Urban Water

Inquiry into secure and sustainable urban water supply and sewerage services for non-metropolitan NSW

Basis for the Inquiry

The State's 106 non-metropolitan local water utilities are facing growing challenges posed by drought, climate change, environmental water allocations, demographic shifts, technological advances and skills shortages.

In August 2007, the Hon Nathan Rees MP, then Minister for Water Utilities, announced an inquiry into the institutional and regulatory arrangements by which town water supply and sewerage services are provided in country NSW.

To conduct the inquiry independently the Government appointed two eminent members of the community as the Inquiry Panel: the former Deputy Premier, the Hon Ian Armstrong OBE, and the former head of the Premier's Department, Dr. Colin Gellatly AO.

Inquiry Objectives

The objectives of the Inquiry are:

to identify the most effective institutional, regulatory and governance arrangements for the long term provision of water supply and sewerage services in country NSW
to ensure these arrangements are cost-effective, financially viable, sustainable, optimise whole-of-community outcomes, and achieve integrated water cycle management.

The Task

The Inquiry addresses the objectives above to identify arrangements that will enable customers of water utilities in regional NSW to benefit from a secure water supply, professional, cost-effective services and regulatory safeguards in the provision of water supply and sewerage services.

As a minimum, the Government expects water supply and sewerage service providers to:

respond and plan in advance to the challenges facing the industry
be financially self sufficient
be able to comply with appropriate stringent environmental and public health standards
implement cost-effective service standards

The Inquiry is focused on the provision of urban water supply and sewerage in rural and regional NSW. Sydney Water, Hunter Water, Gosford City Council Water Supply Authority and Wyong Shire Council Water Supply Authority are excluded from the Inquiry.

The Inquiry Terms of Reference (PDF 19KB) can be viewed here, along with a Discussion Paper (PDF 163KB) which was prepared to encourage discussion during the Inquiry on the issues facing local water utilities. By April 2008 over 140 written submissions were received from interested stakeholders in response to the Inquiry. In addition, the Inquiry Panel held 17 public hearings across NSW in April and May 2008.

Independent Inquiry Report

The Independent Panel has considered the Terms of Reference and input from a wide range of sources throughout the inquiry process. Based on these, in December 2008 the Independent Panel presented the Minister for Water with the Report of the Independent Inquiry into Secure and Sustainable Urban Water Supply and Sewerage Services for Non-Metropolitan NSW.

The independent Inquiry report examines the performance of local water utilities and the challenges that are facing them. It contains a number of recommendations for consideration by stakeholders and the NSW Government. Key recommendations are summarised as follows:

Good governance: The current 106 local water utilities be aggregated into 32 regional groups that are broadly based on submissions provided by stakeholders.
Organisation models: Three organisational structure options should be considered for the regional groups of local water utilities. The models are:
- binding alliance (for planning and technical functions)
- council-owned regional water corporation; and
- status quo for some large general purpose councils and county councils.
The "binding alliance" and "status quo" options allow councils to retain ownership and management of water supply and sewerage assets and to continue providing customer services.

The "council-owned regional water corporation" option involves the transfer of water supply and sewerage assets, related staff and service delivery responsibilities from councils to the corporation. Councils that are the beneficiaries of the corporation's services would be the only shareholders of the corporation.
Strengthen regulatory management: Strengthen the regulation of local water utilities to require implementation of all relevant plans, guidelines and standards. This must be complemented by an adequate reporting and monitoring framework and the designation of a regulator with adequate enforcement powers.
Improve pricing regulation: The regulation of local water utilities' pricing should be strengthened to require utilities to establish prices in accordance with approved business plans and financial plans. Local water utility prices must be approved by an independent body.
Cut red tape: The reporting and regulatory roles undertaken by State Government agencies be reviewed with a view to streamlining these requirements and to ensure a consistent approach across these agencies.
Consumer Protection: The Energy and Water Ombudsman NSW scheme be adopted by local water utilities as a mandatory requirement, provided it can be demonstrated that there are net benefits in doing so.
Skills shortages: A number of strategies are proposed to address regional skills shortages, including: pooling of human resources, staff incentives, skill development and training, increasing the size of local water utilities, outsourcing to the private sector and increasing the capacity of training providers.

The independent Inquiry report does not recommend amalgamating councils or creating state-owned enterprises. Council amalgamations are outside the Inquiry's terms of reference. The Government ruled out the forced transfer of water supply and sewerage delivery functions and related assets to State-owned corporations.

Development of a NSW Government response to the Inquiry

The Department of Water and Energy is working with stakeholders to analyse the recommendations in the independent inquiry report and develop a NSW Government response.

The report was placed on public exhibition from 14 January to 20 March 2009. Submissions have been provided by a wide range of stakeholders, including local water utilities, community groups, individuals and other interested organisations.

The Department of Water and Energy, with other NSW Government agencies, is now considering the issues raised in submissions and undertaking further analysis of report recommendations in order to devise specific strategies to meet the goals of sustainable, secure long term water supply and sewerage services in non-metropolitan NSW.

The NSW Government is expected to release its response to the Independent Inquiry Report in mid 2009.

Submissions received

Frequently Asked Questions

Water Inquiry questions and answers.

On this page
Independent Inquiry Report
Development of a NSW Government response
Submissions received
FAQs