Balancing the boom: navigating rapid growth, climate pressures and rising costs

Australian water sector is navigating an unprecedented investment boom. With water utilities announcing staggering capital works programs reaching well into the billions, the focus is on preparing for population growth and the consequences of climate change.  

This surge in funding marks a shift in government priorities, as investment in water infrastructure eclipses other sectors, like transport and energy. In South Australia, SA Water’s $3.3 billion capital program for 2024-28 is worth double what it was in the prior four-year period. While this investment increase is unprecedented, there is a precedent in big spending from which a great deal of learning has been achieved.  

SA Water General Manager Sustainable Infrastructure Amanda Lewry reminds us of the Millenium Drought, when there were also large spikes in spending during the “water security years”. 

“But this is certainly our biggest program for quite a long time,” Lewry said. “We’re also conscious that it’s happening at a time of dramatically increased cost of living, and at a time in which it’s costing us more to keep our very large infrastructure base operating. 

“If I compare our spending on infrastructure to service growth, from four years ago to the current period, it’s about a 10-times increase. About $1.5 billion of the current $3.3 billion capital program is purely dedicated to servicing growth across the state.” 

STACKING UP

Similar spending stories are being told across the Australian water sector. Data from Water Services Association of Australia’s submission to the Independent Pricing and Regulatory Tribunal’s review of New South Wales utility water prices shows the largest utilities doubled their capital expenditure between 2014 and 2022 (‘Invest to avoid a water crisis’, 2022). 

At Sydney Water, capital investment over the next decade is proposed to cost $32 billion, triple that of the previous 10 years. While climate change and water security remain major global challenges shaping the water sector, localised pressures are also driving significant increases in demand and investment. In South Australia, specific challenges come from managing the country’s longest operating pipe network. 

“We need to pump water, for example, hundreds of kilometres from the River Murray to places like Port Lincoln on the Eyre Peninsula and Ceduna on the state’s West Coast,” Lewry said. 

“We transport water a very long way to ensure the prosperity of the state. But at the same time, global factors have driven inflation. 

“That has had a significant impact on the cost for us to maintain and operate these essential services, as it has on all sectors.” 

Problems are further magnified by the fact that new residential areas requiring significant investment in water and wastewater services are being developed at pace to address the issue of housing availability. Often, those developments are at the periphery of the current network.  

WSP Managing Director Water, Power & Energy Charlie Jewkes said regions that support specific industries are also likely to experience increased demand for water. 

“A lot of the hydrogen plans we’re seeing, particularly in South Australia, are increasing water demand,” Jewkes said. “And the cooling demands of facilities like data centres are also significant. So, in some areas, industrial demand for water is higher than it has been before.” 

Population growth is also a constant motivator for the higher performance of water services. Melbourne Water Executive General Manager Corporate Services Fiona Schutt said Melbourne is expecting an increase from just over five million residents in 2023 to more than six million in 2030. 

At the same time, these localised pressures intersect with broader challenges like ageing infrastructure and climate change, reinforcing the need for strategic investment in water services. 

DEVELOPING NEW APPROACHES 

To ensure the current period’s investment pays dividends into the future, the water sector is taking lessons from past experiences to inform decisions. 

“Around 2008, the South East Queensland water grid had a massive spend in a short period,” said Shaun Kempton, National Water Manager and Acting General Manager for Strategy Customer Markets at John Holland Group. 

“It was necessary, because they were going to run out of water. But were the right investment decisions made? I think there’s a strong feeling that they were not.” 

Today, Kempton said he’s witnessing a far more careful and planned approach, and more considered investment. “There’s a real desire to make sure the right money is spent on the right things at the right time, and that these decisions don’t cause constraint in the future,” he said. 

Within this planning, Kempton is seeing a shift away from rainfalldependent water sources and toward purified recycled water and desalination plants, particularly in New South Wales and Western Australia. 

“There’s a big drive to take pressure off rainfall catchments,” he said. “To me, that’s the big shift over the last couple of years in terms of trying to bring greater resilience into the system.” 

TRILITY Managing Director Francois Gouws (past President of the Australian Water Association) said he has seen “magnificent” community engagement and public education programs around such solutions as purified recycled water. 

“It makes a powerful difference when utilities and water managers first go to the community before they present a solution to the regulator,” Gouws said. “If they can say, ‘the community supports this’, then they’re making the regulator’s job easier.” 

Other innovations include the use of new and advanced materials and coatings to extend pipeline lifespans, and the reduction of environmental impact through the integration of circular economy principles. Some water managers are increasingly employing technology to streamline their operations, to do more with less. 

TAPPING TECHNOLOGY 

The water sector has long been comfortable with the concept of change, particularly when it comes to the use of new and pioneering technologies. That is now revealing itself, Jewkes said, in the broad adoption of AI and machine learning for key operational tasks. Utilities are using these technologies for leak detection and predictive maintenance, enabling early intervention before issues escalate.  

Water treatment plants are benefiting from optimised operations, allowing them to run above design capacity with the support of advanced forecasting tools. Meanwhile, automated inspections, whether carried out by robotic vehicles or AI-driven systems, are reducing the need for human entry into confined or hazardous spaces, while also eliminating low-value, monotonous tasks. 

“Today, we can alert the operator a couple of days before something’s going to happen, purely by looking at historical data and how water quality is changing,” Gouws said. 

“As a result, we have treatment plants that are 20 years old that we can operate above design capacity, purely because our predictive tools have become so much better.” 

Technology will also come to the aid of end users, according to Kate Miles, Sydney Water’s Head of System Planning and Land Acquisition. Sydney Water has completed trial runs of digital metering, which offers customers a much clearer understanding of their own water usage patterns, including how much they’re using on a daily or even hourly basis. 

“The water conserving behaviours of our customers have been fantastic since the Millennium Drought,” she said. “We know that if we can improve their understanding of what they’re using even further, and around wastewater too, they can conserve in both systems. That will reduce their bills both now and into the longer term, as we would need to augment fewer services.” 

Of course, when it comes to advanced technology, larger utilities have an advantage because they have scale, Gouws said. “However, the beauty of the water sector is that information is openly shared. As a result, the sector is embracing digital, which is transforming how we work,” he said. 

AFFORDABILITY RISKS  

Increased infrastructure spending brings greater risk. But what form does that risk take, and what’s being done in terms of mitigation? 

Lewry said the most obvious risk to focus on during a cost-of-living crisis is affordability: “While it might look to an outsider that doubling the spend was inconsiderate of affordability, it wasn’t”. 

“It’s a highly prioritised program of works that carefully balances what we need to keep services going and to support the growing demand for housing,” he said. 

“We work closely with our state government. They were also conscious of the impact of any cost increase on consumers. They took a decision to cap price increases for water and wastewater bills in our current regulatory period to 3.5%, plus CPI.” 

Schutt said the same considerations have been prioritised at Melbourne Water. 

“The community has informed us through extensive forums and surveys that they expect a level of service they can rely on, valuing safety, reliability and affordability,” she said. 

“We are collaborating with our partners in water retail and learning from organisations like Thriving Communities Australia to support vulnerable customers who are facing financial challenges.” 

Similarly, at Sydney Water one of the main influences on decision making has been maintaining a keen focus on affordability. 

“The level of investment didn’t begin at $32 billion in capital over the next 10 years – it started at nearly double that,” Miles said. “We went through an extensive customer engagement process over the course of two years and discovered that customers understood the need for an increase in their bills. But we also had to prioritise our investments to minimise that increase, which is $4.35 per week for 2025/26, and $2 per week for the following four years. 

“Importantly, we’ve also put in place a range of services to support customers, including increasing our hardship program, which itself is worth $1 billion over the five years, and other offerings such as extensions, payment plans and plumbing assistance.” 

CHALLENGES REMAIN 

While there have been surges in spending in the past, experts agree that the current approach is more structured and planned, better advised from previous experience and more collaborative. It’s also data driven. 

As the sector embraces digital transformation, efficiencies improve. As desalination and wastewater reuse programs ramp up, the pressure on rainfall-dependent sources reduces. And while workforce challenges remain, the decrease in focus on transport infrastructure offers the opportunity for engineers, construction workers and more to be brought across to water. 

As it places affordability, innovation and sustainability at the front and centre of everything it does for the community, the water sector appears well placed to face a challenging future. 

This article was originally published in the 2025 edition of Current magazine.