Water Journal : Water Journal February 2014
WATER FEBRUARY 2014 4From the President IS WATER BEING LEFT BEHIND IN THE INVESTMENT STAKES? Graham Dooley -- AWA President An issue that keeps bubbling to the surface as I travel around Australia and speak to business leaders and AWA Branch members is the role of investment capital in our nation's water infrastructure. When Australia was founded around the Tank Stream at Circular Quay in Sydney in 1788, the Government ran everything -- food supplies, law and order, housing, water, labour hire, transport, communications and supply of clothing. Progressively, however, virtually all these businesses have been taken up by the investor- owned sector of our economy. To my mind, once a business provides a commodity rather than a public service it is questionable whether it should be Government- owned. Gas, electricity, banking and airlines have mostly moved out of the Government sector over the last 20 years but not, surprisingly, water utilities. Australia's big super funds have repeatedly told me how much they would like to invest in water utilities, to meet the constant need for new capital and provide a steady rate of return for their members. Some of the larger investors have already invested in UK water utilities, but this option has not yet been available in a realistic sense in Australia. PPPs have played a useful role, but they tend to be speci c to a single project. Provided our economic and technical regulators are set up properly and function both at State and national levels, the non-Government sector is a much more suitable place for capital-hungry businesses -- even those that are natural monopolies, such as large airports and water utilities. The laws in most States that control and regulate the delivery of water for urban, rural and industrial users now make no differentiation between who owns or operates the infrastructure or the water entitlements in the major rivers. That is the rst step, and it has been done well. The second step has been to give State and Local Government owners of these water businesses the incentive to push them into the capital markets. Joe Hockey and the State Treasurers appear to be getting such an incentive in place. Thirdly, the Commonwealth Government has established a Commission of Audit chaired by long- time water industry supporter Tony Shepherd, who was a key player in many of the early Australian water PPPs. This is likely to produce further thinking focused on reducing the endless demand for money from the Government purse for the water sector as a whole. AWA is developing some focused thinking on using more of the capital and human resources already available to the industry rather than dipping constantly into Government coffers. We hope to roll out these ideas over the coming months. I have just celebrated my 44th anniversary of joining the water industry, and over the years I have been employed in every possible type of business con guration. I hope that before I retire I will see a substantial investor-owned water utility business in Australia. Will it be a large utility, or a collection of smaller ones? I don't know, but it will change the way investors and the public view the water sector, and it will free up Government balance sheets to do what Government does best -- look after us with those services that only Government can provide!
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