Australia’s water sector is set to undergo its next major phase of reform, with the Federal Government announcing a new national water inquiry led by the Productivity Commission at the Australian Water Association’s National Policy Forum on Friday.
Opening the National Policy Forum, Minister for the Environment and Water Murray Watt positioned the announcement within a broader period of review and renewal across the sector, as governments reassess the frameworks underpinning water management in the face of emerging pressures.
“Water security impacts every community and every corner of our country. So, our water management frameworks must adapt and evolve to take into consideration the variety of needs,” he said.
“Today’s forum couldn’t come at a more pertinent time, as we mark a year of reflection and renewal.
“Freshwater is facing a range of familiar hurdles as well as new challenges – ones that simply didn’t exist in 2004 when the National Water Initiative was agreed – or in 2012 when the Basin Plan was legislated.”
At the centre of this reform agenda is a new Productivity Commission inquiry, which will be led by Commissioner Joanne Chong, tasked with examining how Australia can maintain water security and affordability while improving productivity and long-term sustainability across the sector.
The inquiry will play a key role in shaping future policy, particularly as governments work to refresh national guidance on water pricing and independent economic regulation over the next two years.
“The PC review will provide advice to governments on policy and regulatory settings that can support you in the water services sector,” Minister Watt said.
“For the first time, we’ve asked the Productivity Commission to also investigate how the water services industry can continue to provide affordable services that meet customer expectations, while ensuring providers remain sustainable in the long run."
Commissioner Joanne Chong will be supported by Associate Commissioner Dr Paul Wywroll. Alongside its forward-looking focus, the inquiry will also fulfil its statutory obligation under the Water Act 2007 to assess progress against the 2004 National Water Initiative (NWI), which remains the foundation of Australia’s water reform framework.
Importantly, the Commission will seek input from across the sector, with Minister Watt urging stakeholders to engage in the process.
“Hearing your views on these issues will be critical for helping governments to shape modern and responsive industry regulation, so I urge you all to engage with the Productivity Commission on its review,” he said.
The final report is due to the Treasurer by 4 September 2026.
The inquiry forms part of a broader suite of reviews currently underway, including assessments of the Water Act, the Murray–Darling Basin Plan, and the Inspector-General of Water Compliance.
“Together these reviews provide an opportunity to reflect on what’s working, and what can be done better,” Minister Watt said.
These parallel processes are expected to inform the development of a new National Water Agreement, which is being negotiated with states and territories to replace and build on the two-decade-old NWI.
The forthcoming agreement will focus on six priority areas, including water planning and management, First Nations engagement, urban water challenges, and economic regulation.
Minister Watt also highlighted emerging pressures shaping water policy, including the rapid growth of data centres and their potential impact on water demand.
“We know data centres can bring a lot of opportunity to Australia, but they can also be heavy users of water and energy,” he said.
Minister Watt said addressing Australia’s water challenges will require coordinated action across all levels of government and industry.
“When it comes to an issue as broad as water, it’s not surprising that there are a lot of interested parties with responsibilities and vested interests,” he said.
“Delivering a sustainable future for our national water resources is a matter that involves us all – and we all need to be part of the conversation.”
With the Productivity Commission inquiry now set to begin, the sector has a critical opportunity to help shape the next chapter of national water reform, one that responds to modern challenges while maintaining the principles that have underpinned Australia’s water management for more than two decades.