Infrastructure Australia today released Reforming Urban Water: A national pathway for change outlining advice for governments and regulators around fundamental changes to the governance and regulation of Australia’s urban water markets.
Australia’s urban water sector provides water, wastewater, recycled water and stormwater services to a range of diverse customers across Australia. Each of these services is governed (to some extent) by state and territory based economic, environmental and health regulation, which aim to:
- Economic regulation - Promote effective competition where possible and encourage efficiency
- Environmental regulation – mitigate the impact of water and wastewater collection, conveyance and treatment on the environment
- Health regulation – mitigate the risk of the provision of unsafe drinking water (and associated human health implications).
Importantly, these different types of regulation interact when determining the efficient and prudent costs – and ultimately, when determining the prices required to recover the costs of service provision.
However, urban water infrastructure is expensive to build and maintain, and faces a number of challenges over the coming years. In particular, a changing climate and substantial population growth is expected to place significant strain on ageing assets. Reform is required to ensure the sector can continue to provide safe, reliable and affordable services into the future. This will require re-shaping the urban water sector, including the range of institutions, regulatory frameworks and decision-making processes to be more efficient, resilient, transparent and accountable.
Infrastructure Australia engaged Frontier Economics (Asia-Pacific) and Arup to provide advice on the current state of economic, environmental and health regulation in the Australian urban water sector, and the opportunities for regulatory improvement. Our report set out minimum and best practice standards for economic, environmental and health regulation, assessed each Australian jurisdiction against these standards and outlined the pathway for regulatory improvement.
Our analysis and findings informed Infrastructure Australia’s advocacy and reform agenda in the Australian urban water sector and helped identify areas for reform. In particular, highlighting jurisdictions that have advanced with reforming their regulatory structures can help to identify what has worked, barriers to reform and the benefits that these reforms have delivered for operators and customers alike. These lessons can provide vital guidance for states and territories that may be further from best practice in each area of regulation, and establish links across jurisdictional borders to advance important reforms in line with nationally consistent standards.
Frontier Economics regularly advises clients in the water sector, including government, regulators and businesses.
