Against the background of submissions to the Inquiry and the spatial dispersion of local water utilities in non-metropolitan NSW, the Final Report considered only two aggregation options in Chapter 4: ‘Regional Aggregation’ and ‘Catchment Aggregation’. Since the ‘Regional Aggregation’ approach represented the preferred option of the Inquiry, we consider only this option in detail.[2]
‘Six criteria’ formed the basis for ‘determining the size and composition’ (pp.33–4) of the ‘Regional Aggregation’ option:
Each aggregation of local water utilities should exceed ‘at least 10 000 connected properties’, with this minimum size stipulated because (a) ‘non-metropolitan local water utilities above this size in NSW generally demonstrate superior performance’; and (b) it represents the ‘minimum size for inclusion in reporting under the National Water Initiative’s National Performance Framework’.
Each aggregation should have an ‘annual revenue of at least $10 million’ on grounds that ‘properly managed local water utilities with such revenues are financially resilient, readily able to raise capital and service debt and attract skilled staff’; a criterion which ‘generally’ overlaps with the 10 000 connected properties stipulation.
Each aggregation should be ‘sensitive to catchment boundaries’ since ‘environmental catchments create natural boundaries around water sources and receiving bodies’.
Each aggregation should build on ‘existing alliances between local water utilities’ to the maximum extent possible, such as a ‘Regional Organisation of Council grouping’, of which in non-metropolitan NSW there are 12 groupings.
Each aggregation should contain ‘a major regional centre’ since these centres have the ‘size/scale’.
Each aggregation should be consistent with ‘submissions made to the Inquiry in order to ensure that ‘as far as possible the aggregations reflect the suggestions provided in submissions and presentations to the Inquiry’.
The ‘Regional Aggregation’ option contains 32 groupings of local water utilities, which are set out in Appendix 1 of the Final Report and illustrated in Map 5 (p.36).
The results of this aggregation exercise were as follows: 14/15 binding alliances, two sewerage alliances, one/three ‘council-owned regional water corporations, eight ‘stand-alone water supply and sewerage utilities’, two/three county councils, and three ‘stand-alone water supply authorities’. In cases where a range of entities is recommended, the Final Report proposes alternative structures for some groupings.
In addition to these proposals, the Final Report (2008: 115) made recommendations regarding the ‘special cases’ of existing County Councils under its preferred structural-reform option of regional aggregation, which included the Goldenfields Water County Council, Riverina Water County Council, MidCoast Water County Council and the Rous Water and Central Tablelands Water County Councils. It also noted that if a Far Western Binding Alliance is established, comprising Broken Hill, Central Darling and Bourke and Brewarrina, then special care should be taken due to the vast distances involved and the high incidence of socioeconomic disadvantage. Finally, the Final Report recommended that the Fish River and Cobar Water Board continue to operate as before.
[2] The second-best ‘aggregation’ proposal put forward in the Final Report (2008: 36–7) consists of the ‘Catchment Aggregation’ option, which yields 15 aggregations or groupings of local water utilities.