Reforming water policy for a changing Australia

At a glance:

• Australia's water policy remains reactive and misaligned: Reform surges during drought but slows in good seasons, creating uncertainty between policy, regulation and delivery 
• Legacy frameworks are falling behind modern expectations: From cultural and environmental outcomes to liveability and emerging industries
• Climate risk, rising renewal costs and regulatory pushback are stalling critical investment: This highlights the need for clearer trade-offs and integrated policy, governance, and engineering approaches to secure long-term water resilience. 

Sponsored by WSP and held in Canberra on 27 March, the AWA National Policy Forum will explore whether current water policy reflects the values Australians hold for water – and, if not, what needs to shift to ensure better long-term outcomes.

Speakers, panellists and participants will examine this through keynote provocations, panel discussions, Q&A sessions and a workshop designed to surface diverse viewpoints, challenge assumptions and co-develop a clearer direction for reform.

For facilitator Matthew Coulton, Associate Director at Ricardo (a member of WSP), the AWA National Policy Forum is coming at a good time, with the Federal Government currently working with states and territories on a new National Water Agreement.

“When it comes to prioritising water policy, we tend to go through cycles. You can map these cycles back to pre-Federation days. We have a big drought, governments say we need to manage water better, the drought breaks and water reform gets deprioritised. There is broad agreement that a crisis is not a good time to make long-term policy, but without the crisis the mandate for policy reform goes away,” he said.

Since the 2017-20 drought broke, much of Australia has experienced more favourable conditions. At the same time, responsibility for water policy has been integrated into large departments with other critical priorities such as the energy transition, environmental protection reform and climate change – all within tight fiscal constraints and increasingly complex governance arrangements.

“The lack of sustained focus is not a criticism of governments – juggling competing priorities with political mandate and funding availability is a wicked problem. But there is a lot that can be done in water policy that doesn’t necessarily involve large expenditure and if we don’t have the substantive conversations now, we will be back into crisis management before we know it,” Coulton said.

A changing Australia

Australia’s current water policy architecture was largely shaped by competition reforms in the 1990s and 2000s, particularly through 1994 COAG agreements of a Water Reform Framework and the National Water Initiative of 2007, Coulton said, and has a core focus on capping water use at sustainable levels and maximising the economic productivity of the water we use.

“It’s been really successful at a high level. We have very efficient water use in Australia. The economic return from water use is very high. But expectations have evolved,” he said.

“More and more, we’re starting to see communities and governments talk about the many other values of water – cultural purposes, for cooling cities and livability, recreation – and we have emerging industries that use water in a different way, such as pumped hydro, hydrogen production and data centres.

“This is challenging a system that was primarily designed to share water between the environment, cities and towns, and agriculture. It’s a good time to sit back and ask whether those core policy frameworks that were born 40 years ago still reflect our values and priorities today.”

WSP Water Director Dean Toomey said regulatory cycles are creating their own peaks and troughs in the sector, with regulatory tension often slowing down the ability for utilities to deliver on community expectations.

“In recent years, most utilities around the country have been flagging significant increases in spend to cater for asset renewal, keeping up with growing demand and responding to climate risks,” Toomey said.

“In many instances, when they’ve gone through the regulatory review, the regulator has said they don’t necessarily agree with those plans and a lot of important work stalls.

“While the role of regulators in ensuring cost effective outcomes for customers is critical, it’s also important to note that this uncertainty flows through the whole industry resulting in less efficient investment.”

Toomey said this highlights the importance of stronger alignment between policy intent, regulatory settings and delivery realities.

“Ultimately, decisions made at the policy and regulatory level need to translate into infrastructure that is constructable, resilient and grounded in community need.”

With WSP recently acquiring Ricardo, Toomey said the integration brings upstream policy, regulatory and economic reform capability alongside design, engineering and construction expertise.

“Our work is often here and now, putting something in the street today. Ricardo brings a much broader, holistic perspective around policy, governance, regulation and economics,” he said.

“There’s a lot of power in bringing those perspectives together, particularly in terms of helping clients move from business case through to delivery with greater confidence and coherence.”

Surfacing trade-offs 

For Coulton, success on the day means creating genuine debate, and a key theme will be the articulation of trade-offs.

“All these decisions in water are often about trade-offs. But those trade-offs aren’t necessarily articulated clearly, explicitly, in a way that communities can engage,” he said.

Coulton said he doesn’t believe it is the job of policy professionals to make value judgements about those trade-offs, but to clearly describe the trade-offs associated with different options in a way that communities and decision-makers can understand and apply their own values to.

“If we can’t articulate the problems and trade-offs really clearly, we can’t have innovative, collaborative conversations about how to solve them,” he said.

Importantly, Coulton does not see the Forum as an exercise in criticising governments.

“This is an opportunity for the broader water sector to take a bit more of the load in having important policy discussions,” he said.

“Many parts of the industry don’t operate within the same, challenging constraints that policy officials do, and can help drive productive conversations about reform. It’s great to see the AWA help make that happen.”

For Toomey, the Forum offers an important opportunity for industry and government to work together in shaping a more coherent direction for the sector.

“I hope we come away with a more common understanding of how to collectively shape reform. That doesn’t mean everyone agrees on the same solution, but it does mean recognising that when policy, regulation and delivery are better aligned, this leads to better outcomes for communities,” he said.

“A more common voice that says: this is important, we need to do something about it, we need to take action.”

Interested in learning more about the National Policy Forum? Take a look at the details here.

This piece was originally published by the Australian Water Association (AWA) and is republished here with permission.