FED:Shake-up urged for urban water

AAP General News (Australia)
04-13-2011
FED:Shake-up urged for urban water

CANBERRA, April 13 AAP - Costly and inefficient, Australia's urban water sector is
in desperate need of a shake-up, a draft Productivity Commission report says.

It's recommended a slew of changes to give certainty to the sector, weighed down by
low water availability, the burden of growing populations as well as ageing infrastructure.

While state governments had responded with endless water restrictions and by spending
big bucks on desalination, the report urged a different approach.

It believes the focus needs to be on ensuring the sector is on the same page when it
comes to securing a plentiful and affordable water supply for our towns and cities.

Instead of relying on the easy fix of water restrictions, which cost at least $1 billion
annually in lost consumption, efforts should be made to shore up supply.

Desalination, the booming augmentation method of choice, is too expensive, the report said.

It suggests Australia reconsider other methods, even if it means having to scrap state
bans on controversial systems like recycling water.

One of the key recommendations laid out on Wednesday was to ensure all stakeholders
were coordinated in their approach.

As an urgent priority, there should be overarching objectives for policy in the sector,
the report said.

Pricing also needs to be more flexible, with the report criticising the use of inclining
block tariffs, whereby the price of water changes as more is consumed.

The report wants the price of water to reflect its relative availability.

It has also recommended that the Council of Australian Governments (COAG) reviews concession
deals on utility services and develops a set of principles to better protect consumers.

State and territory governments have been urged to move away from regulatory price
setting to allow the market a say, although they would still monitor prices.

Meanwhile, the report also found that water utilities in regional areas were doing it tough.

"A significant number of regional water utilities are earning negative or very low
real rates of return," it read.

"This could have serious implications for water system infrastructure over the longer
term, particularly if negative or low returns are sustained over a number of years."

Although there's no "one size fits all" solution, the report said things could improve
with reforms to be implemented across the sector that better define the roles and responsibilities
of stakeholders.

For instance, procuring water augmentation should be assigned to retailer-distributors
given they're best at understanding the risks and benefits.

Presiding commissioner Wendy Craik said it was clear Australia's urban water sector
was in trouble.

"There are some fundamental weaknesses, with conflicting objectives, unclear roles
and responsibilities and deficient governance arrangements," Dr Craik said in a statement.

Under the reforms, she said householders and the community would ultimately benefit.

"Water consumers would get more choice about price, reliability and security of supply
while holding water utilities responsible and accountable," she said.

The commission is now seeking public feedback on the draft report and will hold further
public hearings across the country in May and June.

The final report is due to be delivered to the government by the end of August.

AAP cj/mp

KEYWORD: WATER

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