95 Northbourne Avenue
Canberra ACT 2600
T 02 6102 6000
nwc.gov.au
Chief Executive Officer
The Office of Living Victoria
Level 35
2 Lonsdale Street
Melbourne VIC 3000
National Water Commission submission to Melbourne’s Water Future (Consultation
Draft)
The National Water Commission (the Commission) welcomes the Consultation Draft of
Melbourne’s Water Future Strategy and is pleased to provide this submission.
The Commission supports the reform directions presented in the consultation draft and
views these as necessary to improve the performance of the Victorian urban water sector.
The Commission also made a submission to the Review of the public health regulatory
framework for alternative water supplies in Victoria through the Department of Health. You
can find our submission here.
The Commission commends the Victorian Government on their overall efforts towards
improving urban water cycle management in Melbourne.
Our response is structured across a number of reform priorities.
Institutional Alignment, but ensuring broader conversations
The Commission commends the stated intention to remove institutional barriers to
decentralised and integrated solutions, ensuring that urban water systems are resilient to the
challenges of population growth and climate variability.
Whilst we acknowledge and support the alignment with Melbourne’s broader planning
framework, there may also be opportunities to investigate benefits relating to other nexus
issues such as carbon, energy and food.
The Commission encourages the Office of Living Victoria to consider integrated plans from
other similar sized cities. For example, the City of Sydney’s ‘Sustainable Sydney 2030’ plan
includes a focus on decentralised systems and the use of trigeneration plants to reduce
carbon emissions.
Markets and Competition (Future Directions Recommendation 4.7, p50)
The urban water sector is currently dominated by large government monopoly service
providers and by central planning and regulation with minimal use of market-based
approaches. The Commission considers that there is considerable merit in further exploring
the scope for harnessing competitive forces in the sector to drive efficiency, innovation and
customer focus.
Whilst there is ongoing debate about the forms of competition that are most suitable, there is
acknowledgement that, when implemented well, third-party access to water and wastewater
infrastructure and licensing regimes for new entrants can play a positive role in encouraging
efficiency and innovation.
Customer and Community Expectations (Future Directions Recommendation 4.3, p43)
The Commission’s work to date suggests that there are further opportunities to improve
customer engagement in planning and policy, including better funding of customer
representative bodies.
The Commission considers that an informed community will be best placed to support
efficient service delivery, and that the water sector must make a long term commitment to
educate the community about the challenges and opportunities in urban water cycle
management.
In looking to understand the role of customer choice in water services the Commission
recently engaged Frontier Economics to deliver a Review of urban water customer choice
options, policy drivers and regulatory instruments. The review identified a number of
opportunities for enhancing the role of customer choice and giving customers a greater
voice.
Transparency and Trust
The Commission acknowledges the effort placed on transparency throughout Melbourne’s
Water Future, including the establishment of an online site allowing for more regular and
accurate public reporting. The Commission commends the movement towards the annually
released ‘Statement of Opportunities’ showing the 10 year outlook for investment in the
water cycle. These initiatives will be important for the Office of Living Victoria, and the wider
water sector, to build trust with customers, the community and broader stakeholder groups.
Conclusion
The Commission supports the whole of water cycle planning approach, the use of systems
analysis, and the definition of local, regional and metropolitan water cycle plans. We also
commend the long term planning horizon and the more effective use of ‘big data’ knowledge
and systems to better plan for, and communicate, with customers.
The achievement of secure, efficient and sustainable urban water management into the
future will depend on how successfully the sector embraces a focus on customers and works
through institutional arrangements, competition and markets to achieve this.
In 2011 the Commission completed a body of work on critical urban water reform issues.
These views are contained in the Urban Water in Australia: Future Directions report, which is
supported by the following publications:
 Efficient water resource pricing in Australia: an assessment of administered scarcity
pricing in urban areas, Issue No: 44, April 2011

Review of water quality regulation, Issue No: 47, May 2011

Externality pricing in the Australian water sector, Issue No: 43, April 2011

Competition in the Australian urban water sector, Issue No: 42, April 2011
The primary purpose of the Commission urban work program has been to advance the
objectives of the National Water Initiative (NWI) and inform the Commission assessments of
progress against the NWI. In delivering this work, the Commission has called for an
efficient, adaptive and customer-driven approach to managing urban water that can respond
to the challenges of increasing population, concerns about the affordability of water services,
and the impacts of climate change and extreme variability.
The Commission is currently examining progress in urban water reform and intends to
release work in 2014. The Commission has developed a discussion paper that examines six
themes relating to urban water, including:
1. efficient and effective service delivery
2. aligning institutions and regulatory frameworks
3. access to capital and private investment
4. ensuring a customer focused sector
5. contributing to liveable, sustainable and productive cities, and
6. investing in workforce skills and culture.
We look forward to engaging with the Office of Living Victoria about this project in the
coming months.
For further information regarding this submission please contact Clare Porter at
clare.porter@nwc.gov.au or on (02) 6102 6037.
Yours sincerely,
Kerry Olsson
25 September 2013