Industry Reform

Industry Reform

Between 2007 and 2013, the Queensland water sector endured one of the most difficult periods in its history with ongoing demographic changes and skill shortages overlain by removal of subsidies, forced amalgamation of local governments in 2008 and repeated SEQ Institutional restructure (2007 - 2013). Many of these changes were driven by State government with little consultation with the sector and while some have had beneficial outcomes they have also left a legacy of negative impacts. To avoid poorly planned disruption in the future, the water sector itself commenced a program of internal review and investigation of options for water industry reform in Queensland.

Since 2007 qldwater and LGAQ have been working collaboratively with Local Government Service Providers to discuss reform and provide a unified position on the future of the industry. This program was accelerated in 2011 with the release of three concurrent reviews undertaken by different national agencies which concluded that reform was necessary in regional Queensland and NSW. In late 2011, LGAQ and qldwater formed the Queensland Water Regional Alliances Program (QWRAP) with funding support from the State government to investigate the need for water reform in regional Queensland. These industry programs have been united in questioning the wisdom of hasty restructuring but acknowledged the need to overcome the constraints and limitations of the sector given emerging challenges in water and sewerage service delivery.

Indeed, emerging challenges, including the call for industry reform, are being felt across the water sector globally. QWRAP research reviewed reform in Australia and in OECD and G20 countries summarising the reasons given for the change. While issues such as water quality, water security, compliance, customer service, skills shortages and need for better integrated planning were common in many jurisdictions, two drivers were virtually universal. The two key triggers for reform were a need for greater expenditure on infrastructure and a desire for savings through improved efficiency. In other words, the main reason for restructuring the water sector in most jurisdictions was a lack of funds to maintain increasing demand for improved services particularly where expensive assets are nearing the end of their useful lives. All of the drivers identified in other regions are present in Queensland to some extent and most importantly, the need for greater infrastructure investment and efficiency is just starting to be felt.

While there is no simple solution to the growing need to improve and renew water and sewerage services, QWRAP research has summarised lessons from other jurisdictions that can help reduce the economic burden on current and future communities. For example, clear benefits can be derived through regionalisation of services and this approach is common in OECD and G20 countries via joint outsourcing, selection for economies of scale, amalgamation and/or collaboration among neighbouring local governments. Even where distant communities cannot be connected by physical infrastructure (e.g. a grid), regionalisation reduces costs, spreads the impact of major investments, avoids costs of a lack of capacity, and creates economies of scale in purchasing, marketing and administration. Consequently regional, local government-owned corporations are the most common outcome of water reform internationally, tellingly even in countries where privatisation (i.e. private ownership and investment) have been trialled and failed

The lesson learned from national reviews, the Queensland water sector's own analysis and QWRAP is that privatisation is not the answer for Queensland, but neither is the status quo sustainable on a state-wide basis. Consequently, QWRAP is continuing work with self-selected regions across the state to determine the best model for local communities and avoid top-down imposition of reform that is not fit-for-purpose for diverse and dispersed Queensland sector.

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