Australia is investing in critical minerals processing, digital infrastructure, advanced manufacturing and new housing. But behind those ambitions sits a fundamental question: where will the water come from?

The Productivity Commission’s National Water Reform 2026 report is now with the Australian Government. While its final recommendations are yet to be released, the Commission’s interim work has highlighted challenges around how Australia plans, funds and delivers its water services.

Plan for water earlier

Major projects can progress on the assumption that existing water systems will absorb additional demand. But when water requirements are considered too late, the options become more expensive and project delivery can be put at risk.

That matters as demand shifts. Sydney Water estimates data centres alone could account for 15–20 per cent of Sydney’s drinking water supply by 2035, based on servicing enquiries from developers. At the same time, closing coal-fired power stations may free up significant water entitlements that could potentially be redirected towards emerging needs.

Water capacity therefore needs to be considered much earlier in planning for major projects and housing growth, alongside more established considerations such as energy, approvals and cost.

Make the long-term trade-offs clearer

Australia also needs to confront how it pays for the infrastructure required for the decades ahead.

Water pricing decisions must balance immediate cost-of-living pressures with the need to renew ageing infrastructure and respond to population growth, climate change and changing demand. Yet responsibility is spread across governments, regulators and utilities, making accountability for those trade-offs difficult to pin down.

The opportunity now is to turn national water reform into practical action: plan for major demand earlier, make long-term investment decisions more transparent and bring governments together behind a shared approach.