Water Journal : Water Journal June 2014
JUNE 2014 WATER 13 Special Report Francois Gouws, Chief Executive of one of Australia's largest private operators, TRILITY Pty Ltd, was very clear on the need for there to be an appeal process that investors could rely on should there be any unfair determinations that arise from any of those processes. "We need clear rules and some form of appeal ... some sort of coherency, consistency and the regulators need to be independent. I think a national regulator would sort it out, but it's not that easy in Australia," said Mr Gouws. COULD SUPERANNUATION INVESTMENT OFFER A SOLUTION? The Forum discussed looking beyond the traditional model of Government funding/ownership of water assets. The water industry needs to examine the opportunities to raise additional capital from the private sector, deliver improved customer bene ts and meet future growth needs. The Forum's most preferred source of additional private sector funding was from the superannuation funds. From a poll taken at the Forum, 46 per cent of the water leaders said superannuation funds were the preferred source, with 49 per cent unsure and only ve per cent saying that superannuation funds were not the preferred source. During the Panel Discussion, Chief Investment Of cer of the Queensland Investment Corporation, Adriaan Ryder, stated that long contract terms, which provided modest but reliable returns that were linked to the CPI in a well-regulated market were the investment criteria to make Australia's water utilities and/or their assets attractive for long-term investment from the private sector. ATTRACTING PRIVATE SECTOR INVESTMENT INTO REGIONAL AND RURAL AUSTRALIA The Water Leaders Forum also addressed investment outside the urban sector. It discussed industry-driven private investment, for example in mining, agriculture and regional tourism, as effective ways to attract capital investment into regional and rural areas. Incentives for regional and remote investment were also seen as favourable, especially taxation incentives in the development of northern Australia. The Forum discussed the need to elevate the community's perception of water as a commodity worth managing sustainably to one of Australia's most vital drivers of economic prosperity. CONCLUSIONS Arising from the Forum's panel discussion and subsequent debates, three clear conclusions emerged: 1. The Australian water industry is ready to consider alternative funding models and further private sector involvement to meet the demands of customers and future economic development opportunities in urban, rural and remote areas. 2. Consistency of economic regulation across all states and territories that balances the need for reasonable nancial returns from assets against the customers' ability to pay is essential to attract alternative long-term private sector funding solutions. 3. Superannuation funds provide an immediate alternative source of capital that could bene t the water sector and customers through long-term stable investments while freeing-up the balance sheets of State and Territory Governments. AWA will provide further analysis on the issues raised and engage with stakeholders and Governments to ensure the industry continues to evolve in a form that can best meet the needs of our customers and the opportunities of Australia's future economic prosperity. The Forum was polled on the questions illustrated in the pie charts below. Yes No Uncertain 27.3% 67.5% 5.2% 1. Do you see the extent of capital investment required to maintain and upgrade assets over the next ve years as a major issue? Yes No Uncertain 94.8% 1.3% 3.9% 3. Do you think consistency of economic regulation in the water sector is vital to attracting long-term investments? Yes No Uncertain 37.6% 52.9% 9.4% 5. Is there a role for special incentives to attract private investment in non-urban water assets? Yes No Uncertain 17.1% 71.1% 11.8% 4. Would it be better for Australia if there was a single national economic regulator? Uncertain Yes No 46.2% 48.7% 5.1% 2. Are superannuation funds the preferred type of private investment for water assets?
Water Journal May 2014
Water Journal August 2014