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ACCC Regulatory Conference Australia’s ‘long march’ of water reform Malcolm Thompson Deputy CEO 26 July 2007
June 2004 - National Water Initiative 2005 - NCP assessment of water reform July 2007 - First biennial assessment of progress in NWI Milestones in National Water Reform 1994 - COAG Water Reforms
What we mean by water reform • ‘Normalising’ the water sector: • Clear and ‘non-compromised’ institutional arrangements • Reliable accounting and measurement • Clearly established property rights • Functioning markets • Transparent economic regulation
What we mean by water reform • Dealing with the differences inherent in the water sector … • Improved water planning and environmental management • Addressing unsustainable levels of water extraction • Science and data • Community engagement • Governance arrangements for managing water
Real progress is being made • Water planning practices are improving in every state • Statutory water access entitlements established • National water accounting model is under construction • Water markets are expanding • Cost reflective charging is entrenched in most major urban areas
Nationally, the biggest gaps are in … • actually dealing with overallocation • groundwater / surface water interaction • interception • management of environmental water • water metering, data , accounting and registries • monitoring and compliance • urban water security
Why is reform taking so long? (1) • Entrenched institutional arrangements • Entrenched patterns of water use • The ‘values contest’ in water • Where there is no market price, the value of water becomes subject to a contest of ideas - inertia • Incentives to avoid reform are greater than the incentives to undertake reform …
Why is reform taking so long? (2) • Communities not yet convinced that reform will deliver a better result • Scarcity • Climate change impacts • Higher prices • Governments are major owners and operators of water infrastructure • Revenue source • Tool of economic development • Tool of community development • Rekindled desire to invest in water infrastructure • Crisis = command and control
Lessons for policy makers and regulators (and even academics and consultants) • Don’t lose sight of the unique aspects of the water sector • Understand better how markets develop • Create ‘adaptive efficiency’ in institutions • Make the case for why reform will improve water management and use
What has the NWC been doing? • 65 WSA projects; $1.28b committed • 72 RNWS projects; $95m committed • National Competition Policy Assessment Report • AWR 2005 Stages 1 and 2 • Prime Minister’s Seasonal Outlook Report • Performance Report – Major Urban Utilities • Waterlines Report – Rainwater Tanks • Waterlines Report – Recycled Water • Biennial Assessment of NWI progress • National Water Data Summit