submission 66 - australian water association - national ...€¦ · • the demise of the national...

8 May 2017

National Water Reform Enquiry Productivity Commission GPO Box 1428 Canberra City ACT 2601 Re: Submission to the Inquiry into the reform of Australia’s Water resources sector

It is with pleasure that we make this submission to the “Inquiry into the reform of Australia’s Water Resources Sector”.

The Australian Water Association

The Australian Water Association is the national peak water organisation, delivering information, expertise and collaboration for sustainable water management. Membership is broadly-based and multi-disciplinary, covering the entire water cycle. The Australian Water Association provides the platform for our water experts, practitioners and businesses to share information, grow expertise and collaborate effectively. Our membership includes professionals and practitioners working in utilities, science and research, energy and resources, manufacturing and agriculture. We operate across all Australian States and Territories through an active branch network as well as maintaining extensive international links, including with the International Water Association. The Australian Water Association’s activities are centred around a comprehensive program of conferences, workshops, publications, industry programs, training courses, networking and B2B opportunities. The Australian Water Association’s Annual Conference and Exhibition is Australia’s largest water industry event. Through our extensive range of technical seminars, courses and conferences, we also provide a forum for debate and best practice dissemination at a local, national and international level. The Australian Water Association is committed to building Australia's water capabilities to maintain its position as a world leader in water management.

This submission represents the views of various members of the Association with respect to the “Inquiry into the reform of Australia’s Water Resources Sector’.

Our response is given in three parts including;

• This cover letter • Attachment A – Responses to information sought by the Productivity Commission • Attachment B – List of attached documents provided for further information.

Our key points include;

• The National Water Initiative has been a very successful and important initiative of the Governments of Australia.

• The current National Water Initiative though is not yet completed. • The demise of the National Water Commission has left a Water leadership vacuum

across Australia. • The Australian Water Association calls on Commonwealth Government to re-

establish a COAG-level committee, with a similar, or expanded, remit to previous water-focussed COAG committees, such as the NRMMC or SCEW, that can provide ministerial national and multi-jurisdictional leadership on water-related issues of national importance.

• A refreshed National Water Initiative is required. The current NWI was a bottom up approach to industry re-form. While this is still a valid approach, the association sees the need for a holistic framework to ensure long term water security for all Australians moving forward.

• A refreshed NWI needs to address; o Long term water security. o The leadership of the water sector. o Alignment of industry, innovation and research efforts. o Harmonisation of legislation, strategies and approaches to water. o Increased productivity through identification of best practise, innovation and

asset management.

Detailed responses have been given to the information sought by the commission. The responses have been based on feedback from our members and are not formal policy of the Association.

The association can provide more detailed feedback on specific any issues if required. Should you require further information please contact myself using the contact details below.

Your Faithfully

David Nixon Chair Water Management, Law & Policy Specialist Network Australian Water Association

AttachmentA–Responsestoinformationrequestedby

ProductivityCommission

NationalWaterReform:ResponsetoProductivityCommissionIssuesPaper 1of24

Section3–Australia’swaterPolicyreformtodate

1. Whathavebeenthekeybenefitsofthewatersectorreformtodate?

• Theestablishmentofnationallyagreedprinciplesforwaterpricing,waterresource

managementandwatersupplyplanning,haveprovidedimportantguidanceandamore

commercialfocustowatermanagers.

• Thecorporatisationofwatersupplybusinessesseparatefromotheraspectsofgovernment

(1994reform),thoughtherehavebeenexamplesofrecidivism–e.g.WideBayWater,Qld,

MidCoastWater,NSW.Acontinuedfocusontheseparationofwaterbusinessesshouldbe

maintained.

• Economicregulationhasincreasedfocusoncostefficiencyofthestate-ownedwater

corporationsandisdrivingimprovements.Thereisasecondarybenefittothisinimproving

focusontheoutcomesforcustomers.

• NationalinitiativessuchastheMDBAaregoodbutappeartolackteethintheinconsistent

applicationbetweenstates.Thereislittleconsistencybetweenthestatesbothinmethods

andtheirdegreeofindependencefromgovernment.Itwouldbeusefultohavestandard

guidelinesformakingeconomicevaluationssetupundertheNWIortheNationalWater

QualityManagementStrategy.

• Abilitytocompareperformancetoidentifybestpracticeacrossorganisations.Thenational

performancereportprovidesgoodinformationontheperformanceofurbanwaterutilities,

thoughcomparisonremainsdifficulttoachieve.

• Therehasbeenasignificantimprovementonwaterinformationincludingsurfacewater,

riverflowsandgroundwaterinformation.Thisinformationthoughhasledtolimited

improvementinknowledgeatthisstage.

• Thedefinitionofthewatermarket,separationofallocationandprovision,establishmentof

watertradingandwatermarket-relatedactivities.

• TheestablishmentoftheMurrayDarlingBasinAuthorityandwaterbasinplanning,although

stillalotmoretobedone.

• Recognitionoftheimportanceofwaterforenvironmentandsocialpurposes.

• Thereformshaveturnedmanywaterutilitiesintoself-sustainingorganisationsthatviewthe

communityascustomersinsteadofpassiveratepayers.

Section4–TheCommissionsApproach

2. Whatinformationsourcesshouldwejudgethesuccessoftheprogramon?

• AustralianWaterAssociation/Deloitte,StateoftheWaterSectorReport2015,Sydney2015

• AustralianWaterAssociation,AustralianWaterConsumerOutlook2015.

• AustralianWaterAssociation/ARUP,AustralianWaterOutlook,Sydney2016

• AustralianWaterAssociation,EmergingChallengesandopportunitiestosecureourwater

future,SydneyMay2017

• AustralianWaterAssociation,SubmissiontotheIndependentReviewofthewaterEfficiency

LabellingandStandards(WELS)Scheme2015

• AustralianWaterAssociation,SubmissionondraftnationalgroundwaterStrategicFramework

2015-2025




• AustralianWaterAssociation,PromotinginvestmentintheWaterSector,2015

• AustralianWaterAssociation,AlternativeModelsforFinancingWaterInfrastructure,2016

• NationalPerformanceReporting(BOM)

• NationalWaterCommission2014TriennialAssessment

• AsianDevelopmentBank-AsianWaterDevelopmentOutlook2016

• NationalWaterAccounts–AustralianBureauofMeteorology

• WaterinAustralia-AustralianBureauofMeteorology2014-15

• StateoftheEnvironmentReport-AustralianGovernment2016

• AustralianNationalOutlook–CSIRO2015

• Queensland-Waterforlife-SouthEastQueensland’sWaterSecurityProgram-2016-2046

• NewSouthWales–2017MetropolitanWaterPlan-WaterforaLiveable,GrowingandResilient

GreaterSydney

• NewSouthWales–variousRegionalWaterResourcingPlans(2016–2017)

• Victoria–WaterforVictoria2016

• WesternAustralia–WaterforGrowth–WaterSupplyandDemandOutlookto2050–2016

• AustralianCapitalTerritory–WaterStrategy-StrikingtheBalance-2014-44

• NorthernTerritory-‘OurWaterFutureDiscussionPaper:AConversationwithTerritories’–2015

• 2016WSAAClimateChangeAdaptationGuideline–WaterServicesAssociationofAustralia.

• WaterUtilityClimateAlliancepublications:http://www.wucaonline.org/publications/index.html

• Doingtheimportantaswellastheurgent:Reformingtheurbanwatersector-WSAA2015.

• Positionstatementonimprovingeconomicregulation-WSAA2014.

3. WhatNWIreformshavestalledandwhatistheconsequencesofthatfailure.

• ThedisbandingoftheNationalWaterCommissionwasnotsupportedbytheindustryandhas

hadanegativeimpact.

• WiththescrappingoftheNWC,thewaterindustryhaslostleadership,bothvisibleandbehind

thescenes.ThereisnocentralleadershipwithintheCommonwealthGovernment,with

responsibilityforwateracrossseveralportfolios.

• Leadershipatstatelevelisasdividedinsomestateswithwateracrossseveralportfolios.This

lackofleadershipwillresultintheincreaseinthedividebetweenstatesandalackoffocusof

directiontowardstheNWI.

• WiththescrappingoftheNWC,noonehastakenresponsibilityforthestrategicthinkingneeded

withinthewaterindustry.Waterplanningissueshavealongtimeframe.Withthelackof

knowledgeastohowclimatevariabilitywillaffectourwatercycleatalocallevel,itismore

imperativethaneverthatlongtermstrategicthinkingaroundwaterissuescontinues.Failureto

dosomightresultincostlyremediesthatcouldhavebeenpreventedwithbetterknowledgeand

planning.

• ThereisnolongeraneffectiveassessmentofprogressbytheStatesfollowingthescrappingof

NWC.TheProductivityCommissionreportisattemptingtodothis,butona“one-off”basis.

• QuotefromfinalTriennialReviewofNWC(p109)

o “WiththerecentabolitionoftheCOAGStandingCouncilonEnvironmentandWater

andtheclosureoftheNationalWaterCommissionattheendof2014,theAustralian

Governmentissubstantiallywithdrawingfromaninterestinwaterreformoutsideof

theBasinplan,orproposalsfornewstoragesincludinginnorthernAustralia.A

committeeofseniorofficialsisintheprocessofformationand,atitsfirstmeeting,

agreedtoareductioninthepreviouslyagreedCOAGworkprogramfornational

waterreform.Inaddition,theabsenceofincentivesforjurisdictionstocoordinate




theireffortsandthelackofanationalministerialcouncilarelikelytohinderthe

progressofnationallysignificantreformsinthefuture…

• IntheabsenceoftheCommission’sindependentoversightandfacilitationroleandthe

coordinatednationalfocuspreviouslyprovidedbyCOAG,thereisarealriskofgradual

backslidingoncurrentprogress,andaretreatfrompublicaccountability.Giventhe

substantialinvestmentinimprovementsundertakentodate,thiswouldberegrettable.”

• Theconsequencesofnotaddressingthelongtermstrategicwaterissuescanbeseenby

thefailuresofourwatersuppliesduringthemillenniumdroughtandtheinflatedcosts

thatwererequiredataddresstheissues.Thefailurescurrentlybeingexperiencedin

theenergymarketareagainagoodexampleofthelackoflongtermstrategicplanning.

4. WhatdoyoufeelistheunfinishedbusinessoftheNWI?

• Implementation

o TheclosureoftheNationalWaterCommissionshasresultedinalackofindustry

LeadershipandthelackofeffectivedrivingoftheoutcomesoftheNWI.

• WaterAccessEntitlementandPlanningFramework

o Thedevelopmentofwaterplansacrossthenationarenotcompleteandhavebeen

undertakentovariousstandards.

o TherecognitionofIndigenouswaterneeds,hasnotbeencompleted.

o Thereremainsalackofunderstandingoftheeffectofclimatechangeonwater

accessentitlements.

o Overallocationofand/oradjustmentofoverusedsystemsremainsaproblemin

someareas.

• WaterMarkets

o Waterregistersarenotreadilyaccessibleacrossthenation.

• BestPractiseWaterPricingandInstitutionalArrangements

o Fullcostrecoveryofwaterservicesremainsincomplete.

o Variancesintheapproachtoenvironmentalexternalitiesremainacrossthecountry.

o BenchmarkingEfficientPerformancereportinghasfailedtoenablecomparative

benchmarkingtooccuracrossutilities.

o Pricingregulationisnotindependentofgovernmentinterventioninmoststates.

• IntegratedManagementofEnvironmentalWater

o Environmentalwaterisbeingmanageddifferentlyineachstate.

• WaterResourceAccounting

o Nocomments.

• UrbanWaterReform

o IntegratedWaterCycleManagementpractisesarefailingduetomultiple

responsibilitieswithoutacommonframework.

o Thereremainsalackofalignmentofinnovationandresearchactivitiesbetween

serviceprovidersandwaterutilities.

• CommunityPartnershipsandAdjustment

o Thereremainsalackoftransparencyoverthereformprocess.

• KnowledgeandCapacityBuilding

o KnowledgegapsremainparticularlyinWaterforesightandlocalisedclimatechange

effects.




PreliminaryFramework

5. Feedbackontheirpreliminaryframework

• Theproposedframeworkisverymuchabottomupframeworkaddressingwhatisperceived

tobetheimmediateissueswithinthewaterreformspace.Thishasbeentheapproachsince

theinitialCOAGreforms.Otherframeworksaroundtheworldmightprovideamoreholistic

framework,coveringboththeimmediateissuesandlongertermstrategicissues.

• Otherframeworksworthreviewinginclude;

o UnitedNationsWaterSecurityFramework.

o EuropeanUnionWaterFramework.

o WaterGovernanceinOECDCountries-AMulti-LevelApproach2011.

• Theproposedframeworkthough,isgenerallysound,butconsiderationshouldbegivento

ensuringthereisaregular,independentprocessofmeasuringcomplianceandprogress,

encouragedwithincentivesandsanctions.

• Theindependenceofwatercatchmentmanagementauthorities(whichshouldhave

statutoryresponsibility)fromwaterutilitieswhichseektoaccessthewater,shouldbe

ensured.Therearesomecitieswhereinstrumentalitiesperformbothfunctions.

6. Whatareyoutop5areasforwaterreformandwhy?

• LongtermwatersecurityforallAustralians

o Theassociationhasdevelopedadiscussionpaperonwhatwatersecurityforall

Australian’smightlooklike(AttachmentB).

o Currentlyallplanningisstatebased,non-bipartisanandtendstobeshortterm.

o Thereisalackofintergovernmentalmechanismstomakeplanningmoreeffective.

o Longtermplanningisnormallyrestrictedtosimpleissuesanddoesnotaddress

morecomplicatedissues.

o Littleunderstandingoftheeffectsofclimatechangeshasbeenaddressedat

localisedlevels.

o Theassociationcallsonthecommonwealthgovernmenttomakeaclear“National

StatementonWaterSecurityforAustralia-2030”.

• WaterLeadershipwiththedemiseoftheNWC

o TheNationalWaterCommissionwastheonlyagencyaddressinglongtermstrategic

andcomplicatedissues.Anexampleofthiswasthe90reviewsandreportsinthe

“Waterlines”series,commissionedbytheNWConkeywaterissues.

o TheBureauofMeteorologyandProductivityCommissionareonlyaddressingwhat

couldbeconsideredoperationalwaterissues.

o Agapexiststoassistwiththecoordinationofstateeffortsandtoaddresslongterm

strategicissues.

o TheassociationcallsonCommonwealthGovernmenttore-establishaCOAG-level

committee,withasimilar,orexpanded,remittopreviouswater-focussedCOAG

committees,suchastheNRMMCorSCEW,thatcanprovideministerialnationaland

multi-jurisdictionalleadershiponwater-relatedissueofnationalimportance. • AlignmentofIndustry,innovationandresearchefforts




o Therehasbeenamajorreductioninresearchfundingforwatersincetheendofthe

millenniumdrought.

o Weneedtoencouragecontinuedinnovationinthewaterindustrythroughbetter

continuityofresearchfunding.Atpresentthisisveryinconsistent–oneCRC(Water

SensitiveCities)towhichtheCommonwealthcontributes,andfundingtosupport

WaterResearchAustraliafromalimitednumberofutilities.

o InAustralia,wehavenumerousCRC’s,researchinstitutesanduniversitiespromoting

anexpertiseinwatermanagement.Weneedtocontinuetheprocessofalignment

ofthisexpertisewiththeneedsofthemanagersandoperatorsofwater

infrastructure.

o Considerationshouldbegiventoalong-termfundalongthelinesoftheSouth

AfricanWaterResearchCommissionwhichwassupportedbyalevyfrom1July

2013,ofZAR4.86cpercubicmeter(abouthalfanAustraliancent/kl)inrespectof

meteredwatersuppliedormadeavailablefromagovernmentwatersourceother

thanforirrigation.

o TheassociationcallsonTheCommonwealth,thoughCOAG,toestablisha

government/industryforumtocoordinatewaterinnovationandresearchacross

Australia.

• Harmonisationoflegislation,strategiesandapproachestowater

o Statesandagencieshavelittlecoordinationandhencethereisanincreasein

disparateapproaches.

o Thestatebasedapproachdiscourageslongtermthinking,discouragesundertaking

waterforesighting,minimisingstrategicandinnovativeendeavours.

o TheassociationcallsontheCommonwealth,thoughCOAG,todevelopan

intergovernmentalagreementontheharmonisationofwaterlegislation,water

strategies,environmental&economicregulationofwater.

• IncreasedproductivitythroughIdentificationofoperationalbestpractise,innovationand

assetmanagement

o Wehavewelldevelopedpractisesinsomeareasofwatermanagement.The

NationalWaterQualityManagementStrategy(NWQMS)Guidelinesandthe

AustralianDrinkingWaterGuidelinesaretwoareaswherenationalpractiseshave

assistedinthematurityoftheindustry.

o Itisthough,recognisedthatcurrentindustryproductivityisrestrictedduetothe

lackofmaturityofourperformancebenchmarkingandlackofstandardisedbest

practiseinotherareas.

o Thedevelopmentofoperationalbestpractise,innovationandassetmanagement

standardscanleadtoimprovedbenchmarking,increaseeconomicperformanceand

thetransportabilityofskillsandsystems.

o TheassociationcallsontheCommonwealth,thoughCOAG,toinstitutethe

developmentofasecondgenerationsetofstandardsforoperationalbestpractise,

innovationandassetmanagement.

7. Whatarethekeycontemporaryandfuturedriversofwaterreform

• Theneedforwatermanagementatnational,stateandregionalleveltoadapttotheimpacts

ofclimatechangeiscritical.E.g.thedryingtrendinthesouthwestofWAisforecastto

continue,requiringenhancedcapabilitiesinidentifyingnewwatersourcesandwater

savings,watersupplyplanning,communityengagement,andunderstandingenvironmental

andwaterresourceimpacts.




• Theneedtoforesightwatersecuritychallengesanddevelopmechanismstoallocatewater

amongstcompetingusersinaneconomicallyefficientmanner.

• TheneedtoheedthelessonsoftheMillenniumDrought,bytakinglongtermwatersecurity

outofshorttermbudgetcycles.

• Theneedtoforecastandplanforfuturewatersupply/demandbalancewithexpected

extremesofclimaticconditions(droughtandflood).

• Theneedtoaddressindigenouswaterrights.

• Populationgrowthandurbansprawlleadingtohigherdemandandincreasingpollution�

• Expandingdemandforincreasingagriculturalproductivitytosupplyintointernational

markets.

• Expandingdemandforwaterincreatingliveablecommunities(inbothurbanandrural

areas).

• Changesinmanagingwaterqualityfromnewsupplysourcesandtechnologies.

• Failingtointegratelandmanagementandwaterplanningprocessesacrossthewatercycle

andurbanplanning,particularlywithincreasedhousingdensitiesininnerurbanareas,

increasedimpermeablesurfacesandonlylimitedconsiderationoftheprinciplesofWater

SensitiveUrbanDesign.

• Increasingneedforaligninginstitutionsandregulatoryframeworkstomaximiseefficiencyin

regulatoryapprovalsprocessesandcompliancecosts.

• Notdevelopingalternativewatersourcestoprovideenhancedsupplyresilience.

• Failingtoobtainlong-termcommunityengagementintacklingwatersecuritychallenges.

• Addressingtheuniquewatersecuritychallengesaroundourcoastlines.




Section5–WaterResourceManagement

PropertyRights

8. Whatfurtheractionsareneededtoachieveclearandsecurepropertyrights?

• Ideally,aconsistentnationalviewisrequiredandthatneedstobeenforcedacrossthe

states.TheNWIisaguidelineandhasnostatutorybasisforenforcement.

• Thereisaneedtoencourageconsistentuseofentitlementandallocationterminology

acrossstates’legislation.

• Thereisaneedforconsistencyacrossstateboundariestomanagecostsrelatedto

transactions.

• Alljurisdictionsneedlegislationinplacetohavestatutoryunderpinningofclearandsecure

propertyrights.

Manywaterresourceplansstillneedtobecompleted,muchofthefocustodatehasbeen

ontheMDB.

• Thereisstillalackofcompetitionandnotmuchimplementationofenvironmentalflows.

Thereisanimpressionisthatenvironmentalwaterallocationsarebeingignored,particularly

inthenorthernMDB.

• Furtherprogressisrequiredinsomejurisdictions(WA)towardswaterresourceslegislative

reform(underwayforthepasttenyearstoreplacetheRightsinWaterandIrrigationAct1914andfiveotherrelatedacts).

• Thereissomeconcernastotheabilityto'secure'propertyrightsinadryingclimate.

Significantworkneedstobeundertakentodeterminetheeffectofclimatevariablyandits

futureeffectonpropertyrights.

9. Whatnewwatersourcesshouldbebroughtintoawaterentitlementprocessandwhy?

• Thereshouldbenoexclusionswithallwatersourcestraded.

• Weneedtoprogressivelymovefromalwaysusingpotablewatertomeetallurbanneeds.

• Stormwater,reclaimedwastewater,includingmanagedaquiferrechargeneedtobe

consideredonalocalisedbasis.

• Clearpolicyandregulatoryframeworksarerequiredtosupportwatermanagersforthe

incorporationofthesenewwatersources.

• Theinclusionofthesewillresultinabetterbalancebetweenplanningandmarketbased

mechanismsachievingefficiencies.

• Weneedtoremoveallservicecostcrosssubsidiesthatarecurrentlyexist,toensure

appropriatemarketbasedwatersourcesareutilised.

• WeneedtoreviewthemanagementofIrrigationtailwatersresultingfrompoorirrigation

practises.

10. Arecurrentapproachestowaterrightscomplianceandenforcementfit-for-purpose?

• Inprinciple,wheretheyareappliedconsistentlytheyarefitforpurpose,thoughconcernhas

beenraisedthattheyareoverlycomplexacrosssomejurisdictions.

• Somejurisdictionsarepersistingwith"useitorloseit"approacheswhichdistortthemarket

infullyallocatedsystems.




WaterPlanning

11. Whatarethekeyareasofwaterplanningwherefurtherprogressisrequiredtoachievethe

objectivesandoutcomesoftheNWI?�

• Furtherurbanwaterreformisrequiredincludingseparationfromlocalgovernment,

performancemanagement,integratedwatercyclegovernanceandthirdpartyaccessto

market.

• Traditionalmodelsfordeliveringlong-terminfrastructurearealreadyinsufficient.Theyarea

majorsubsidyforirrigatorsinsomecases.Asuncertaintyregardingthefutureincreasesand

consumerexpectationschangemorerapidlythisdilemmawillincrease.Anewapproachwill

berequirednotjuststreamliningprocesses.

• Transparencyisrequiredregardingthelevelsofservice,determinedthroughengagement

withthecommunity,whichshouldbeundertakenbywaterserviceproviders,includingthe

levelsofsecurityofsupplyandtriggersforrestrictions.

• Weneedtoensuretheplanningsystemcoversthenecessarywaterresourcestypese.g.

waterinminingandpetroleum,stormwater,wastewater,excessdrainagewater.

• Betterintegrationofwaterplanningandlanduseplanningwascoveredbythe1994reforms

buthasbeenvirtuallyignoredsincethe2004NWI.

• Thelackofexplicitconsiderationofclimatechangeisafundamentalweaknessandmustbe

addressedwithinfuturereforms.

• Risksexistwithinruralwaterissuesontheequityofallocation.Theriskisthatthehighest

demandandpriceislikelytobeurban,pushinguppricesforenvironmentalflowsand

agriculture.

• Allwaterplanningundertakingsneedstobeoutcomefocussedasopposedtocompliant

driven.

• Furtherdefinitionandstandardisationofwaterownershipandaccessrightsneedstobe

made.Forexample,who"owns"thewatercontainedwithinstormwatersystems.

12. Istherescopetostreamlinewaterplanningprocessestoreduceunnecessarycostsimposedon

plannersandparticipants?�

• Anationalapproachwithcommonarrangementscouldprovideconsiderablebenefit.Plans

developedbyplannersandparticipantsatthelocallevel(withinthecommonarrangements)

canthanprovideadditionalvaluetoallparties.

• Thisapproachcouldminimiseplanningduplication,withtheframeworkatthehigherlevel

andlocalsecurityissuesatthelowerlevel.

• Thereareopportunitiesforfurtherincorporatingsocialrequirementsandstandardising

consultationprocessesonallocationplanning.

• Itwouldbeusefultohavebetterintegrationbetweentheplanningsystemanduseror

managersofwaterresources,toavoidthepotentialforunnecessaryoverlaporconflict.

• Theplanningprocessmustincorporatetransparentstakeholderengagementthatincludes

specificandrobustconsiderationoftherisks,suchastheeffectsofdryingclimate.

• Additionaleffortneedstobemadetoimprovethescienceandknowledgearoundclimate

variability,whichcanbesharedtoall.




13. Areprocessesforreviewingwaterplanssufficientlyrobust,transparent,open,andtimely?

�

• Aconsistentapproachtothedevelopment,consultationanddeliveryofplanswouldassist

totheefficiencyofwaterplans.Currentlythereisnoconsistencybetweenstates.

• TheNWIshouldcontinuetoencouragetransparencyinwaterplanningandthedeliveryof

suchplans.

• Withalltheworkinthisarea,littleimprovementhasbeenwitnessed.Expectationsofastep

changeinthesophisticationofplanningremainselusive.

• Theongoingpoliticalinvolvementandinfluenceontheplanningprocessisdetractingfrom

anyreforms.Delaystoprocessesandpoliticaloverrideiscommon.Theplanningprocess

needstobebasedonbestavailabletechnicalandsocialscience.

• Thedevelopmentofbestpractisewaterplans,consultationguidesandreviewstandards

couldbenefittheprocess.

14. Istherescopetoimprovehowwaterplansdealwithlong-termshiftsinclimateaffecting

resourceavailability?Arethererecentexamplesofleadingpractice?�

• Thewatersectorneedstoembraceaculturalmindshifttowardsadaptiveplanningtobetter

incorporateanuncertainfutureincludingduetotheimpactsofclimatevariability.WAhasa

systematicapproachtothisinits(stillnon-statutory)process.Itisespeciallyrelevanttothe

dryingsouthwestofWA.

• Traditionalmodelsfordeliveringcapitalforlong-terminfrastructurearealreadyinsufficient.

• Whilstsignificantworkhasbeenundertakenontheeffectsofclimatechangeatamacro

level,verylittleofthisworkhasbeenbroughttocatchmentorregionalleveltoassistwith

theplanningprocess.Currentpredicationsarebroadbasedandinsufficientforeffective

regionalplanning.

• AreviewbyATSEin2009showedmostnon-urbanwaterutilitieshadnottakenany

cognisanceofthepotentialforglobalwarming.Whilstitisrecognisedthatsubstantialwork

hasbeenundertakensincethisperiod,weareconcernedthatthescientificdataisnot

availableforanyworktobetrulyeffective.

• Thiscanbeevidencedbythefactthatthe2016WSAAClimateChangeAdaptationGuideline

takeaverybroadviewofCCadaptation:https://www.wsaa.asn.au/publication/climate-

change-adaptation.

• MosttheworktodateisbasicwithWAprovidingsomegoodexampleofleadingpractice.

• Moreworkonscenarioanalysisandtriggerpointsforshiftsininvestmentisrequired.

• Moreworkonunderstandingexternalitiesisalsorequired.

• Dealingwithwatersecurityandusingacommonmeasure(withcommonmethodof

calculation)shouldfactorinclimatevariabilityandshouldbescenariotestedtoassessa

security"score”.

• Weneedtoprovidetransparencyinwaterresourcemanagementimpactfromclimate

changeatascalewhererealchangeandimpactactuallytakeplace.

• Somegoodinternationalguidelinesexistat

http://www.wucaonline.org/publications/index.html.




15. Arecurrentwaterentitlementandplanningframeworksconducivetoinvestorconfidence,

facilitatinginvestmentinmajornewinfrastructure(suchasinnorthernAustralia),while

managingriskstothesupplysecurityofexistingwaterusers?�

• Thelackofaconsistentapproachacrossthecountryandongoingpoliticalinterferenceis

erodinginvestorconfidence.

• Investorconfidenceishighinwell-regulatedarease.g.urbanarea,butlowinothersettings.

• NorthernVictoriaprovidesaverygoodexampleofhowtheframeworkaddsvaluetoall

stakeholders.

• ThedevelopingNorthernAustraliahasfailedtoinspireconfidenceduetothelackof

connectionbetweenthepoliticalvisionandthevalueofagriculturemarketstofundthe

work.

• ThereareconcernsregardingtheongoingcommitmentofTheCommonwealthtoclimate

risk,whichisnotseentoalignwiththeriskprofileofinvestors.

• Confidencecanbeincreasedbytheimprovementinmanagementofsocialandconsultation

processes.

• Improvedtransparency,broaderriskmanagementandthematuringoflegalframeworkswill

improveconfidence.

• Inmanyareasconfidencehasdecreasedduetothemultipleapprovalagenciesarrangements

invariousjurisdictions.

16. HowcantheinterestsandneedsofIndigenouspeoplebebetteraccommodatedand

representedinwaterplanningprocesses?�

• Anationallyagreedframeworkandprinciplesfortherecognitionofindigenousvaluesis

important,particularlyinjurisdictions,includingWA,SAandQLD,thatareseekingto

improvewaterservicestoremoteindigenouscommunities.

• Weneedtohaveculturalwaterrequirementsidentifiedandincorporatedinplans.Weneed

tomakeprovisionforspecialpurposeindigenouseconomicentitlementstoassistwith

"closingthegap".

• GoodexamplesofhowthiscouldworkisdetailedintheWaterPlanforVictoriaandthe

approachofNewZealandRegionalCouncilsondealingwiththeculturalwaterrequirements

ofMaoripeople.

• AgoodexampleofalternativegovernanceapproachescanbeseenwiththeFitzroyRiverin

WesternAustralia.

• Weneedtoincreaseparticipation(notjustidentificationofneedsandinterests)by

indigenouscommunitiesinstrategy,planninganddelivery.Indigenouscommunitieshavea

lottoofferthewatersectorinNRMrolessuchascatchmentmanagementauthoritiesand

otherrelevantorganisationsacrossAustralia.

• Earlynominationofindigenousinterests,includingthebasisofthoseinterestsisimportant.

Thiscanensurethatlocalknowledgeisgainedandwaterplanningoccursinatransparent

andinclusivemannerwellinadvanceofmajorprojectsputtingtimepressureoncommunity

engagement.




17. Whatstepshavebeentaken—orshouldbetaken—tointegratewaterqualityobjectivesinto

waterplanningarrangements?�

• Theyshouldbeintegratedtoensurethatthereisexplicitrecognitionthatboththequantity

andqualityofwaterresourcesareimportant,andthattheaimshouldbetoprovidefit-for-

purposewaterproducts.

• Thewaterqualitymanagementframeworkneedstobeafundamentalcontributortowater

planning-'Rightresourceforrightpurpose'.

• Allwaterusesdonotrequirethesamewaterqualityobjectiveswithintheurban

environment(e.g.drinkingwaterversuswateringparks/openspace).

• Moresophisticatedplanning,matchingwastewaterproducerswithpotentialuserscould

reducethedemandforextractionanddesalination.

• InWA,thereisstrongprotectionofwatersourcecatchments,bothforsurfacewaterand

groundwater.Wearenotawareofanyeffectivegovernanceonthequalityofirrigation

returnstoriversinAustralia-thisshouldbeapriority,particularlyasflowsdecline.

• Intheurbancontext,theyarealreadybeingandwhatisneededispolicyandregulatory

settingswhichenablemoreflexibilityofsources.MoreworkneedstobedoneonIWCM.

Quantity,qualityandreliabilityplanningonhydrologicalcycle,notjurisdictionalbasis

• TheBasinplanmethodologyareagoodexampleofbestpractise.




WaterTrading

18. TowhatextenthastheNWIgoalofopenwatertradingmarketsbeenachieved?�

• Thisishighlyvariabledependingontheunderstandingofthewaterusersandthematurity

ofthemarkets.IntheMurray-DarlingBasingoodprogresshasbeenmade,whileinthe

groundwatersystemsthereislimitedunderstanding.(evenrecognisingtheincreased

physicalconstraintscomparedwithsurfacewater)

• Thereisaneedtorecognisetheconnectivitybetweensurfaceandgroundwatersystems.

• Watertradingisonlyonetoolinawatermanagementtoolboxandweareexpectingalot

fromit.Weneedtoaskwheredoeswatertradingenhancewatermanagementeffortsand

whatothertoolsarerequired.

• WaterresourceslegislativereforminWAisslowlyprogressing,butwillimprovetheability

totradewater.

19. Arethereworthwhileopportunitiestoexpandtradetonewregionsandwaterresources?�

• Therearealwaysopportunitiestoexpandtrading,butthequestionwillbearoundvalue

deliveredbytheadditionalwaterandtheabilitytofundorunderwritethetrade.

• Opportunitiesneedtoberealwithouttheneedforthirdpartycrosssubsidies.

• Optionsexistsespeciallywithgroundwatersystemsandpotentiallymarketsinwastewater,

stormwaterandexcessdrainagewater.

• TheACThasstatedthatitiskeentostarttradingwithNSW.

20. Arethererestrictionsontradingwaterthatareunwarrantedandshouldberemovedor

revised?�

• Themarketshouldbeopen,whilemanagingtheriskofpricingoutindustrieswheretheir

"values"aredissimilar.

• Limitsonannualtradeoutofregionsshouldbeprogressivelyremovedtoallowregionsto

adjustovertime.

• Aregularreviewandevaluationoftherestrictions,isneededandongoingreportingofthis

shouldoccur.

21. Arethereactionsthatgovernmentsshouldtaketoreducecostsanddelaysoftrading

water,includingforinter-regionandinterstatetrade?�

• Thewatermarketisseenbysomeasaslowprocess,opportunitiesmayexisttocopythe

ASXtradingsystemasaminimum.TheWaterfindapproachfromSouthAustralianisan

exceptiontothis.

• Weneedtohavemoredataandinformationmorereadilyavailabletoinformthemarket.

• Weneedtofinaliseandimplementtheproposedreformstothewaterresource

managementlegislationinWA.




• Theinvestigationofblock-chaintechnologymightbeappropriatetofurtherdevelopthe

marketwithouttheneedforanextensiveregulatoryframework

22. Howcanwatermarketinformationbemademoretimely,reliableandaccessibleinacost-

effectiveway?�

• BOMdoesagreatjobandseveralstateagencieshaveallocationandtradingdatabases.Some

brokershavegoodup-to-datemarketandrecenttransactioninformationavailableonline.

• Thebiggestissueisaroundtheavailabilityofinformationthroughanopeninformation

source,inasimilarmannertotheASX.

• Manyhavecalledforanationalweb-basedwater'stockexchange'wherealltransactions

(andcurrentpricingetc.)isavailable.TheWaterfindsystemthoughcurrentlyprovidesthis

servicetotheirclients.

• Thebenefitsofaspatiallybasedsystemtooverlayavailabilityandstressedsystemsneedsto

beconsidered.Catchmentsdonotnecessarilyalignwithgroundwaterbasins,eventhough

theremaybeconjunctivelybetweenthem.




EnvironmentalManagement

23. Whataretheguidingprinciplesfor‘bestpractice’managementofenvironmentalwater?Are

theinstitutionalandgovernancearrangementsforheldenvironmentalwaterworkingwell?

• Aconsolidatednationalapproachisrequiredratherthanthestatebystateapproach.This

wouldseeconsistentstandardsbeingsetforthequalityandquantityofenvironmental

water.Thecurrentarrangementsarenoteffectiveandthereareexamplesofregulators

pushingforuneconomicallytightrestrictionsondischargeswhichcouldassistwith

environmentalflows.

• Acatchmentbycatchmentapproachimplementedwithinanagreednationalframeworkmay

addresstheseissues.Themanagementofenvironmentalwaterthoughwillremaina

States/Territoriesresponsibility.

• Theobjectivesshouldnotbe"leastcost"rather"bestvalue".Environmentoftenhasfar

greatervaluethanecologicalhealthofwaterways.Themostobviousexampleofthisis

recreationalvalueofwaterbodies.Intheurbancontext,therearesignificantpublichealth

benefitsofgreenopenspaceparticularlyifinconjunctionwithwaterbodies(seeresearchby

CRCforWaterSensitiveCities).

• Thattheenvironmentshouldnotbeprioritisedlast,whenwaterresourcesarebeing

allocated,suchthattheguidingprinciplesareflexibleenoughtoallocatewaterresourcesto

endusersincludingtheenvironmentinanequitablecase-by-casemanner.Bestpractice

couldmeanallocatingenvironmentalwaterfirst,nottryingtoclawitbackafterover-

allocationhasoccurred.

• Bestpracticeisstillanevolvingscience,butthemoremonitoringandassessmentwedo,the

better.

• Morerecognitionneedstobegiventothevalueofplannedenvironmentalwater.Held

environmentalwaterappliesmoreatthemargins.

• Theenvironmentshouldbeclassifiedasauserandineffectgovernmentisactingasan

intergenerationTrustee.TheNewZealandrecognitionofariverasalivingbeingisan

interestingdevelopmentthathaspotentialtobereplicatedinAustralia.

• TheredoesappearsthoughtobebackslidinghappeningintheMurrayDarlingBasin.

• InWA,the'environmentalwaterfirst'principleisappliedtonewresources,butthesouth-

Westernriverflowshavedeclinedsomuchthattheoreticallyadequatereleasesfromolder

damsarenolongerfeasible.

• Conservationofwaterfortheenvironmentshouldbedoneinassociationwithconservation

ofotheraspectsofnaturalresources(vegetation,fauna,significantgeologicalformations

etc.)asisprovidedforundertheNaturalResourcesManagementAct(SouthAustralia).

24. Whatistheroleforgovernmentsinpromotingtradeinenvironmentalwater,andacquiring

environmentalwateratleastcosttothecommunity?�

• Governmentsplayanextremelyimportantrole,asitisprobablyfairtosaythatmostwater

marketswouldprioritiseenvironmentalwaterlast,intermsofendusers,sogovernments

shouldbetheretoprovidethebalance.

• Weneedtopromotetransparencyininformationandneed,backedbyrobustscience.




• Weneedtoredresspastpoordecisionsonenvironmentalwaterprovisionsatleastcostto

thecommunityandindustry.

• Governmentsmustpayiftheyhaveover-allocatedwater.Governmentroleiscentralto

achievingthiscommongoodobjective

25. Howcaninstitutionalarrangementsbeusedtoensureagencieswithnaturalresource

managementresponsibilities(includingenvironmentalwatermanagers)pursueleast-cost

approachestoachievingenvironmentalandotherpublicbenefitobjectives?�

• Itisunlikelythatanationalagencywilleverbeestablishedtotakeregulatoryresponsibility

acrosstheNationforthesearrangements.

• Therewouldbebenefitinsuchanagencyundertakinganindependentannualauditfor

benefitcostachievements.

• Ifthereisnosingle“regulator”thenthestate/territoryregulatorsshouldallbealignedtoa

commonframeworkofresponsibilitiesandqualityrequirements.

• Therearetoomanyagencieswithsiloedaccountabilitiesandthisleadstomultiplegapsand

redtape.

• Allregulatoryoptionsneedtobesubjectedtofull,transparenteconomicanalysiswherethe

environmental,socialandfinancialaspectsofeachissuearemonetised.Usingfinancial

analysesonlyusuallyresultsinatragedyofthecommons.

• Asaminimum,havetransparentreview,evaluationandreportingrequirementswith"NRM

industry"standardsandguidelines.

26. Arethepoliciesthataffectthehealthofwatersystemssufficientlyintegrated?�

• Mostoftheindustryrecognisethatfurtherintegrationisrequired.

• Policieswidelyvariedacrossjurisdictionsandthereisinsufficientintegrationofwater

planningwithlanduseplanningandmanagement.

• Catchmentmanagementauthoritiesandwaterauthoritiesshouldbealignedtoenablewhole

ofwatercycleoutcomestobebetterplannedanddeliveredefficiently.

• Additionally,inmostStatestherecanbecross-jurisdictionalcompetitionamongstresource

agencies,aswellasamongstresourcemanagersanddevelopmentagenciesingovernment.




Section6–WaterServices

RuralWaterServices

27. HastheNWIbeensuccessfulinachievingitsobjectiveswithrespecttoruralwaterservices?

Ifnot,whatactionsarerequiredtoachievetheseobjectives?�

• Continuedprogressisrequiredtowardscost-reflectivepricinginruralwaterservicesorata

minimumtransparencyaboutcostsandanyoperatingsubsidiestowardsruralservices.

• Servicesbeingprovidedtoremoteruralcommunitiesandespeciallyremoteindigenous

communitiesneedsignificantimprovement.

• MoreeffortneedstobeputintheBoMbenchmarkingassessmentforruralwaterproviders,

asiswiththeurbanproviders.

• TheNationalPerformanceReporting(NPR)forruralprovidersisworthwhile,butneedtobe

mademoreefficient.

28. Arethereanyinstanceswheresimilarruralwaterserviceprovidersshouldbesubjectto

differentregulatorytreatmentsbasedonthenatureoftheirownershipand/orjurisdiction

ofoperation?Ifso,whenandwhyaresuchdifferentapproacheswarranted?�

• Generally,consistencyisrequired.

• Whereoperatingsubsidiesareinplaceasadecisionofgovernment,thereshouldbe

transparencyaroundtheamountandpurposeofthosesubsidies.

• Appropriateriskbasedconsiderationsshouldbeused,includingconsideringpopulationsat

risk,whilehavingabasicunderpinningstandard.

29. Whatroleshouldindependenteconomicregulatorsplayintheregulationofruralwater

services?�

• Independenteconomicregulationcanimprovetransparencyaboutcosts,efficiencyin

expenditureandcost-reflectivepricing.

• Aftertheexperienceofbuildingdesalinationandadvancedwatertreatmentplantsinthe

millenniumdrought,morecarefulattentionneedstobegiventotheinvestmentofcapitalin

newinfrastructure.

• Economicregulationcanalsoimproveincentivesonwaterserviceproviderstoachievecost

efficiency,includingthroughinnovation(e.g.remotemetering,monitoringandbilling

technologiesforremotecommunities).

• Independenceisrequiredforeconomicregulatorsacrossalljurisdictions.Theessential

servicescommissioninVictoriaisagoodexampleofthisasisIPARTinNSWintheirareasof

responsibility.

• PricesinWAareindependentlyreviewedbutpricesarestillsetbytheGovernment.It

shouldbenotedthattheWaterServicesAssociationofAustraliasupportsindependent

economicregulationasitprovidesmorecertaintytoinvestors(WSAA2015),“Doingthe

importantaswellastheurgent:Reformingtheurbanwatersector”,and(2014“Position

statementonimprovingeconomicregulation”.)

• Thereshouldbeaconsistentregulatoryframeworkinplaceacrossallwaterservices,both

ruralandurban.




• Theycanreviewandmakecommentaboutrelevantmatterssothat,forexample,the

degreesofcrosssubsidisation(whichtherewillbe)aretransparent.

30. Howaretheneedsofruralwaterserviceproviders(bothbulkwaterandirrigationdelivery)andpreferencesofusersbalancedinthesettingofinfrastructurecharges?Inwhatways

couldtheseprocessesbeimproved?�

• Thecostsofmeetingdamsafetystandards(ANCOLD)hasbeenshowntobe

disproportionatelyhighrelativetoothertypesofpublichealthandsafetyexpenditure,

contributingtohigherinfrastructurecostsforruralusers(seeEconomicRegulationAuthority

(2007)inquiryintoHarveyWaterbulkwaterprices).

• Itisrecognisedthatruralwaterusersaresubsidisedandthisneedstobereducedtoachieve

fullcostrecovery.

31. Howeffectivelydoinfrastructurenetworkownersengagewithusers(bothcurrentandprospective)toensureinfrastructureprogramsaddresscurrentandfutureneeds?�

• Communityengagementisrequiredtoagreetheservicesstandardsexpectedbycustomers

andcommunities,consideringfactorssuchaschangesinclimate,supply/demandbalance,

andcommunityexpectationsonamenitylevelsandenvironmentalquality.

• Someownersengagewellwithusersandotherownerscouldimprovetheirperformance.

• Theperceptionofgoodengagementishamperedbyindividualuservscommunitygoodand

prudentservicedelivery.

32. Isinfrastructurechargingsufficientlyflexibletocopewithchangestothenumberand

compositionofcustomerswithinnetworks?Ifnot,howcouldinfrastructurechargesbe

improved?Whatrolehaveplayedinthis?�

• Additionalflexibilitycouldaddvaluebutalsocomplexity.Thesystemsarenotsetuptohave

toobroadasetofclassificationsbutthereshouldbeaprocesstoreflectthechangingnature

ofourcitiesandurbanfootprint.

• Weneedtoconsiderhowthisisdealtwithandbywhom,forexampledeveloperscharges

paidtoMelbourneWaterwheredevelopersforegolocalcostofWSUDinstallations.

• Theeconomicvaluecreated,ratherthandirectcostsofserviceprovision,needstobeableto

bematerialised.

33. Haveterminationfeesbeeneffectiveinenablinginfrastructurenetworkownerstoadjusttheir

networksinresponsetodecliningusage?�

• Wehavenocommentsonthisissue.

34. What,ifany,governmentoversightshouldtherebeofprivatelyownedprovidersofirrigation

services?�




• Therearetwoschoolsofthoughtonthisissue.

• ThatweshouldallowthemarkettomanageitselfwithACCCmanaginganti-competitive

behaviours.

• Orthattheyshouldoperateunderthesameregulatoryconditionsasgovernmentproviders

andanyotherwaterserviceproviders.

• Aswaterserviceproviders,theywouldbesubjecttothesamequalityandeconomic

regulatoryoversightasotherwaterutilities.

35. Howrobustarethecost-benefitanalysesappliedtoirrigationinfrastructureprojects?Wherecouldtheybeimproved?�

• Atthehighestlevel,theyareoftenflawedbypoorcostestimating,especiallyofthe

'alternative'optionswhicharelesswelldefined.

• Afullandtransparentanalysisofthestate-widecosts,benefitsandrisksoflargescale

infrastructureprojectsiscriticaltoanydecisionsongovernmentinvestmentinsuch

projects.

• Thereislittleevidencethat'robust'cost-benefitanalysesareused,becausetheyarepurely

financial,ratherthaneconomicanalyses,andtheymostlydon'ttakefuturerisksinto

account.

• Alwayschallengingandthenatureofco-operativesandtheirgovernancechallengesmake

infrastructureinvestmentprocessesdifficult.

• Moreworkisneededinidentifyingcostsandbenefitstothirdpartiesandtheenvironment

outasrobustasmostothercost-benefitanalysis.Weneedtoensurelifecyclecostsare

included.

36. Aretheresufficientchecksandbalancestopreventunviableorunsustainableinfrastructureprojectsfromproceeding?Ifnot,whataretheareasneedingimprovement?�

• Thisshouldbemanagedbythemarket;thebiggerchallengeiswhengovernmentmake

investmentswhichprovenottobeeconomicandarenottransparent.

• Wearesubjecttothechecksandbalancesofaparticipativedemocracy.Transparencyof

costsandbenefitscanhelpinformthedebateandthedecisions.

• Politicalinterventionwillalwaysbeanissue,theaspirationforNorthernDamsisagood

example.Robustcost-benefitanalyseswithtransparent,openpublicengagementneedsto

occuronallprojects.




UrbanWaterServices

37. Whatpolicyandinstitutionalarrangementsareneededintheurbanwatersectortoimprove

theefficiencyofserviceprovision?�

• Significantopportunitiesexistforharmonisationoflegislationandregulationacrossstate

boundaries.Currentlyonlyhealthtargetsareharmonisingacrossstates.Roomexistsfor

harmonisationacrossenvironmental,socialandeconomicaspects.

• Harmonisationhasbenefitstoimprovecomparativebenchmarkingacrossexistingutilities

andlowerentrybarrierstonewentitiestothemarket.

• Harmonisationallowsfortheestablishmentand/orimprovementofpracticalIndustrybest

practice,whichWSAAcontinuallystrivesfor.

• Inmanystatesvariationsininstitutionalarrangementsexistincityandregionalareas,

especiallyinNSWandQueenslandwheretheurbanwatersectorhasbeenusedtoimprove

theviabilityofgeneralpurposeCouncils.

• NumerousreportshaverecommendedthatUrbanWatershouldbeseparatedfromGeneral

PurposeCounciloperationsassoughtunderthe1994WaterReformAgendaandwecontinue

topromotethis.

• Weneedtominimisecrosssubsidiesinservicedeliverytorecognisetruecostsand

accordinglystimulateimprovedpracticeinserviceanddelivery.Anyconsumerwelfare

subsidiesshouldbetransparentcrosssubsidiesandcustomerserviceobligationsneedtobe

accuratelycosted,withtransparencytothecommunity.

• Robustcost-benefitanalysesshouldalsobeappliedtocompareinfrastructureandpolicy

options.Thecurrentapproachesresultinstrandedassets(e.g.thePilbaracitiesinWA)and

wastageofmoney.Publicutilitiesshouldberequiredtomaximisetheeconomicbenefitsof

theiractivitiestosocietyandtheenvironment,notjustpursuethe'cheapest'options.

• AlackofcommitmenttoIWCMremainswiththesplitofresponsibilitybetweenutilitiesand

generalpurposecouncils.Regionalandcatchmentwatermanagementplansneedtoaddress

theseissuesandresolvedirectionandresponsibilitiestomaximisebenefittothecommunity.

• Thestreamliningofthenumberofregulatoryagenciesatastatelevel,thathaveanoversight

roleintheurbanwatersectorwillreducecoststotheconsumer.

38. Whatapproachshouldbetakentopriceregulationintheurbanwatersector?Isthereaneed

forgreaterconsistencyinpricesettingapproachesacrossdifferentjurisdictions?Docurrent

pricingpracticespromoteinvestorconfidence?�

• Thereisaneedforagreatconsistencyofapproachacrossjurisdictions.

§ AnoverarchingframeworkshouldbeprovidedbytheCommonwealthasthereare

pricingregulatorswhogetcarriedawaywithspecificeconomictheorywhichis

contrarytowhatisbestforall.

§ Thebasicapproachcouldbethatpricesshouldreflectprudentandefficient

expenditure,andshouldmovetowardssomethingclosetofullcostrecoveryover

time,toensurethatwaterutilitiesremainfinanciallyviable.

§ Withintheoverarchingframeworkeachjurisdictionshouldbeindependent,asone

sizeneverfitsall.




§ Regulatoryperiodsshouldbesettofiveyears,investorsshouldbefine,asmost

investmentsaremorevolatilethanthat.

§ Greaterconsistencyandtransparencyinthemethodofpricecalculationanddecision

makingprocessesneedtobemade(non-political).

§ Standardisationoftheapproachtoconsiderationofexternalitiesshouldbemadeat

thenationallevel.

§ AversionoftheUKOfWatmodelmightbeapplicable.

• Improvementsandharmonisationofeconomicregulationwillimproveconfidence.

§ Ifanationaloverarchingframeworkisnotviable,weneedaguidelineonprice

regulationaddedtotheNWI,recognisingthatnotallstatesandterritorieswill

respondtoitidentically.

§ IfutilitiescontinuetoremaininGovernmentownershipthentheeconomic

regulatorsneedmorepowertobreaktheconnectiontogovernmentsothatthe

waterbusinessesarenotseenassimplyasourcefordividendsbythestates.

§ Forexample,inWA'priceregulation'isapostagestampconcept,becausetheERA

onlyadvisesgovernment.Asaresult,thepricingofwaterservicesisalmostalways

higherthanCPIbecausetheWAGovernmentwantsthetaxequivalentdividend.

§ ThecurrentpracticesofOfWaterandVictoriaareworld-bestpractice.

§ Pricingshouldreflecttruecostatthelocallevel.Allsubsidies,customerservice

obligations,costshiftinganddividendsneedtobetransparenttoall.

§ Thereisaneedforgreaterconsistency(scopeofconsiderationisverydifferentin

NSWfromsay,Vic).Economicvaluecreated,notjustdirectcostsofassets,shouldbe

abletobechargedfor/recuperated.

§ ItshouldbenotedthattheWaterServicesAssociationofAustraliasupports

independenteconomicregulationasitprovidesmorecertaintytoinvestors(WSAA

(2015),“Doingtheimportantaswellastheurgent:Reformingtheurbanwater

sector”,and(2014“Positionstatementonimprovingeconomicregulation”.)

• Thedevelopmentofbestpractiseandimprovedperformancereportingwillallow

comparativebenchmarkingtoassistwitheconomicregulation.

§ Thecurrentperformancereportingisundertakeninamannerthatindividualutility

performancecannotbecomparedacrossutilitiesasmuchofthedataarenot

reportedconsistently.

§ Comparativebenchmarkingistheonlyrealtoolavailablewithinamonopoly

arrangementasmostwaterutilitiesare.

§ Costtoserveisunfortunatelynotcomparableacrossutilitiesduetogeographicaland

demographicalissues.

§ Thedevelopmentofaseriesofbestpracticeguidessuchascustomerperformance,

assetmanagement,projectmanagementetc.canprovideabasisforcomparative

benchmarking.

39. Isthereacasetoincreasetheinvolvementofcustomersinregulatorydecisionmaking,asis

commencinginVictoria?Ifso,whatisthebestwaytodothis?�

• ThecurrentVictorianmodel,whichismodelledontheUKOfWatapproach,allowsflexibility

ofapproach,butrequiresdeepandbroadengagementwithcustomersonthepricing

submission.

• ThecurrentVictorianregulatoryframeworkhasmadewaterutilitiesalotmorecustomer-




centric.Ithasdriventhecustomer-ethosrightthroughorganisations.

• Itisimportanttoengagecommunitiesindiscussionsontheirprioritiesfortheuseofwater

resourcesandtheirexpectationsonwaterservicelevelsatdifferentstagesofwaterscarcity,

asaninputintofuturewatersupplyplanninganddecisionsonnewwatersources.

• Wedohavetobecarefulthoughnottoputalldecisionstocustomers.Weneedtoeducate

ourcustomersinorderthattheytheabilitytomakeaninformeddecision.

• Weneedtorecognisetheissueswherecustomerisnotinformedanditisnotvalidtoseek

theirinvolvement.Issuessuchasfuturestrategies,technicaloptionsandeconomiccost-

benefitanalysescanbedifficulttocommunicatetothepublic.

• Wealsoneedtorecognisethatwhilstcustomersareanimportantpartofourdecision-

makingprocess,theyareonlyonepartandwemustbeopenwiththemonwhenandwhere

wewanttheirinvolvementandwhatwewilldowiththeirdecisions.

40. Howcanthelevelofcompetitionintheprovisionofurbanwaterservicesbeincreased?�

• Itisimportantthatconsumersrecognisedthedifferencebetweenownershipand

outsourcingoftheoperationofurbanwaterservicesastheyareoftenusedinterchangeably.

• Itisnotrealistictoimaginedifferentnetworksoperatinginthesameareaaswewantneed

toaddressthetechnicalchallengesofcommoncarriageonwaterqualityandpublichealth.

• Thesameoutcomescouldandshouldbeachievedthrougheffectivenationaleconomic

regulationdrivingimprovedefficienciesandbettercustomerpricing.

• Iftheobjectiveisgreaterprivatesectorinvolvementintheownershipandmanagementof

assetsthen,lesspoliticalandregulatoryintervention(bothrealandperceived)isrequired.

• Therearealreadyhighlevelsofcompetitionforcontractsintheurbanwatersectorand

mostoftheexpenditureofwaterauthoritiesisoutsourcedthroughcompetitiveprocesses.It

isestimatedthat90%ofcapitalworksprogramsareundertakenbytheprivatesectorand

70%ofoperationsprogramsareundertakenbytheprivatesector.

• Weneedtoincreasetheleveloftransparencyofownershipandoutsourcing.

o Currentlynorecordsexistonanationalbasisofownershipofurbanutilities.The

CommonwealthAttorneyGeneraliscurrentlyinvestigatingthiswithintheirreviews

ofcriticalinfrastructureandcybersecurity.

o Currentlynodetailedrecordsexistofprivateandpublicdeliveryofserviceswith

urbanutilities.

o Thetransparencyofthisinformationcanprovidethemarketwithtriggerstoprovide

betterandmorecost-effectivesolutions.

o Utilitiesshouldberequiredtomakepublic,proposedprocurementrequirements

andapproacheswithintheireconomicassessmentwithjustificationastothe

preferredapproachtoenablefeedbackfromproviders.

• Thedevelopmentofasecondgenerationofconsistentnationalperformancereportingis

requiredtoachievegenuinecomparativebenchmarking.

o Thecurrentperformancereportingisundertakeninmannerthatindividualutility

performancecannotbecomparedacrossutilities.

o Asecondgenerationofperformancereportingbasedoncomparableattributes

needstobedevelopedtoachievecomparativebenchmarking.

o Thesearelikelytobebasedonaseriesofbestpractiseguidesthatwouldneedtobe

developedfortheindustry.

o Thecosttoserveinaspecificlocatecanrarelybeusedtocomparetothecostto




serveinadifferentlocation.Bestpracticeguidesthoughcanbedevelopedto

providethiscomparison.

o Bestpractiseguidescanalsoprovideadviceonensuringalternativeserviceor

projectprovisionarrangementscanproceed,basedontransparentconsiderationof

allthefactorstodoso.

• Weneedtodecreasethebarrierstoentry

o Havingdifferentthirdpartyentryrequirementsindifferentstatesisabarrierto

entry.

o Somemajorutilitiesarenowtakingalong-termoutsourcingtoasingleentity

approachwhichhastheeffecttorestrictionaccesstosmallandmediumsize

providers.

41. Dowaterandwastewaterservicesdeliveredtoregionalandremotecommunities,including

Indigenouscommunities,complywithrelevantpublichealth,safetyandenvironmental

regulations?Ifnot,whatpolicyremediesmightimproveperformance?�

• Compliancewithpublichealthstandardsinremotecommunitiesisoftendifficultduetohigh

costs,poorwaterquality,andlimitedcapacityinwaterservicedelivery.TheNWIshould

encourageimprovedservicedeliveryandimprovedtransparencyinthecostsofserviceand

fundingarrangements.

• Thecostsofmeetingdamsafetystandards(ANCOLD)hasbeenshowntobe

disproportionatelyhighrelativetoothertypesofpublichealthandsafetyexpenditure,

contributingtohigherinfrastructurecostsforruralusers(seeEconomicRegulationAuthority

(2007)inquiryintoHarveyWaterbulkwaterprices).

• NSWandQueenslandcouldfollowtheVictorianmodelanddivestcouncilsfromthe

provisionofwaterandsewerservices,andcreateregionalwatercorporationsthathavethe

financialcapacitytodeliverservicesthatcomplywiththerelevantregulations.

• Manyoftheseareasthought,couldnotachievethefinancialcapacityrequiredtoviablybe

servicedbyregionalwatercorporationsandothermodelsmayneedtobedevelopedand

recognised.

42. Dotheprocessesfordeterminingpublichealth,safetyandenvironmentalregulationsapplying

tourbanwaterproviderspromotecost-effectiveandtargetedregulations?Dothevarious

policy-makingandregulatorybodieshaveclearrolesandresponsibilities?�

• Thecurrentapproachdoesnotpromoteacost-effectiveapproach.

• Thereareoverlapsinthepolicymakingandregulatorybodies.

• Thereisoftencompetitionamongstthewaterresource,environmental,healthandeconomic

regulators,thusblurringresponsibilities.

• Insomematurejurisdictions,reasonableconversationsareheldbetweenregulatorsandentities

toensureregulatoryobjectivesareachievedatleastcost,andthereareexamplesofthis,butit

isnotalwaystheprocessanditisoftenslowanddrivenbytheutilitynotthephilosophyofthe

regulator.

• Thereisalackofregulatoryaccountabilityamongststateregulators,andanabsenceof

scientifically-basedriskassessmentappliedtomanyhealthandenvironmentalissues.

• WeneedtoreinstatetheMinisterialcouncilforEnvironmentandWater.ThecurrentAGMIN

(MinisterialCouncilforAgricultureandWaterisinsenseinformalandoutsidetheCoAG




structureandhasneverhadanysignificantwaterissuesonitsagendaanyway.

• Acasecouldbemountedforhavingasinglesetofnationally-developedanduniversally-applied

regulations.Failingthis,reinstateatCOAGarepresentativecommitteethatdealswiththe

harmonizationofregulationsandregulatoryapproaches.

43. Whatistheimportanceofintegratedwatercyclemanagement?Arerolesand

responsibilitiesinrelationtothisclear?�

• Anintegratedapproachisessentialtodeliveryofbetterservicestothecommunityinthe

urbancontext.

• Rolesofmasterwaterplanningincitiesareverymuddied,toomanyplayersleadingtoan

absenceofrealimplementationofIWCMapproach.Integrationisrequiredbothacrossthe

watercycleandacrosssectors(e.g.withlocalcouncilsandplanningsectors).

• Rolesandresponsibilitiesarenotclear;however,collaborationandplanningprocessesis

likelytobethekeyratherthaninstitutionalchanges.

• Integratedwatersupplymanagementcouldprovidecost-effectivesolutionsforbalancing

supplyanddemandandshouldbeevaluatedalongsidethecostsandbenefitsofallother

options.

• Goodplanning,deliveryandongoingmanagementofalternativesupplyoptionsshouldbe

promotedbytheNWI.Alternativeschemesoftenfailduetopoorgovernanceand

operationalarrangements.

• IWCMneedstobeconsideredinanynewdevelopment,integratinglandmanagementand

watermanagementandplanningpolicies,especiallywithrespecttowatersensitiveurban

design.

• Wearemovingtoawaterandresourcerecovery(waterfromwastewater)phase,whilstthe

responsibilityforoperationofthestorm-waterdrainagesystemremainswithlocal

governmentwhichisacarry-overfromthe19thcentury.

44. Howcandemandmanagementapproachessuchaswaterrestrictionsandwater-use

efficiencymeasuresbestcontributetotheefficiencyofurbanwaterservices?�

• Theyareveryimportantandwehavesomebestpracticesinthem.

• Demandmanagementapproacheshaveproventobeaveryeffectivewaytoavoidmajor

augmentationstodate.However,demandhasnotsignificantlybouncedbackandtheurban

watersectorneedstobetterunderstandtowhatextenttheycanrelyonwaterrestrictions

andwaterefficiencymeasuresinthefuture.

• Demandmanagementapproachescanprovidecost-effectivesolutionsforbalancingsupply

anddemandandshouldbeevaluatedalongsidethecostsandbenefitsofallotheroptions.

Itisimportanttoengagewithcommunitiestodeterminethewillingnesstoacceptdifferent

levelsofrestrictions.

• Waterefficiencyshouldbeconsideredatthetownplanning,developmentandbuilding

approvalstages.Thisiswheretherewillbethegreatestopportunity.




Section7-AchievingReform

45. ShouldfurtherwaterreformbepursuedthroughanimprovedNWI?�

• TheNWIhasbeenaverysuccessfultoolinpursuingwaterreformacrossAustralia.

• Withsignificantwaterreformstillrequireditwillneedtobepursuedthroughavehiclelikethe

NWI.

• Withsignificantreformstillrequired,theformofthevehiclemaydependontheleadership

approachacceptabletothegovernment.

• TheroleoftheNWCastheindustryleaderneedstobereplaced.Areplacementcouldbea

MinisterialCouncil,asignificantlyreducedagencyoracrossgovernment/industryworking

group.

46. Howcanpolicyimpetusbebestgenerated?�

• TheassociationcallsontheCommonwealthGovernmenttomakeaclear“NationalStatement

onWaterSecurityforAustralia-2030”

• TheroleoftheNWCorsimilarbodyastheindustryleaderneedstobere-established.

• ArefreshedNationalWaterInitiativewitha30-yearoutlookneedstobedevelopedandagreed

byCOAG.

• Bothsanctionsandincentivesshouldneedtobeutilised.Themechanismsusedinnational

competitionPolicywereeffectivethoughnotcompleteorundertakeninaharmonisedmanner.

AttachmentB–Additionalmaterialforreference

NationalWaterReform:ResponsetoProductivityCommissionIssuesPaper1of1

The following documents are attached for reference by the Productivity Commission. They are documents in which should be considered during the review process. They include;

1. AustralianWaterAssociation/Deloitte,StateoftheWaterSectorReport2015,Sydney2015

2. AustralianWaterAssociation/ARUP,AustralianWaterOutlook,Sydney20163. AustralianWaterAssociation,AustralianWaterConsumerOutlook2015.4. AustralianWaterAssociation,EmergingChallengesandopportunitiestosecureour

waterfuture,SydneyMay20175. AustralianWaterAssociation,SubmissiontotheIndependentReviewofthewater

EfficiencyLabellingandStandards(WELS)Scheme20156. AustralianWaterAssociation,SubmissionondraftnationalgroundwaterStrategic

Framework2015-20257. AustralianWaterAssociation,PromotinginvestmentintheWaterSector,20158. AustralianWaterAssociation,AlternativeModelsforFinancingWaterInfrastructure,

2016

submission 66 - australian water association - national ...€¦ · • the demise of the national...

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