By Nicole Hasham and State Politics
Water conservation mandates are being abolished and there are warnings Sydney Water is being fattened for sale as the Baird government overhauls water competition laws.
The wind-back comes as the Bureau of Meteorology warns of signs of an El Nino in the Pacific, which may bring warmer, drier weather to Australia and increase the drought risk.
The government has introduced a bill that relieves private water companies of their obligation to develop alternative sources of water, such as water recycling.
At the same time, the Independent Pricing and Regulatory Tribunal has recommended that Sydney Water’s usage and efficiency targets be scrapped, saying they may lead to unnecessary and costly water-saving programs.
About ten private companies compete with public utilities in NSW, providing water to residential, commercial and industrial customers. They include a recycled water project at the Central Park residential development at Chippendale and a recycling scheme at Rosehill that supplies industrial and commercial sites in Western Sydney.
Private operators must source “sufficient” water through alternative measures such as recycling or stormwater harvesting, rather than buying all water more cheaply from Sydney Water or other public utilities, which could put pressure on supplies.
But Water Minister Kevin Humphries plans to repeal that rule in the Water Industry Competition Act. He says private operators incur unfair costs that create “an unlevel playing field” and dampen competition.
The change comes as IPART, which is reviewing Sydney Water’s operating licence, says obligations on water usage and efficiency should be scrapped. An issues paper says the targets may be “arbitrarily set” and it can encourage Sydney Water to implement water conservation programs “that are not necessary or uneconomic”.
Total Environment Centre director Jeff Angel said removing Sydney Water’s conservation targets, while allowing it to sell more water to private operators and boost profits, was a bid to “increase its attractiveness to potential buyers”.
He said the water conservation target had been “a critical driver of investment” in managing water demand and "there is nothing more economically important than having sufficient supplies of water to last out a drought".
Labor’s water spokesman Peter Primrose said he was “very concerned” that the government was seeking to undermine the development of alternative water sources.
He said Labor was still examining the bill, but it was clear “privatisation must be on [the government’s] mind”.
Infrastructure Australia, which advises the federal government, identified Sydney Water as ripe for sale in 2012 to plug an infrastructure funding gap. It also singled out the entire NSW electricity transmission and distribution sector, the partial sale of which the Baird government will take to the election next March.
Mr Humphries said the government had “no plans to privatise Sydney Water”. He said water competition laws, drawn up in 2006, came during a major drought, and the new laws would promote competition and “continue to protect water-saving measures and to reduce demand on drinking water supplies”. However, he did not detail how this would occur.