Changes in the pipeline

By ROB VALENTINE | Water and sewerage services to the Tasmanian community are a core function of local government and a responsibility councils take very seriously.

As chairman of the Southern Tasmanian Councils Authority (STCA), which represents the 12 councils in the South of the state, I welcome Treasurer Michael Aird’s comments in the Mercury of January 1 regarding the State Government’s review of the water and sewerage sector.

In particular, the assurances — that the review is not aimed at forced council amalgamations or privatisation of water or sewerage services, and that career and training opportunities in the sector will improve — are noted and welcomed.

Since announcement of the review in the Premier’s September 2006 State of the State address, a great deal of work has been going on behind the scenes, both by the State Government’s Ministerial Taskforce and Project Team and by local councils, individually and collectively.

However, until now there has been little information provided to inform the community of the review’s potentially huge implications.

It is sure to lead to changes in the way water and sewerage services are charged, together with a major restructuring of how they are provided, disruption to local councils and regional water authorities presently providing them and an increase in the overall charge for water and sewerage.

The STCA acknowledges that some reform of the water and sewerage sector is needed for the following reasons:

Many councils do not generate sufficient return on their investments in water and sewerage infrastructure to meet Government Prices Oversight Commission (GPOC) standards, and price increases are likely to be phased in to achieve that.

Some smaller councils are having difficulty providing an acceptable standard of service.

FUNDS NEEDED

Additional funds will be needed from borrowings, grants and/or price increases to manage the water and sewerage infrastructure that will need to be built across the whole state in the next 10 years.

Local government in the southern region supports the kinds of regulatory reform proposed by the Treasurer: independent price setting, minimum service standards and transparent, efficient and sustainable water and sewerage infrastructure.

As far as the structure of the sector is concerned, one option being considered by the review is removing water and sewerage services from individual councils and bulk water authorities and creating either a single statewide corporation or a few regional water and sewerage corporations.

Whether these corporations will remain in local government ownership has yet to be decided. If that is the case, establishment of three regional, local government-owned water and sewerage entities is the only model that will be acceptable to most councils in southern Tasmania.

Any structural reform of the water and sewerage sector is likely to be both costly and disruptive, not only to the present water and sewerage operations of councils but also to how councils provide a wide range of other services to their communities.

BEST OPTION

But three regional, local government-owned and commercially operated water and sewerage businesses is the best option to achieve the necessary efficiencies and improvements.

Such an arrangement would enable local communities to continue to have a say in how their local infrastructure, built up over many years and paid for by local communities, will be renewed and expanded.

Irrespective of which structural model is adopted by the State Government, some of the consequences of water and sewerage reform could include:

Introduction of water metering and consumption-based pricing in areas of the state where they are not already in place.

Residential consumers of water and sewerage services paying a larger proportion of total water and sewerage charges compared to commercial property owners.

Regulatory enforcement of the present discretionary GPOC returns on investment will generate increases in the cost of water and sewerage services to consumers.

Consumers served by councils that presently generate a significant return on their investment will pay more in their general rates if those councils are not adequately compensated for their loss of revenue to the new water and sewerage corporation(s).

The State Government is yet to determine the totality of these effects or how they will be addressed.

QUALIFIED SUPPORT

Southern Tasmanian councils support the need for reform of Tasmania’s water and sewerage sector, as long as the reforms achieve two results.

There must be improvements in water and sewerage services in our own region and Tasmania as a whole, and councils must continue to be strong enough to provide the large number of other services to their local communities.

Those results can be achieved only if state and local governments work together in an open and co-operative manner without unnecessary and unproductive conflict.

The STCA remains willing to work with the State Government to achieve positive results for all residents in southern Tasmania. 


Rob Valentine is Lord Mayor of the City of Hobart and chair of the Southern Tasmania Councils Authority. This article was published in The Mercury on January 9, 2008.