Discussion paper promotes investment in the water sector

The Australian Water Association (AWA) has released a discussion paper, prepared by legal practice Minter Ellison, that highlights the current regulatory barriers to greater private sector participation in the Australian water sector.

The discussion paper, ‘Promoting investment in the water sector’, outlines that Australian governments are the primary investors in the Australian water sector. Population growth, historic underinvestment in water infrastructure, water security, climate change and increasing environmental and public health regulation mean that considerable investment in the sector is needed in the future.

Given the challenging fiscal environment for governments in the short to medium term, said AWA Chief Executive Jonathan McKeown, now is an opportune time for governments to consider whether additional private investment into the water sector could assist in making public investment more readily available in other areas.

“Funding issues are only going to become more severe in coming years, when the competition for the available capital from governments will increase amongst service providers such as health and education,” McKeown said.

“However, for effective private investment in the water industry, clear and strong policy and regulatory settings are required to maximise customer benefits and community expectations from additional private sector involvement.

“The ‘Promoting investment in the water sector’ discussion paper shows there is a desperate need for consistency of economic regulation across all states and territories to attract long-term private investment.”

The paper’s author, Minter Ellison partner Katrina Groshinski, said one of the key recommendations of the report is that governments should agree on the broad objective of water sector regulatory frameworks.

“Most jurisdictions now have discrete public health, environmental and economic regulatory frameworks that can readily be used to govern activities by a range of participants,” she said. “However, in many parts of the sector, there is not complete institutional separation of service providers from the regulatory and policy functions of the governments. This can create barriers to the promotion of customer choice, innovation, efficiency and private sector investment.”

The paper is available for download at www.awa.asn.au/discussion_papers.