Structural reforms of water utilities in Australia examined.

Keynote speaker from the Australian Water Association- Water NZ Conference, 17 October 2013, 9.00 am

Significant institutional reforms to water utilities in Australia have largely been successful; but there were lessons to be learned, says Graham Dooley, the President of the Australian Water Association at today’s NZ Water conference in Hamilton.

In the 1990s 150 Victorian water utilities owned by local bodies were brought together into 17 larger utilities. “This brought significant economies of scale into both water and sewage services,” he told the conference.

Graham Dooley said that prior to the reforms there was considerable fear of disruption of services.

“As it transpired, there was no disruption despite the enormity of the reforms. Additionally the career prospects for water professionals were enhanced.”

Proper management of the reform process was key to the success across all the disciplines involved in delivering water and disposing of waste. These included accountants, planners, engineers and administrators.

Efficiency and a desire to lift the standard of water services were the drivers in the Australian reforms.

“Many of the smaller towns and districts in Victoria were too small to access and service the capital needed to bring their water services up to standard. When they joined in with the larger towns and cities, the larger customer catchment provided the necessary size and numbers to spread the cost of upgrades. More customers paid less per head for improved services.”

The Australian reforms are not unique, the conference was told. A similar story was seen in England and Wales in 1976 when hundreds and hundreds of little utilities were amalgamated into ten big ones with astounding improvement in efficiencies, enhancing services levels and careers for water professionals.

The Thatcher reforms followed in 1989. Margaret Thatcher’s government sold the water utilities; moving its ownership into the private sector in a blaze of criticism.

Baroness Thatcher later explained the reason for privatisation. She argued water utilities needed enormous sums of capital to bring the UK water standards up to European Community levels and the British Government could not afford it. Hindsight shows that move was successful.

Shares in those companies today are generally held in conservative international superannuation funds who seek low, long-term, stable returns on their investments.

The privatised water utilities are heavily regulated by an independent drinking water inspectorate, an independent economic regulator and an independent environmental regulator. This ensures customers receive potable water, their sewage is disposed of effectively and that costs are reasonable . In reality it is business-as-usual delivering high standard services.

“The private ownership model has not been for everyone,“ he said, noting that there was no support for it in New Zealand. Support for greater engagement of investment capital in all types of infrastructure, including water utilities, was growing in Australia. Sydney Water recently engaged A$2.1 Billion of investment capital in its desalination plant to replace Government debt.

Graham Dooley repeated his point that good management of reform was crucial with clear objectives and a good communication plan for the community and stakeholders. He told the conference that all reforms are not ‘good news stories’; citing problematic processes in the Queensland reforms. “However, these problems could have been avoided by better planning and management,” he said.

Ends…/

Background
Graham Dooley – Chair, Australian Water Association

Graham has been a leading figure in the Australian water industry for many years in both public and private sectors.

Following a 20 year career with the public utility Sydney Water, during which he held a number of management roles, Graham spent 17 years as Managing Director of United Utilities Australia Pty Ltd, a UK owned company which was successful in winning infrastructure projects across Australia for public authorities, local government and industry.

Graham is also Chairman of Blue Sky Water Partners Pty Ltd, an investment management company, Chairman of Osmoflo Pty Ltd, Australia’s largest desalination company, Chairman of Water Utilities Australia Pty Ltd, an investor in water infrastructure, the President (Chair) of the Australian Water Association, the peak Australian water industry organisation and of Water Australia, the industry's lead export business body. He is a Fellow of both the Institute of Engineers Australia and the Australian Institute of Company Directors.

Graham holds a Bachelor of Science and Bachelor of Engineering (Hons) from the University of Sydney and a Masters in Public Administration from the American University, Washington DC.

ends

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