The Australian Water Association periodically publishes Position Papers and other submissions on matters of key interest to members.  These are developed in conjunction with members, or developed independently by members.  In order to ensure consistency and the high-quality that is a hallmark of AWA, the Board of the Association has endorsed a procedure for the development of such responses.

 

 

• A number of States and Territories, and the Federal Government, are actively considering further reform of the Australian Water Industry
• AWA believes that improvements can be made, but that all proposals should be carefully considered to ensure that industry efficiency is maintained and that established frameworks which provide certainty to the industry are not weakened
• AWA further believes that the Federal Government should convene an appropriate national forum of all jurisdictions to consider the practicality of the reforms under consideration.

 

 

 

 

 

Cost Reflective Pricing

 

• In line with the 1994 COAG water reforms, the water industry sets prices to cover the full cost of service provision.  This has rationalized water use and made the industry substantially more commercial in its outlook.
• There are further improvements that could be made, particularly with regard to the internalisation of externalities in price and investigation of the value of scarcity pricing in times of drought.
• There are also a number of circumstances emerging that may inhibit the industry’s ability to ensure that prices set are cost-reflective.  Caution needs to be exercised to ensure that these circumstances are mitigated.
   

 

 

 

 

• The 1994 COAG Water Reform Framework entrenched the principle of full cost recovery for urban water services and the elimination of cross-subsidies, The Framework further stated that where cross-subsidies are needed to achieve particular social outcomes, they must be made transparent.
• Much has been done to reduce or make explicit subsidies and cross-subsidies within the water industry in line with this Framework
• Despite these achievements, in a number of categories subsidies and cross-subsidies persist or remain hidden.  Their existence distorts the market for water and lead to inefficiencies.
• AWA believes that effort needs to be directed to minimising these cross-subsidies and avoiding the emergence of new subsidies and cross-subsidies in future.

 

 

 

 

 

Preparation for Climate Change

 

• The water industry is potentially significantly affected by climate change.  Supply security may decline and there will be costs associated with adaptation to a climate change future
• Investment in research to make climate change projects more certain will be of great value, as will investigation of means by which the industry can adapt to climate change
• The Australian Water Association has a role in disseminating the results of this research and also in encouraging commitment to further research by governments. 
• Precipitous decisions to invest in additional supply-side options (e.g. new dams, desalination) should be resisted.  Decisions on new water supply options should only be taken in light of results of climate change-related research

 

 

 

 

 

 

• Smaller water authorities, particularly those run by local governments, are not as competitive as larger authorities and may not be as well positioned as those authorities to capitalise on economies-of-scale.
• Costs to consumers in areas served by smaller utilities may not be as economically efficient as those delivered through larger utilities.
• The skills base of smaller authorities may not be robust, a situation likely to be exacerbated by the emerging skills shortage in the water industry and the smaller authorities’ lesser capacity to bid for the services of those skilled practitioners who are available. 
• Governance arrangements surrounding water utilities owned by local governments may be weaker than those surrounding larger, more regularly scrutinised authorities.
• There is a case for examining the future viability of smaller authorities, particularly those operated by local governments

 

 

 

 

 

• The Australian urban water industry is a significant consumer of energy and, consequently, a producer of Greenhouse Gas emissions
• The industry’s operations are susceptible to the impacts of climate change.  It is therefore incumbent on the industry to show leadership by reducing its own Greenhouse Gas emissions.
• The relative contribution of the water industry on a per capita basis to greenhouse gas (GHG) emissions is small, albeit the industry’s overall consumption is significant.
• Energy used in heating water is a much larger contributor to GHG emissions  than the delivery of water or the treatment of wastewater.  There is therefore much to be gained from demand management
• AWA is generally supportive of the federal Government’s Carbon Pollution Reduction Scheme, although the AWA believes that some aspects of the Scheme’s design could be improved.

 

 

 

 

• Inter-basin delivery of water refers to the process of moving water from a source basin (catchment) to a recipient basin
• The approach has been controversial at times because of both perceived and actual impacts on the source basin and the receiving basin.
• There are examples of negative impacts arising from schemes in this country and overseas
• Rigorous controls and assessment processes are available for determining how Inter-basin deliveries can be achieved sustainably.  These need to be applied meticulously in determining when and how inter-basin delivery can occur.
• AWA believes that inter-basin deliveries are a legitimate means of accessing water, and should be considered equally with all alternatives, including non-supply options such as demand management and water conservation.  If well researched, planned, implemented, monitored and adapted in response to unforeseen issues, inter-basin delivery can be a successful water supply strategy