In 2006 the then Premier, Paul Lennon MP, in his State of the State speech, announced the creation of a Ministerial Water and Sewerage Taskforce to investigate the structural and regulatory arrangements in the water and sewerage sector.
The Taskforce found that:
- about $1 billion of new water and sewerage infrastructure is required over the next decade;
- half the 29 councils, which were the owners of Tasmania’s water and sewerage assets at that time, had not completed asset condition assessments and 70% did not have adequate asset management plans;
- the financial returns from the sector averaged around two to three per cent, which had resulted in little capacity to service debt and an underinvestment in infrastructure;
- approximately 50 per cent of the wastewater treatment plants in Tasmania were not always in compliance with their licence conditions;
- 23 water supply areas were on permanent boil water alerts, including in key tourism areas; and
- Tasmania’s water and sewerage regulatory framework was light-handed compared to other Australian states.
The Government has been driving reform in the water and sewerage sector because it will deliver significant long term benefits to public health, the environment and the Tasmanian economy.
Outcomes of the Review
Outcomes arising from the work of the Taskforce include:
- The establishment of three regional water and sewerage corporations, Ben Lomond Water, Cradle Mountain Water and Southern Water, which assumed responsibility for the provision of water and sewerage services on 1 July 2009.
- Initial price regulation by the Government, under an Interim Price Order. The Interim Price Order was started to transition the water and sewerage industry towards independent price regulation, full cost recovery and consistent pricing arrangements.
- The introduction of the water and sewerage concession. On 4 September 2009, the Water and Sewerage Industry (Community Service Obligation) Act 2009 commenced. The Act establishes arrangements under which the State Government funds the full cost of the water and sewerage concession. The total cost of the concession is estimated to be $8.4 million for 2013–14.
- The introduction of Customer Services Standards in December 2009, with the commencement of the Water and Sewerage Industry (Customer Service Standards) Regulations 2009. The customer service standards framework has been developed to protect customers from the risk of misuse of monopoly power which could arise from a lack of competition in the provision of water and sewerage services. The Department of Primary Industries, Parks, Water and Environment is responsible for administering these Regulations.
Interim Price Order
The Interim Price Order was initially published by the Hon Michael Aird MLC on 1 June 2009.
The IPO governed the setting of water and sewerage charges by the three regional water corporations from July 2009 to June 2012, before independent price regulation by the Tasmanian Economic Regulator. The IPO allowed for different increases in charges across Tasmania’s municipalities.
The Treasurer was responsible for administering the IPO.
On 30 November 2009 the Government announced it would implement a five per cent cap on the increase in water and sewerage bills for the 2009-10 to 2011-12 period. Following this, the former Treasurer, the Hon Michael Aird MLC, published an amended IPO on 17 February 2010.
After public consultation and advice from the Economic Regulator, the Treasurer, the Hon Lara Giddings MP, published an amended IPO, which took effect from 1 July 2011, This amended Order allowed prices to increase in some municipalities in Tasmania by up to 10 per cent or $50 per service for the 2011–12 period.