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