Review of funding models for local water utilities

Final report

The NSW Productivity and Equality Commission provided to the Minister for Water on 19 July 2024 the final report of the Review of Local Water Utilities (LWU) Funding Models. The Review was conducted in response to the Terms of Reference provided by the Minister, focusing on identifying sustainable, efficient, and equitable approaches to reform NSW Government funding for local water utilities.

The report details the Commission’s findings and recommendations which include adopting clear funding principles, implementing a strategic planning-led approach, developing a new LWU investment framework, utilising Community Service Obligation fundings, and improving regulation and standards.

Terms of Reference

The NSW Productivity and Equality Commission was requested by the Minister for Water to investigate funding options to help reduce service risk for local water utilities and provide advice to the NSW Government on a future direction.

The NSW Government’s policy position is that there shall be no forced amalgamations and that councils will continue as the owners of their water and sewerage assets. Continuation of this policy position is a critical assumption of this investigation.

The terms of reference of the review requires consideration of:

• minimum levels of service
• the diversity of local water utilities
• the extent to which funding models could lift performance of local water utilities and overall incentives to lift performance
• transition pathways to a new funding approach and ways to leverage the capabilities of State Owned Corporations
• pensioner rebates.

Issues paper

To inform this review, the Productivity and Equality Commission released an Issues Paper that considered challenges from the current funding models, funding model principles, minimum service levels and alternative funding options.

The release of the Issues Paper was supported by consultations with councils, local water utilities, joint organisations of councils, industry groups, NSW Government agencies, and the community.

The Commission received 41 submissions from local government councils, county councils, regional water alliances, State-Owned Corporations, regulators, peak bodies, businesses (consultants and infrastructure industries) and citizens.

The submissions below have only been published with the author's agreement. Where consent to publish was not provided, submissions have not been published. All submissions have been reviewed prior to publication and some submissions have been redacted in part to protect the privacy of respondents or others.

The views and recommendations expressed in these submissions are those of the authors and are not the views or recommendations of the Commission or the NSW Government. The Commissioner and the NSW Government accepts no responsibility for the accuracy or completeness of any material contained in these responses.

Submissions

View the submissions