions from the retail functions Streamlining the competition regime to provide more certain and quicker outcomes for

telecommunications companies Strengthening consumer safeguards, notably the Universal Service Obligation, Customer

Service Guarantee and Priority Assistance Removing redundant and inefficient regulatory red tape.728

The Commonwealth Telecommunications Act 1997 exempts low-impact and certain other telecommunications facilities from most planning requirements under State legislation.729 However, for other facilities, State and local government planning schemes apply. In 2009, the NSW Government released a draft NSW Telecommunications Facilities Code including Broadband Code that will be implemented through an amendment to the State Environmental Planning Policy (Infrastructure). The draft code lists the telecommunication facilities that are to be exempted from the planning approval process and will not require development consent. The draft code, if implemented, would result in a framework that would greatly assist in the delivery of telecommunications infrastructure in NSW.730 Key multi-jurisdictional bodies and government agencies are: Department of Broadband, Communications and the Digital Economy (DBCDE)

(Australian Government). The DBCDE has a leading role in outlining the strategic direction of the telecommunications sector, and providing advice on all regulatory policy aspects of the

m The access rules under this legislation provide a framework for determining the services to which content service providers have a right to access for the purpose of providing their own competing services, and the cost at which such services will be provided to them.

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telecommunications and radiocommunications sectors. Its Telecommunications Industry Division also provides advice on legislative and administrative arrangements for Telstra and Australia Post.

Australian Communications and Media Authority (ACMA) (Australian Government). ACMA is a regulator of the Australian communications industry, with specific responsibilities for the regulation of broadcasting, the Internet, radiocommunications, and telecommunications consumer and technical matters.

Australian Competition and Consumer Commission (ACCC) (Australian Government). The ACCC regulates competition in the telecommunications industry with specific responsibilities for the administration of regulation of anti-competitive conduct, and the approval and arbitration of access codes developed by the industry.

Telecommunications Industry Ombudsman (TIO) (Australian Government). The TIO provides an independent dispute resolution forum for complaints made by residential and small business consumers of telecommunications services. The TIO is funded through charges levied on carriers and service providers on the basis of complaints received against them.

Communications Alliance Ltd. The Communications Alliance is the peak communications industry body and has primary responsibility for developing technical, operational and consumer industry codes and standards for the industry.731

Industry & Investment NSW. This Department is responsible for supporting innovative, sustainable and globally-competitive businesses, industries and sectors. This area of responsibility was previously covered by the Department of State and Regional Development.732

Land and Property Management Authority (NSW Government). This agency is responsible for the Community Broadband Development Program under the NSW’s Government Building the Country Package.

NSW National Broadband Network Taskforce. This taskforce aims to accelerate the roll-out of the NBN network in NSW.

11.2.3 Sector trends Growth in internet connections The number of NSW consumers with internet connections continues to rise as seen in Figure 11.5. The graph illustrates that in the past year, growth has slowed, which may indicate that the market is reaching saturation given the current price and quality packages. However, the number of consumers is likely to rise as services become available in unserved areas and the roll-out of the NBN commences. Figure 11.5: Total ISP subscriptions in NSW, June 2009733

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Some 38% of NSW residents have an ISP subscription that is equal to the national average as seen in Table 11.2. Table 11.2: Percentage of population with ISP subscriptions, June 2009.

State Population (thousands)734

People with ISP subscriptions (thousands)735

Percentage of population with ISP subscriptions

New South Wales 7,099.7 2,713 38%

Victoria 5,427.7 1,952 36%

Queensland 4,406.8 1,746 40%

South Australia 1,622.7 584 36%

Western Australia 2,236.9 919 41%

Tasmania 502.6 182 36%

Northern Territory 224.8 83 37%

Australian Capital Territory 351.2 241 69%

Australia 21,874.9 8,420 38%

Roll-out of Government broadband infrastructure In response to the increasing demand for high-speed broadband services, and need to provide broadband services in regional and other areas with limited access, governments have initiated a number of projects to develop broadband networks. National Broadband Network In early 2009, the Australian Government announced that it would be building the National Broadband Network (NBN). The NBN aims to connect 90% of Australian homes, schools and workplaces with 100Mbps broadband services through fibre-to-the-premises (FTTP) connections. The remaining 10% will be provided with 12Mbps next generation wireless and satellite broadband services. The network will be built and operated by a new company specifically established by the Australian Government for the project. Investment in the company will, according to preliminary estimates, total up to $43 billion over eight years. Funding for the company will come primarily from the Australian Government through the Building Australia Fund, which will be the majority shareholder. The Australian Government expects private sector investment in the company through the issuing of Aussie Infrastructure Bonds (AIBs). The Australian Government intends to sell its interest in the company after the network is built and fully operational. Roll-out of the network will begin in NSW in July 2010, with 5,000 homes in two sites receiving fibre-to-the-premises connection as part of a live trial. The two sites are: An area west of Armidale encompassing the campus of the University of New England and

approximately 2900 premises 2600 premises in Minnamurra and Kiama Downs, two small coastal communities south of

Wollongong. These sites will be used as a test to determine the final design and construction elements of the eight-year network roll-out. The network is expected to be accessible for these two sites by early 2011. To assist in the roll-out process the NSW Government has established an NBN Taskforce to work closely with the NBN Co.736 Fibre in greenfield estates The Australian Government has announced that as part of the NBN, all greenfield developments that receive planning approval after 1 July 2010 will require fibre-to-the-premises infrastructure. This initiative is designed to ensure that homes built in new developments or major redevelopments

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are connected via fibre infrastructure. In December 2009, the Australian Government released an exposure draft of a bill to implement the changes.n Backhaul Blackspots Initiative To immediately enhance broadband access in regional Australia, the Australian Government announced the Backhaul Blackspots Initiative in April 2009. This program provides $250 million to be used to immediately address ‘backbone blackspots’ in regional Australia. In June 2009, the Australian Government announced that Broken Hill had been named as one of six initial locations in the first round of the program. The contract for the initiative was awarded to Leighton Holdings-owned Nextgen Networks in December 2009 and was announced as part of the first building blocks of the National Broadband Network.737 This project is identified in Figure 11.6. Figure 11.6: Regional Backbone Blackspot Project in NSW738

Government Broadband Service The NSW Government has a considerable demand for broadband services for its various agencies and operations. In 2005, the Government used its purchasing power to aggregate procurement of broadband services and commissioned Soul to deliver broadband services to 24 regional centres through the Government Broadband Service. The service is used by 25 agencies and connects over 3,000 sites including schools, hospitals, TAFE colleges, courts and police stations. These Government agencies experience the benefit of superior broadband services from those available to households and businesses in surrounding areas. Figure 11.7 identifies centres connected to the Government Broadband Service.739

n The proposed Act is called Telecommunications Legislation Amendment (Fibre Deployment) Act 2010. Department of Broadband, Communications and the Digital Economy, Fibre in Greenfields Estate webpage, http://www.dbcde.gov.au/broadband/national_broadband_network/fibre_in_greenfield_estates, accessed 4 January 2009.

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Figure 11.7: Centres connected to Government Broadband Services740

Fibre Towns Infrastructure Project The NSW and Australian Government jointly funded a $7 million project in 2008 to deliver alternative ‘last mile’ broadband infrastructure to more than 60 regional Health and Education sites in 16 regional centres. The project constructed an average of 8km of last mile optical fibre loops in each centre through the use of Country Energy power poles. This infrastructure investment was designed to improve competition for regional broadband users.741 Community Broadband Development Fund The NSW Government has announced, as part of the $85 million ‘Building the Country Package’, that $11.6 million will be made available for five years from 2008/09 for grants to deliver broadband services in the 2% of areas not being covered by the Australian Government’s National Broadband Network. Applications for funding have been encouraged from communities of fewer than 5,000 people that do not currently have high-speed wireless broadband.742 In 2008/09, 11 projects were funded in the communities of Wilcannia, South West Rocks, Pilliga, Quambone, Dalgety, Coleambally, Jubulum, Hill End, Goodooga, Balranald and Delegate.743 Wireless Broadband Infrastructure Initiative In 2006, the NSW Government foreshadowed an initiative to provide wireless accessibility at high bandwidths across the CBDs of Sydney (including North Sydney), Parramatta, Gosford, Penrith, Liverpool, Newcastle and Wollongong. This initiative, which was outlined as a key action of the Government’s Statement on Innovation, is designed to increase the desirability of each location for business. The NSW Government foreshadowed a plan to advance this proposal through soliciting proposals for the projects by the end of 2006, before reaching a final decision and beginning construction in 2007, with the project to be operational by 2009.744 This has not been achieved.

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services and 6 had no ports for ADSL2+ Services, meaning that no additional ADSL customers could be served.p Even if there were ports available at the exchange for connections, customers still may not be able to access ADSL because they: Are located too far from an exchange; the quality of ADSL decreases with distance Have a technology problem such as:

Having a large pair gain system (LPGS) already on their line, resulting in no additional capacity being available

Suffering from external interference such as a train line.749 Evaluating the performance of broadband involves assessing the grade and quality of services. This normally involves assessing not only infrastructure issues, such as coverage and capacity, but also market issues such as pricing and packages offered. However, this Report Card focuses on infrastructure issues and, while making comment on the existence of multiple broadband infrastructure providers in a market, does not rate the affordability of broadband. The majority of broadband connections are provided by copper wire fixed lines. About 70% of broadband connections are DSL, and the most common form is asynchronous DSL (ADSL). ADSL uses Telstra’s copper phone network to connect to the home from exchanges.750 A faster version of DSL is ADSL2+. This service can provide download speeds of up to 24Mbps; however, premises using ADSL2+ typically need to be within 1.5km of an exchange to obtain speeds greater than 12Mbps.751 Figure 11.9 shows the physical ADSL-enabled exchanges in NSW. Figure 11.9: ADSL-enabled exchanges in NSW (red signifies ADSL1 and green ADSL1 2+ exchanges)752

Upgrading of exchanges is continually occurring and details of the availability of ADSL ports in exchanges and by CMUX are available from Telstra Wholesale at http://telstrawholesale.com/products/data/adsl-reports-plans.htm and on ADSl2exchanges.com.au under the RIM section

p Based on ADSL Enabled Exchanges report and the Proposed ADSL Enabled Exchanges report produced by Telstra Wholesale as of 1 February 2010, accessed http://www.telstrawholesale.com/products/data/adsl-reports-plans.htm.

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Figure 11.12 shows Optus’s 3G and GSM network coverage map. Figure 11.12: Optus’s 3G and GSM network coverage map, March 2010756

Figure 11.13 shows Vodafone’s 3G and GSM network coverage map. Figure 11.13: Vodafone’s 3G and GSM network coverage map, March 2010757

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196

Complaints Mobile phone services attract the major of level of service complaints compared to fixed line and broadband services. A measure of customer satisfaction for fixed line, mobile and broadband by complaints is provided by the Telecommunications Industry Ombudsman. It records the number of complaints for telecommunication services. The main areas of concern were billing and payment. The highest increase in complaints was among mobile phone users (79% rise), followed by internet (57%), landline (40%) and mobile premium services (13%). Figure 11.14 identifies the nature and location of the complaints across NSW. The figures are only indicative of complaints per postcode and are not indicative of the percentage of complaints per population within each postcode. Figure 11.14: Location of complaints State-wide, September 2009758

Figure 11.15 identifies the nature and location of the complaints in Sydney. Figure 11.15: Location of complaints in Sydney, September 2009759

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11.3.3 Backhaul infrastructure In some regions of NSW, backhaul infrastructure consists of only one primary fibre cable. These can be cut, typically accidentally by a backhoe, which can result in a loss of most telecommunication access for many hours while the cable is being repaired. The other major problem with single fibre links is that there is a lack of competition, resulting in high broadband prices. The NSW Government has outlined that the requirement for increased backhaul infrastructure stems from three constraining circumstances: Where Telstra is the sole provider and, despite having no capacity constraints on its

infrastructure, has set the wholesale access pricing at an uncompetitive level Where Telstra is the sole provider but has capacity constraints and is unable to provide

competitive wholesale backhaul Where there is no backhaul capacity capable of supporting advanced services.760

Table 11.4 lists communities that have expressed an interest in participating in the NSW Government’s Community Broadband Development Fund. This list is by no means exhaustive and was determined prior to the Australian Government’s announcement of the National Broadband Network. It provides an indication of the areas lacking in backhaul infrastructure. Table 11.4: NSW communities that have expressed interest in the Community Broadband Development Fund761

State and Regional Development Region

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New England/North West Glen Innes Severn

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Armidale Dumaresq

Inverell Shire Council

Mid North Coast Port Macquarie Hastings

Kempsey Shire Council

Northern Rivers Byron Bay

Kyogle Council

Richmond Valley

Hunter Upper Hunter

Dungog

Murray Jerilderie

Murray Shire

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Bombala

Snowy River

Palerang

Yass Valley

Riverina Junee

Murrumbidgee

Wagga Wagga

Carrathool

Central West Lithgow

Bathurst Regional Council

Weddin Shire

Coonamble

Parkes

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Warren Shire Council

Bourke Shire Council

Brewarrina

Far West Central Darling

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11.4 Future challenges The challenges to achieving improvements in telecommunications infrastructure in NSW are: Implementing the NBN. The NBN roll-out across Australia will have a significant impact on

other telecommunication service providers. Consequently, this is causing uncertainty leading to delays in investment decisions by other telecommunication providers.

Creating a value proposition for ubiquitous high-speed broadband. The NBN aims to provide universal high-speed broadband access, and it is claimed that this will deliver significant improvements in business efficiency and innovation, and quality of life improvements. However, while there is no doubt that its higher speed and universal access will be welcome, the cost of the NBN will be significant. Already the vast majority of all businesses have high-speed access as do the majority of urban Australians if they wish to purchase it. A challenge will be in ensuring that the benefits of the NBN justify the costs.

Selecting optimal technologies for the future. There are many technologies that telecommunications companies can deploy. All have tradeoffs in areas such as cost, risk, capability and compatibility. The selection of technologies is critical to prevent stranding of assets, particularly for smaller telecommunication companies that do not dominate the market, and for those wishing to be compatible with the NBN.

Generating broadband consumer demand to justify infrastructure investment by telecommunication providers. New broadband infrastructure provision relies on a commercially-viable level of demand. Increasing demand in areas outside of the currently-served population centres will be a challenge in smaller population centres. Without increases in demand, competitive backhaul will not be provided by the market, keeping prices high and suppressing demand.

Recognising that a visionary approach to telecommunications infrastructure is required as telecommunications will be instrumental in delivering future economic growth and social benefit. Telecommunication infrastructure has become an essential service upon which productivity and lifestyle quality rests. The Australian Government in partnership with other levels of government, industry and community needs to establish a vision for the future that provides for the exploding use of telecommunications. It then requires supporting regulation to translate this vision into reality. The NBN is addressing this to some degree, but it lacks a focus on providing high-speed broadband services in a mobile context.

Utilising Government-owned communications infrastructure. The NSW Government owns substantial infrastructure assets through Government utilities, such as TransGrid. As a result of this extra capacity, there is increased opportunity to provide broadband services into communities through leveraging the existing Government assets.762

Strengthening the resilience of the telecommunications backbone. The telecommunications network has become an essential service and its loss causes significant economic and social consequences. As telecommunication becomes embedded into more aspects of commercial and everyday life, ensuring its resilience and robustness becomes increasingly important. This requires reducing single points of failure and other vulnerabilities, and preventing unintentional disruptions such as by accidentally cutting through cables with a backhoe.

Capitalising on smart network roll-out. Smart networks are being rolled out by electricity and transport infrastructure organisations. These all rely on telecommunications. If there are opportunities to capitalise on the roll-outs to improve the provision of telecommunication services to under-served areas, these developments should be capitalised on.

Telecommunications

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11.5 Report Card Rating

Infrastructure type NSW 2010 NSW 2003 National 2005 National 2001

Telecommunications C- Not rated Not rated B

Based on considerations of planning, funding, and infrastructure capacity and condition, NSW’s telecommunications infrastructure has been rated C-. This rating recognises that the mobile and broadband provision is generally very high in the metropolitan areas, but is of variable quality in regional areas. The twisted copper pair network, upon which ADSL services rest, is reaching its limits and the rollout of fibre, broadband wireless and satellite under the NBN will enable the next evolution of broadband services to be provided. Backhaul networks are in good condition and competitive provision will be improved through the NBN blackspots program. Positives that have contributed to the rating are: Significant improvements in telecommunications coverage, capability and pricing across the

State, significantly due to competition and Government intervention Recognition of rural and regional blackspots and recent improvements Commitment from the Australian and NSW Governments to improve telecommunications

services, for example the planning of the NBN network. Negatives that have contributed to the rating are: Uncertainty surrounding the commitment, implementation and financial viability of the NBN Lack of utilisation of existing NSW Government-owned telecommunications networks and

related infrastructure Inadequate focus on mobility requirements for the future Inadequate collaboration between levels of government and service providers to optimise

service delivery A high telecommunications infrastructure disparity between rural and metropolitan areas.

Telecommunications

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201

APPENDICES

202

Appendix A: Rating methodology

The rating methodology is designed to provide a standardised approach to developing evidence-based rating of infrastructure that is credible, defendable, and explainable. The Report Card’s rating scheme is predicated on the principle that infrastructure policy, regulation, planning, provision, operation and maintenance are optimal if the infrastructure meets the current and future needs of the community, economy and environment in terms of sustainability, effectiveness, efficiency and equity. The infrastructure rating principles are based on the view that: Infrastructure needs to be optimised in a systems context that requires:

complementarity in national, State/Territory and local government decisions best-practice governance arrangements across the infrastructure policy, regulation, planning,

provision, operation and maintenance activities competitive and efficient markets (which includes infrastructure reflecting the true cost of

provision, including externality costs and benefits) a minimum set of sector legislation, regulation and standards the efficient use of existing infrastructure and resources (requires long-term focus on

maintenance, renewals and demand management) a sustainability approach, which gives due regard to economic, social and environmental

factors planning that is based on data, evidence and informed decision-makers working in

partnership with stakeholders. Infrastructure should be planned, designed, built, operated and maintained in a sustainable,

cost-effective, efficient and equitable manner over its life-cycle, which is typically 30 to 100 years depending on the infrastructure.

Decisions on infrastructure need to recognise that it both shapes and is shaped by the social, economic and environmental objectives set by the community.

Infrastructure decisions should balance the costs and benefits on the economy, society and environment by simultaneously optimising the following objectives:

economic growth, efficiency and effectiveness health, safety and security access and social justice environmental responsibility liveability, connectivity and amenity.

Infrastructure should be provided by both the public and private sectors to optimise taxpayer and infrastructure stakeholder best value.

Governments and infrastructure organisations should have the relevant skills to effectively oversee the provision of infrastructure, whether the actual infrastructure policy, regulation, planning, provision, operation and maintenance are done by the public or private sector.

Infrastructure decisions should reflect current and anticipated challenges, such as demographic shifts, ageing, climate change adaptation, greenhouse gas mitigation and resilience.

Infrastructure decisions should be accountable and transparent.

Rating scheme The rating scheme is based on a cascading structure that details, at various levels of granularity, the key elements deemed to be essential to optimal infrastructure policy, regulation, planning, provision, operation and maintenance.

Appendix A: Rating methodology

203

The scheme has two high level Categories – future infrastructure and existing infrastructure. For each of these, there are three Components, which further divide into Element Blocks and finally Foundation Elements. This is illustrated in the figure below.

Rating scale Ratings given are based on the scale in the table below: Table: Rating scale

Letter grade

Designation Definition*

A Very good Infrastructure is fit for its current and anticipated future purposes

B Good Minor changes required to enable infrastructure to be fit for its current and anticipated future purposes

C Adequate Major changes required to enable infrastructure to be fit for its current and anticipated future purposes

D Poor Critical changes required to enable infrastructure to be fit for its current and anticipated future purposes

F Inadequate Inadequate for current and anticipated future purposes * Defined as infrastructure meeting the current and future needs of the community, economy and environment in terms of sustainability, effectiveness, efficiency and equity.

204

Appendix B: Units and acronyms

Units J Joule, a unit of energy

W Watt (1W = 1 joule/second), a unit of power

Wh watt-hour (1Wh = 3600J), a unit of electricity energy

V Volt, a unit of voltage

l Litre, a unit of volume

Prefixes m milli, meaning 10-3

k kilo, meaning 103 (thousand)

M mega, meaning 106 (million)

G giga, meaning 109 (billion)

T tera, meaning 1012 (trillion)

P peta, meaning 1015 (quadrillion)

Acronyms ACCC Australian Competition and Consumer Commission

AEMC Australian Energy Market Commission

AER Australian Energy Regulator

AGO Australian Greenhouse Office

ARTC Australian Rail Track Corporation

BITRE Bureau of Infrastructure, Transport and Regional Economics

CBD Central Business District

COAG Council of Australian Governments

CPRS Carbon Pollution Reduction Scheme

DIRN Defined Interstate Rail Network

DITRDLG Department of Infrastructure, Transport, Regional Development and Local Government, formally DOTARS

GPG Gas power generation

IRI International Roughness Index

ITS Intelligent Transport Systems

KPI Key Performance Indicator

LNG Liquefied Natural Gas

LPG Liquid Petroleum Gas

MAIFI Momentary Average Interruption Frequency Index

MRET Mandated Renewable Energy Target (scheme)

MW Megawatts

NEM National Electricity Market

NWC National Water Commission

NWI National Water Initiative

RET Renewable Energy Targets

SAIDI System Average Interruption Duration Index

SAIFI System Average Interruption Frequency Index

TEU Twenty-foot Equivalent Unit (container)

v/c Volume to capacity ratio

205

Appendix C: Glossary

Roads Road infrastructure: Road infrastructure consists of:

the road pavement—the structure that carries traffic other structures—bridges, pathways, barriers, walls roadside assets—including engineering features such as traffic signs and guideposts, cuttings and embankments, and environmental features such as vegetated areas situated within the boundaries of the road reserve

roadside traffic signs—which regulate speed, warn of hazards and provide information pavement markings—designating the edges of the road and traffic lanes and providing directional and warning information.

Road maintenance: Pavement maintenance can be divided into the following classes: routine maintenance which is reactive, addressing minor defects. This includes fixing potholes and rough patches on the pavement.

periodic maintenance to resurface and reseal the pavement to prevent water infiltrating the pavement structure, to address some aspects of surface roughness and to improve the traction of the pavement surface.

rehabilitation which involves a more significant treatment to improve the structural condition of the pavement and bring the surface back to within an acceptable level of roughness and traction.

Rail

Above rail: Those activities required to provide and operate train services such as rolling stock provision (i.e. trains, carriages), rolling stock maintenance, train crewing, terminal provision, freight handling and the marketing and administration of the above services.

Below rail: Those activities associated with the provision and management of rail infrastructure, including the construction, maintenance and renewal of rail infrastructure assets, and the network management services required for the safe operation of train services on the rail infrastructure, including train control services and the implementation of safe working procedures.

Broad gauge: The distance of 1,600mm (5’3”) between two rails.

Narrow gauge: The distance of 1,067mm (3'6") between two rails.

Rail infrastructure: Consists of both above and below rail infrastructure.

Standard gauge: The distance of 1,435mm (4’8½”) between two rails.

Ports

Berth: The wharf space at which a ship docks. A wharf may have two or three berths, depending on the length of incoming ships.

Break Bulk Cargo: Cargo that is not containerised, e.g. timber, paper, steel, vehicles, vehicle components.

Common-User Facility: A port facility not dedicated to a particular use and available for short-term hire.

Container terminal: A specialised facility where ocean container vessels dock to discharge and load containers.

Container: A metal container designed for cargo transport. Most containers are either 20 feet (six metres) or 40 feet (twelve metres) long and referred to 20 TEU or 40 TEU respectively.

Dead Weight Tonnage (DWT): Maximum weight of a vessel including the vessel, cargo and ballast.

Pilot: A licensed navigational guide with thorough knowledge of a particular section of a waterway, whose occupation is to steer ships along a coast or into and out of a harbour. Local pilots board the ship to advise the captain and navigator of local navigation conditions.

Stevedores: Labour management companies that provide equipment and hire workers to transfer cargo between ships and docks.

Twenty Foot Equivalent Unit (TEU): A unit of measurement equal to the space occupied by a standard twenty foot container.

Airports

Airport Master Plan: Airport Master Plans are a requirement of the Airport Acts 1996 and are prepared by major Australian airports every five years to provide a clear direction for the growth and development of the airport.

Airport Operator: The airport lessee or owner.

Curfew: A restriction on flights that can take off or land from specified airports at designated times.

General aviation: All civil operations other than Regular Public Transport operations.

Appendix C: Glossary

206

Leased federal airports: The 21 Australian airports covered by the Airports Act 1996 where the Airport Operators lease the airport land from the Australian Government.

Non-aeronautical developments: Non-aviation commercial developments, such as retail outlets and office buildings, on airport sites.

Regular Public Transport operation (RPT): An operation of an aircraft for the purposes of an air service that is provided for a fee payable by persons using the service, is conducted in accordance with fixed schedules to or from fixed terminals over specific routes, and is available to the general public on a regular basis (synonymous with ‘scheduled services’).

Water

Annual Exceedance Probability (AEP): The statistical likelihood of occurrence of a flood of a given size or larger in any one year, usually expressed as a percentage.

Carrier (irrigation): A conduit for the supply or drainage of water. The key types are lined channel (an earthen channel lined with a low permeability material), unlined channel (an earthen open channel without internal lining), natural waterway (a stream or other naturally-formed watercourse), and pipe (a closed conveyance or carrier regardless of material, size or shape that conveys water, typically for supply service).

Catchment: An area of land where run-off from rainfall goes into one river system.

Consumptive use: The use of water for private benefit consumptive purposes including irrigation, industry, urban, stock and domestic use.

Effluent: Treated sewage that flows out of a sewage treatment plant.

Greywater: Water from the kitchen, laundry and bathroom. It does not include toilet waste.

Headworks: Dams, weirs and associated works used for the harvest and supply of water.

Indirect Potable Reuse (IPR) water: Recycled water used as a source of potable water, typically by injecting it into a water reservoir.

Integrated urban water cycle management: The integrated management of all water sources so that water is used optimally within a catchment resource, in a state and national policy context. This approach promotes coordinated planning, sustainable development and management of the water, land and related resources linked to urban areas, and the application of water sensitive urban design principles.

Irrigation: The artificial application of water to land for the purpose of agricultural production.

Potable: Suitable for drinking.

Recycled water: Water derived from sewerage systems or industry processes, treated to a standard appropriate for its intended use.

Reticulation: The network of pipelines used to take water into areas of consumption; includes residential districts and individual households.

Run-off: Precipitation or rainfall that flows from a catchment into streams, lakes, rivers or reservoirs.

Sewage: The waste and wastewater discharged into sewers from homes and industry.

Sewerage: Infrastructure system for the collection, removal, treatment and disposal of sewage.

Stormwater: Urban rainfall that runs off roofs, roads and other surfaces where it flows into gutters, streams, rivers and creeks or is harvested.

Third pipe systems: A reticulated pipe network that distributes recycled water for use in gardens, etc.

Trade waste: Industrial and commercial liquid waste discharged into the sewerage system.

Urban runoff: Water deposited by storms or other sources that passes through stormwater drains or is harvested. Urban runoff may contain substantial level of pollutants such as solid wastes, petroleum-based compounds, heavy metals, nutrients, pathogens, sediment, organic chemicals, pesticides, insecticides and other lawn care and cleaning materials.

Wastewater: Water that, following capture or use by the community, does not currently have a form of beneficial recycling; includes greywater, sewage and stormwater.

Water allocation: The specific volume of water allocated to water access entitlements in a given season, defined according to rules established in the relevant water plan.

Water businesses: Organisations charged with supplying water to towns and cities across the State for urban, industrial and commercial use. They administer the diversion of water from waterways and the extraction of groundwater.

Water Sensitive Urban Design (WSUD). The integration of urban planning with the management, protection and conservation of the urban water cycle, ensuring that urban water management is sensitive to natural hydrological and ecological processes. This involves the integration of water cycle management into urban planning and design so that it minimises the risks to the water bodies that supply water or receive the stormwater or recycled water.

Wholesale market: A competitive market where a commodity such as water can be sought from multiple suppliers.

Appendix C: Glossary

207

Electricity Carbon Pollution Reduction Scheme (CPRS): The CPRS is the Australian Government's emissions trading scheme

which has two distinct elements, the cap on carbon pollution and the ability to trade.

Contingency events: Events that affect the power system’s operation. Their categories are: credible contingency events, events whose occurrence is considered ‘reasonably possible’ in the circumstances. For example, the unexpected disconnection or unplanned reduction in capacity of one operating generating unit, or the unexpected disconnection of one major item of a transmission plant.

non-credible contingency event, events whose occurrence is not considered ‘reasonably possible’ in the circumstances. Typically, a non-credible contingency event involves simultaneous multiple disruptions, such as the failure of several generating units at the same time.

Demand-side management (DSM): The planning, implementation and monitoring of utility activities designed to encourage consumers to modify patterns of electricity usage, including the timing and level of electricity demand.

Generator (Baseload and peaking): Baseload generators provide the continuous ongoing electricity supply while peaking generators provide supplemental power to meet energy demand peaks.

Interconnector: Transmission line/s that connects transmission networks in adjacent regions.

Load shedding: Reducing or disconnecting load from the power system either by automatic control systems or under instructions from the AEMO.

Reliability of supply: The likelihood of having sufficient capacity (generation or demand-side response) to meet demand.

Reliability Standard: The requirement that there is sufficient generation and bulk transmission capacity so that, over the long term, no more than 0.002% of the annual energy of consumers in any region is at risk of not being supplied, i.e. the maximum USE is 0.002%.

Unserved energy (USE): The amount of energy that cannot be supplied because there are insufficient supplies (generation) to meet demand.

Gas

Coal seam methane (CSM): Methane absorbed into the solid matrix of coal beds, and then extracted.

Linepack: Gas maintained in a gas transmission line to maintain pressure but also as a buffer to provide an uninterrupted flow of gas to customers.

Liquefied Natural Gas (LNG): Natural gas that has been converted temporarily for ease of storage or transport. LNG takes up about 1/600th the volume of natural gas in the gaseous state.

Natural gas: Gaseous fossil fuel consisting primarily of methane but including significant quantities of ethane, butane, propane, carbon dioxide, nitrogen, helium and hydrogen sulphide.

Unaccounted for gas (UAFG): The difference between metered injected gas supply and metered and allocated gas at delivery points. UAFG comprises gas losses, metering errors, timing, heating value error, allocation error and other factors.

Telecommunications

2G: Second generation mobile telecommunications, digital mobile service that provides voice communications and a low level of data transmission.

3G: Third generation mobile telecommunications, digital mobile service that provides voice communications, high-speed data transmission and Internet access.

Asymmetrical digital subscriber line (ADSL): A technology that converts telephone lines to paths for high-speed data services; enhancements to this technology include ADSL2 and ADSL2+.

Backhaul networks: Backhaul transmission networks connect the central point of an access network (such as telephone exchange, HFC hub or mobile tower) to the rest of the network. Backhaul transmission is provided on either optical fibre or microwave. The majority of backhaul transmission networks are provided by Telstra and Optus with other operators including AAPT, Amcom, Ergon, Nextgen, PIPE Networks, Primus, QLD Rail and Soul. While there is competition in backhaul networks between all capitals and within many inter-exchange routes, many regional routes are served by Telstra alone.

Bandwidth: The maximum data transmission rate, measured in bits per second (bps)

Broadband: ‘Always on’ high data speed connection. Technologies used to deliver broadband include ADSL, HFC, fibre-optic cable, wireless and satellite.

Broadband over power line (BPL). A communications technology that uses electricity networks for the transmission of data, voice and video.

Customer Access Network (CAN): The link between the telephone exchange and the consumer.

Code division multiple access (CDMA): A digital standard that separates calls from one another by code.

Digital subscriber line (DSL): A transmission technology that enables digital data services. DSL describes several technologies including ADSL, ADSL2 and ADSL2+.

Appendix C: Glossary

208

DSLAM (Digital Subscriber Line Access Multiplexer). Technology located at exchanges or in roadside cabinets that take the copper lines from a customer premises and convert signals on/off them into a high speed pipeline to the internet.

Fibre-to-the-x (FTTx): A generic term for the configuration of a broadband network that uses optical fibre to replace all or part of the usual metal connection to the consumer. (FTTB) Fibre-to-the-building: fibre reaches the boundary of the building. (FTTH) Fibre-to-the-home: fibre reaches the boundary of the living space. (FTTK) Fibre-to-the-kerb: fibre reaches typically within 300m of the consumer’s premises. (FTTN) Fibre-to-the-node: fibre reaches a street cabinet typically further than 300m from the consumer’s premises.

Global system for mobile communication (GSM): A digital cellular standard operated by Telstra, Optus and Vodafone.

Hybrid fibre coaxial cable (HFC): A telecommunication connection that consists of optical fibre on major routes and coaxial cable connections to consumers.

Long Term Evolution (LTE). LTE is an advanced mobile telecommunications standard and considered a pre-4G system.

Microcell: An antenna and associated box that supplements the mobile network in heavy usage areas. A microcell may minimise the need for a larger facility.

Public switched telecommunications network (PSTN): The network of the world's public circuit-switched telephone networks.

Speed: Typical speeds are kilobits per second (kbps) and Mbps (Megabits per second).

Telecommunication facility: Any part of the infrastructure of a telecommunications network; or any line, equipment, apparatus, tower, mast, antenna, tunnel, duct, hole, pit, pole or other structure or thing used, or for use, in or in connection with a telecommunications network.

Voice over internet protocol (VoIP): A protocol for transmitting voice over data networks, also known as ‘Voice over DSL’.

WiMAX (Worldwide Interoperability for Microwave Access). A wireless digital communications system which can provide broadband wireless.

209

Appendix D: References

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7 Department of Climate Change, Victoria: Summary of projected impacts webpage, http://74.125.153.132/search?q=cache:bpu4mq0JqOEJ:www.climatechange.gov.au/impacts/regions/tas.html+Victoria+site:climatechange.gov.au&cd=2&hl=en&ct=clnk&gl=au, accessed 10 October 2009.

8 NSW Government's Metropolitan Strategy, webpage, http://www.metrostrategy.nsw.gov.au/, accessed 9 April 2010. 9 NSW Government, Transport Infrastructure Development Corporation, webpage, http://www.tidc.nsw.gov.au/About-us/default.aspx,

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101 Department of Infrastructure, Transport, Regional Development and Local Government, 2009, New South Wales Grain Freight Review, p. 22.

102 NSW Transport, Commonwealth Review of the NSW Grain Network: Preliminary NSW Government Response webpage, http://www.transport.nsw.gov.au/rail/grain-network-review-prelim-response.html, accessed 5 June 2010.

103 Rail Infrastructure Corporation, 2009, Statement of Corporate Intent, p. 5. 104 Australian Rail Track Corporation Ltd, webpage, http://www.artc.com.au/Content.aspx?p=14, accessed 9 April 2010. 105 Adapted from Australian Rail Track Corporation Ltd, webpage, http://www.artc.com.au/Content.aspx?p=39, accessed 9 April 2010. 106 NSW Parliamentary Library Research Service, 2009, Rail Freight Transport in NSW, p. 27. 107 ARTC, 2009, Annual Report 2008-09, p. 14. 108 ARTC, 2009, 2009-2018 Hunter Valley Corridor Capacity Strategy Consultation Document, p. 3. 109 NSW Treasury, http://siteresources.worldbank.org/INTMONGOLIA/Resources/3_NSW_Treasury_Danny_Graham.pdf, accessed 9

April 2010. 110 Australian Rail Track Corporation Ltd, webpage, http://www.artc.com.au/Content.aspx?p=154#ns, accessed 9 April 2010.

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April 2010. 115 NSW Rail Heritage, webpage, http://www.nswrailheritage.com.au/orh.htm, accessed 9 April 2010. 116 Government of NSW, 2010, Metropolitan Transport Plan: Connecting the City of Cities, p. 14. 117 NSW Government, 2010, NSW State Plan Annual Performance Report 2010, p. 1. 118 Adapted from Government of NSW, 2010, Metropolitan Transport Plan: Connecting the City of Cities, p. 41, and stated in

http://www.botanybay.info/wp-content/uploads/2007/11/07-05-31-premier-ports-freight-strategy.pdf 119 Lloyd's List DCN, Patrick to terminate Port Botany rail service, webpage,

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Development and Local Government, p. 5. 166 Australia Transport Safety Bureau, 2009, Australian Rail Safety Occurrence Data, 1 January 2001 to 30 June 2009, p. 4. 167 Australian Transport Safety Bureau, Australian Rail Safety Occurrence Data 1 January 2001 to 30 June 2009, p. 4. 168 Department of Infrastructure, Transport, Regional Development and Local Government, webpage,

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219 BITRE, Airport Traffic Data, website, http://www.bitre.gov.au/Info.aspx?NodeId=96, (Airport Traffic Data 1985/86 to 2008/09 (xls format)), accessed 7 November 2009.

220 The civilian airport at Williamtown will be referred to as Newcastle Airport in this report. 221 BITRE, Airport Traffic Data, website, http://www.bitre.gov.au/Info.aspx?NodeId=96, (Airport Traffic Data 1985/86 to 2008/09 (xls

format)), accessed 7 November 2009. 222 NSW Government, 2008, Infrastructure Audit Submission to Infrastructure Australia, p. 38. 223 Sydney Airport, Annual Report 2008/09, p. 12. 224 Totals include domestic-on-carriage passenger movements. 225 NSW Government, 2008, Infrastructure Audit Submission to Infrastructure Australia, p. 38. 226 NSW Government, 2008, Infrastructure Audit Submission to Infrastructure Australia, p. 38. 227 Sydney Airport, 2009, Sydney Airport Master Plan, p. 49. 228 Department of Infrastructure, Transport, Regional Development and Local Government, 2009, National Aviation Policy White Paper:

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242 NSW Government, Transport & Infrastructure, Air Transport Regulation and Licensing in NSW, webpage, http://www.transport.nsw.gov.au/air/regulation-licensing.html, accessed 23 April 2010.

243 Department of Infrastructure, Transport, Regional Development and Local Government, 2009, National Aviation Policy White Paper: Flight Path to the Future, pp. 158-167.

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18. 656 Parsons Brinckerhoff Australia, 2009, Review of Jemena Gas Networks Capital Expenditure 2010/11 - 2014/15 Access Arrangement

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723 ACMA and ACCC, 2008, Communications Infrastructure and Services Availability in Australia, p. 10. 724 Engineers Australia, 2007, Telecommunications Infrastructure Scorecard, Market Clarity report edition, p. 16. 725 NSW Department of Commerce, 2006, Response to Discussion Paper, Broadband Connect and Clever Networks, p. 10. 726 NSW Government, 2006, Statement on Innovation, p. 5. 727 ACMA, Telecommunications Regulation webpage, http://www.acma.gov.au/WEB/STANDARD/1001/pc=PC_1593, accessed 7

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