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The program

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Local water utilities

What is a local water utility?

Local water utilities deliver water supply and sewerage services to more than 1.8 million people in regional NSW (i.e., outside the areas of operation of Sydney Water Corporation and Hunter Water Corporation); protecting public health and the environment and supporting economic development and liveability.

The vast majority of NSW’s local water utilities are either general purpose councils, which operate as financially separate to general local council operations, or special purpose county councils. Councils exercising water supply and/or sewerage functions do so under the Local Government Act 1993. Three local water utilities - Cobar Water Board, Essential Energy and WaterNSW for the Fish River Water Supply - operate as water supply authorities under the Water Management Act 2000. Central Coast Council exercises its functions under both the Local Government Act 1993 and as a water supply authority under the Water Management Act 2000.

More information about local water utilities is available on our website: water utilities.

What challenges and risks do local water utilities face?

Local water utilities face challenging conditions, with drought, flood and climate variability all potentially affecting water availability.

There is also significant variability in the geographic coverage and population trends in the areas covered by local water utilities, with service areas ranging from 285 km2 to over 50,000 km2 while populations range from 1,000 to over 300,000.

Remoteness and low population density can contribute to cost disadvantages, revenue raising challenges and skills shortages, including in specialist water engineers and operators to maintain town water infrastructure. Some regional towns also need to provide for transient tourist population peaks and water for households that are not serviced by town water during extended dry periods. In 2019/20, local water utilities had an annual revenue of $1.71 billion and combined infrastructure current replacement costs of $31.1 billion.

Town Water Risk Reduction Program

What are the objectives of the Town Water risk Reduction Program?

The key objective of this program is to develop and implement a new approach of working together that enables local water utilities to manage risks and priorities in town water systems more strategically and effectively and, as a result, reduce risks in regional NSW communities over time.

The department’s overarching goal for this program is to work collaboratively with stakeholders to build a town water sector where:

  • stakeholders, including the department, work together in partnership, sharing data and knowledge, consulting and collaborating with one another, and supporting each other where applicable
  • local water utilities are supported to manage safe, secure and sustainable water supply and sewerage services in an efficient and customer-focused manner
  • regulation of local water utilities is focused on outcomes, based on risk and the maturity of local water utilities, and is fair and transparent. Regulators are accountable and well-coordinated.

What is the Town Water Risk Reduction Program focused on?

Based on previous reviews and feedback, the department has identified five key barriers the program will focus on to help reduce risks in town water systems and improve the performance of local water utilities:

  1. Scale and remoteness - Utilities with small or spread-out customer bases face intrinsically higher per-person costs for delivering water and sewerage services and are sometimes unable to raise the revenue needed to manage their risks through service charges alone.
  2. Skills shortages - Some utilities have difficulty attracting suitably qualified and experienced staff to fill critical roles within their business. In some cases, this is due to shortages of certain skill sets in the market, but in other cases it is simply that local water utilities cannot afford to offer the same remuneration or career progression opportunities as the metropolitan sector. Solutions to these issues must also consider the complex regulatory requirements and industry standards applicable to local water utilities.
  3. Sub-optimal strategic planning - There is currently a lack of coordination between the various layers of strategic planning relevant to town water. For example, there is no formal mechanism for aligning the modelling, risk and options analyses of the department’s regional water strategies with local water utilities’ integrated water cycle management

Partnership approach

What does a partnership approach mean?

What does a partnership approach mean?

The department has learned from the issues encountered by previous change programs and identified several areas where we can improve our approach. This includes engaging more meaningfully with stakeholders when designing and refining options, having a greater willingness to look inward at government’s own regulatory and support activities, and ensuring the necessary follow through to implement recommended options. The department will put these learnings at the centre of the Town Water Risk Reduction Program by adopting a robust partnership approach with the following key elements:

  • A dedicated team accountable to the CEO Water for driving partnership and implementing solutions.
  • Creation of a stakeholder advisory panel to help the program team shape proposals and design engagement mechanisms.
  • Commitment to listen – capture stakeholder input at every stage, provide flexible feedback options, and formal processes to document and address feedback.
  • Collaborative design – leveraging existing local government sector expertise and success; design and refine solutions in partnership with sector stakeholders; establish feedback loops so stakeholders can tell us if we are not meeting these standards.

What engagement has occurred during the project?

We have surveyed the sector on their perceptions of the department as a regulator of local water utilities. Download the results (PDF, 324.14 KB).

In June 2021, the Program team engaged with over 260 stakeholders from across the local water utility sector in virtual and regional workshops. We discussed the problems stakeholders saw with the department’s regulatory framework and approach and collaborated on potential solutions and a possible path forward. Download the summary of engagement (PDF, 446.5 KB).

We will continue to engage with the local water utility sector throughout the program.

We continue to engage with the local water utility sector through our Working Groups and Focus Teams.

Where can I find more information about past and upcoming events?

We share the presentations and outcomes of our meetings on our website: Stakeholder Advisory Panel.

We also have a monthly newsletter updating our regular stakeholders. If you can’t find what you are looking for, email the team: regional.town.water@dpie.nsw.gov.au

Roadmap to an improved regulatory framework for local water utilities

What does the roadmap do?

The roadmap focuses on improvements to the regulatory framework for local water utilities. However, recognising that the regulatory framework is just one element of a new partnership approach between local water utilities and the NSW Government, where relevant, the roadmap also identifies opportunities for improvements to the department’s related advisory and support role and the coordination of strategic planning across all levels of government.

How can I engage with the program to help progress the roadmap?

We have established Working Groups to collaborate with the department to design improvements to our regulatory approach to strategic planning and technical assessment and approvals. Working groups outcomes will be shared and feedback is welcome. More formal and broader consultation on working group outcomes/options will take place as a next step.

Review of strategic planning - Integrated Water Cycle Management Strategies

What future changes can councils expect?

One of the first issues identified by stakeholders for review and improvement under the Town Water Risk Reduction Program is the department’s approach to regulating and supporting the implementation of IWCM strategies. In particular, improving the transparency, accountability and efficiency which govern the department’s assessment of IWCM strategies.

We expect that changes from the review will take effect from 1 July 2022.

The review is in partnership with councils and local water utilities and will consider the:

  • role of strategic planning for local water utilities
  • components of the existing IWCM strategic planning framework and how they interact
  • needs of councils and local water utilities to have timely access to climate risk and water availability data and modelling approaches for their water sources
  • clarity of the department’s definitions, assessment criteria, procedures and timeframes for the assessment of IWCM strategies
  • monitoring and publicly reporting on the status of IWCM strategies’ development and implementation
  • assistance the department provides to local water utilities to procure value-for-money services for IWCM Strategy development.

For more information visit our website: Review of the requirements and administrative processes for Integrated Water Cycle Management Strategies.

What should councils and local water utilities do now?

For information on what to do next see our website: What should councils and local water utilities do now?

When will changes be implemented?

We expect that changes from the review will take effect from 1 July 2022.

Have your say

We continually incorporated feedback into our program and would like to hear more about what you think about the program elements. To have your say, simply email regional.town.water@dpie.nsw.gov.au