The NSW Government welcomes the findings of a detailed review into the funding arrangements for local water utilities across the state, ensuring they are financially equipped to continue providing critical water and sewerage services to regional communities.
In November last year, the NSW Government requested a review by the NSW Productivity and Equality Commission to identify sustainable, efficient, and equitable approaches for reforming state funding for local water utilities.
The Commission has now handed down the report for the NSW Government to consider the findings and determine the next steps. The Government is committed to carefully considering the findings before deciding on the next steps over the coming months, in close consultation with Local Government.
“We know many councils, particularly in remote parts of the state, have a small ratepayer base but huge areas to cover, which makes it difficult, and sometimes impossible, to deliver water and sewerage services that are sustainable and financially viable,” said New South Wales Minister for Water Rose Jackson. “The revenue they generate often barely covers staff wages, let alone maintenance, upgrades or even the cost of chemicals to treat water, which means they’re constantly seeking money from other sources to keep the plants operating, which is a serious risk to water quality and security.
The proposed reforms from the report include:
- Better regulation, including improved strategic planning, water quality and environmental regulation, and reforming the approach to the regulation of water security
- Establishing a prioritisation framework and a priorities plan for the sector
- Developing a Local Water Utilities Funding Policy, including the establishment of a Community Service Obligation funding mechanism
- A review of the water and wastewater services in Western NSW.
The review considered the vast diversity of local water utilities across NSW and examined setting minimum service levels, such as requirements for water security and strategic planning.
Local water utilities rely solely on water and sewerage charges to fund the operation and maintenance of infrastructure. However, 69 per cent have less than 10,000 customers, and a third have less than 2,000, which gives a sense of the challenge they face.
“Councils are on the ground, closest to the community,” said Jackson. “That’s why we believe that councils should remain as the owners of their water and sewer assets. But the relationship between state and local government is vital, especially when it comes to delivering essential services. We’ll continue to work closely with them on these potential reforms to find the best path forward.”
This review also investigated whether new funding models and incentives could be effective in lifting the performance of local water utilities and addressing the inequality of pensioner rebates between different areas.
No decisions will be made on any potential reforms until key stakeholders, including local councils, have had a chance to have their say.
“This review was much needed, but I also want to be crystal clear that no changes will be made until we’ve heard feedback from the public and other stakeholders through an extensive consultation process.”
To view the report, visit: Review of funding models for local water utilities.
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