Call for water sales to bring billions
A Canberra academic says Australia could make billions of dollars from privatising its water assets, but only after broad reforms.
Writing for Fairfax Media this week, Canberra lecturer Andrew Blyth argues that inefficient allocations combined with burdensome water restrictions and conservation programs make Australia’s water assets unattractive to investors.
This, he claims, has pushed up water prices.
Mr Blyth - adjunct lecturer at the University of NSW - said Britain's water industry saw new investment of almost $200 million over 20 years after it started its water privatisation scheme.
Investments even came from Australian superannuation funds.
“The ability of Australia's water authorities to finance their future activities without driving up water bills is forcing an urgent rethink on the need for institutional and regulatory reform of our water industry,” Mr Blyth said.
“Fixing the regulatory hole in the bucket in the water sector could see consumers and Australian investors benefit.”
The Federal Government has indicated it believes water industry reform is lagging behind change in other sectors.
Its recent competition policy review called for the creation of a new bureaucratic body, the Access and Pricing Regulator, to take over some regulatory functions from the Australian Competition and Consumer Commission (ACCC).
But the review found that the ACCC should continue to act as competition watchdog for the water sector.
The Access and Pricing Regulator also would take on some jobs currently being fulfilled by the Australian Energy Regulator.
“Investment [in water]... is either funded directly from budgets or by users across the network rather than from users according to the costs they impose on the network,” the review's report said.
Mr Blyth said if the regulatory structure could be sorted out, there are potential profits of $54 billion to $61 billion from the sale of bulk water assets, and $32 billion to $35 billion for distribution assets.
“However, with unclear roles and responsibilities of governments; water utilities and regulators leading to the inefficient allocation of water resources; misdirected investment; undue reliance on water restrictions; and costly water conservation programs, these assets could end up being less attractive,” he said.