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State Government of Victoria Reforming , Victoria's Water Industry Regional Structure for Non-Metropolitan Urban Water Authorities June 1995 Office of State Owned Ente1·prises Office of Water Reform Department of the Trea$ury Department of Conservation and Natural Resources ,_;: j ~ ~ ~- Reforming Victoria's Water Industry Regional Structure for Non-Metropolitan Urban Water Authorities June 1995 Office of State Owned Enterprises Office of\Vater Reform Department of the Treasury Department of Conservation and Natural Resources PREFACE In March 1994, we released the Government's Plan for Reform of Non-Metropolitan Urban Water Authorities (the Plan). That document set out the Government's desire to complete the amalgamations of water authorities as a necessary first step toward achieving major improvements in water services and environmental conditions in Victoria. It incorporated a three-month consultation phase. All water authorities took advantage of the opportunity to make input during the consultation phase. The plan was then the subject of further consultation to resolve specific issues. Authorities made more than 100 formal written submissions during the consultations as well as participating in numerous meetings to discuss the Plan and possible variations to it. A major effort was needed on the part of the water authorities - through their members and officers - for this process to succeed. We thank all those concerned. Thanks arc also due to all individuals and organisations who made their views known to the Government. This document records the outcome of the consultation and points the way to the future. Modifications were made to the Plan to acconunodate the strong regional relationships which were clarified during the consultation process. We are pleased to say that the Government's criteria for achieving commercially viable water authorities with a trne regional focus were best satisfied by the regional groupings which the authorities themselves helped to finalise. We were also encouraged by the fact that the eighteen regional water authorities identified in this document were established almost exclusively through the voluntary amalgamation of over 80 former authorities. The statewide restructuring was substantially completed in February 1995. By assisting with this reform the former bodies have helped prepare Victoria for a new era in the management of water services. The new regional water authorities are now addressing the major challenge in meeting Government objectives for the water sector. In the broadest tenns these objectives are to achieve enduring public benefit by improving services and reducing costs. Economies of scale achieved from restructuring should enable operating costs to be reduced by 20% statewide. These savings will contribute to the financing of priority works for improved water quality to customers and better wastewater management, which are two key outcomes expected of the reforms. We are also establishing a framework for protecting the envirorunent and making more sensible use ofVictoria's valuable resources. The next step in this process will be to introduce operating licences with customer service contracts. We look forward to working with the new authorities for the benefit of the people and the envirorunent of Victoria. Alan Stockdale Geoff Coleman Treasurer Minister for Natural Resources CONTENTS PREFACE CONTENTS BACKGROUND .... .......... .......... .......... .... ................................................................................ 1 STATE PLAN OF NON-METROPOLITAN URBAN WATER AUTHORITIES ............. 6 REGIONAL WATERAUTHORITIES- SUMMARY STATISTICS ................................. 7 THE FUTURE ......................................................................................................................... 9 REGIONAL WATER AUTHORITIES ........... .... ................................................................ 11 Grampians Region Water Authority ............................................................................... 12 Lower Murray Region Water Authority ......................................................................... 16 Coliban Region Water Authority ................. ................................................................... 18 Goulburn Valley Region Water Authority ....................................................................... 20 Mid-Goulburn Regional Water Board ............................................................................ 22 Ovens Region Water Authority ...................................................................................... 24 Kiewa Murray Region WateT Authority ......................................................................... 26 East Gippsland Region Water Authority ........................................................................ 28 Central Gippsland Reg1on Water Authority .................................................................... 30 South GippsJand Region Water Authority ...................................................................... 32 Westernport Region \Vater Authority .......... ................................................................... 34 Western Region Water Authority .................................................................................... 36 SOUTH WEST AUTHORITIES ................................................................................ 39 Central Highlands Region Water Authority .. .................................................................. 40 Barwon Region Water Authority .................................................................................... 42 Co lac Region Water Authority ....................................................................................... 44 South West Water Authority ........................................................................................... 46 Portland Coast Region Water Authority ......................................................................... 48 Glenelg Region Water Authority .................................................................................... 50 APPENDIX - Contact Listing for Region Water Authorities ................................................. 53 BACKGROUND GOVERNMENT OBJECTIVES ln October 1993, the Treasurer and the Minister for Natural Resources released the Government's policy 'Reforming Victoria's Water Industry -A Competitive Future - Water'. This policy document identified the substantial scope for improvt:ment in the Victmian water industry by introducing competition to drive efficiencies and by empowering customers to make choices about the services they require. The document listed previous over-investment of capital, excessive debt, inefficient work practices and Jack of responsiveness to customers as issues of major concern. The policy was set in the framework of the national agenda of reform which arose out of the I 992 Industry Commission report on water and wastewater management. The Industry Commission examined what it believed were unsatisfactory economic aspects of water and wastewater management around Australia. It also examined the issue of sustainable development and emerging enviromnental problems such as blue-green algae outbreaks across the country. Victoria's policy is consistent with the national directions. Since the Industry Commission reported, the Council of Australian Governments (COAG), through its Working Group on Water Resource Policy, has been developing a strategic framework for efficient and sustainable reform of the water industry. At the same time, the National Competition Policy Repon by the Independent Committee of Inquiry (the Hilmer Committee) also reported to CO AG that government business enterprises in Australia, including water authorities, lacked the vital clement of competition to drive improved customer service and efficiency gains. 'Reforming Victoria's Water industry -A Competitive Future - Water' also described a program to separate the public-good functions (regulatory and community service) and commercial functions (customer services) in the water industry, and to introduce greater financial transparency and accountability. It addressed sub-sectors in the industry served by the Melbourne Water Corporation, the Rural Water Corporation and non-meu·opolilan urban water authorities. The subject of this report is the refonn of the non-metropolitan urban water authorities. PROCESS OF STRUCTURAL REFORM History of Reform In the early 1970s Victoria's non-metropolitan water industry consisted of 370 water tmsts, sewerage authorities and local councils which operated their own water and sewage services. The Public Bodies Review Conunittee, a joint parliamentary committee, was established in 1980 with one of its tasks being to address the fragmentation within the water sector. This led to substantial restructuring of non-metropolitan authorities and progressively reduced the number of authorities to approximately 150 by the mid 1980s. The late 1980s and early 1990s saw several reviews into the management arrangements of the State's water industry where there were specific financial or management problems. The number of auth01ilies was further reduced during this period to 120. 1 South West Victo1·ia Thirty-two water authorities in South West Victoria jointly completed a major review of the management arrangements for water services in the region in September 1992. After further consultation, the Government in December 1993 supported the major reconunendation that six regional
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