ACCC Regulatory Conference Australia’s ‘long march’ of water reform Malcolm Thompson Deputy CEO 26 July 2007

Milestones in National Water Reform COAG Water Reforms June National Water Initiative NCP assessment of water reform July First biennial assessment of progress in NWI

‘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 What we mean by water reform

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 Real progress is being made

Nationally, the biggest gaps are in … 1.actually dealing with overallocation 2.groundwater / surface water interaction 3.interception 4.management of environmental water 5.water metering, data, accounting and registries 6.monitoring and compliance 7.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 2Prime 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