Water Journal : Water Journal February 2015
FEBRUARY 2015 water 43 Feature article A ustralia has been well served by its water industry for over 100 years. We enjoy a relatively affordable, high- quality and reliable water supply and an environment protected from wastewater pretty consistently across the nation. This is no mean feat for a land with one of the most variable climates in the world, where there can be a 2,000-fold difference in flows between a wet year and a dry year. As we face the next population boom, the spectre of climate change is exacerbating the natural variability of our climate. The community has ever-higher service and personal choice expectations. Governments have increasing burdens on the public purse. This continuously toughening environment means we need to be constantly focused on delivering urban infrastructure and services more efficiently and more effectively. The focus needs to be on both how the infrastructure itself is conceived and planned, and how it will be procured, funded and operated. The last few years in Australia have seen a high level of interest in, and debate about, infrastructure at a government, investor and industry level. The conversation has focused largely on how to fund more infrastructure to support a productive and competitive economy, and to deliver a desired standard of living while protecting the natural environment, at the same time as governments have high levels of debt and many competing priorities. The role of the private sector in financing, owning and operating infrastructure is being explored at an unprecedented level. While water infrastructure has been in the background of this debate, with most attention on areas such as roads, ports, rail, electricity and telecommunications, there is significant value in examining how the private sector could effectively participate to a greater extent in water infrastructure. There is already private sector participation in the supply of services to the industry, in the operations of some assets, and a few examples of private finance through private schemes, asset sales and PPPs. It is now time to plan for the future and to develop the right governance, regulation, incentives and protections to ensure Australia continues to be well served by reliable, responsive high-quality water services at a price the community can afford – and to rethink the style of infrastructure and water services that will best meet our needs in the next 50 years. AustrAliA’s urbAn wAter growth chAllenge Australia is highly urbanised, with over 80 per cent of the population of 23 million people living in urban areas and two-thirds in capital cities alone. Based on medium growth projections from the Australian Bureau of Statistics, urban populations are projected to double in the next 50 years, with capital cities increasing from the current 15 million to 29 million people. The infrastructure and water resources required to accommodate this growing population will increase commensurately. In addition, urban population growth usually comes with higher expectations of standards of living and provision of services. The supply of naturally available water in our capital cities and other urban areas is already stretched. Climate-variable supplies have been augmented with desalination plants in most coastal capital cities to minimise future restrictions in times of drought. The 2011 Productivity Commission inquiry into urban water in Australia concluded that the scale and timing of some of these investments were not efficient. It also noted that not all solutions were contemplated due to policy bans in some jurisdictions and this potentially led to higher infrastructure costs. The inquiry also attempted to model the economic impact of restrictions, while acknowledging the difficulty in such calculations. Figures ranged from $209 million per annum for Stage 4 restrictions in Canberra, $275 million per annum due to restrictions in Sydney, and between $420 million and $1.5 billion over 10 years for Stage 3a restrictions in Melbourne2. The Commission’s conclusion regarding water supply security is that with such large cost impacts of drought and so few alternatives, large cities simply cannot be allowed to run out of water. The dichotomy between the level of service we wish for and what we can afford to pay means that in the future the community and industry as users must be an integral part of infrastructure planning. The level of service required, and willingness to pay for that service, is an essential guide to scaling and timing infrastructure efficiently. Technological innovation has the potential to dramatically change the impact of infrastructure. Infrastructure that is smart and connected, supported by targeted use of quality data, will improve the overall efficiency of infrastructure, improve the level of service and reduce cost to serve. It should be possible to do more with a lot less. The investment of the water industry in innovation and data must continue. There is potential for better integrated planning supported by new data and models, faster feedback of AUSTRALIA’S WATER INFRASTRUCTURE: THE CASE FOR CHANGE Good infrastructure is critical to our productivity, economic growth, standard of living and environmental protection. In this article Lucia Cade argues the case for fundamental reforms in how we plan, fund and deliver for the future. financing infrastructure 1 3222.0 – Population Projections, Australia, 2012 (base) to 2101, Australian Bureau of Statistics. 2 Productivity Commission Inquiry Report, Australia’s Urban Water Sector, Volume I, August 2011, Box 4, page 22.
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