Table of Contents
Water has the capacity to capture the imagination, particularly the Australian imagination. Historically, it has loomed large in Australian literature, film and art, both overtly and suggestively. Sometimes it has been a site of celebration, sometimes a site of pain and darkness. The breadth of water imagery is vast. A cursory reflection brings to mind Patterson’s Clancy of the Overflow,[1] Slessor’s Five Bells, Winton’s Cloudstreet, Drewe’s The Drowner and The Bodysurfers, as well as Streeton’s painting Sunlight Sweet, Coogee, and Done’s prolific collection of harbour and beach paintings, for example.[2] The subject of water in these representations is commonly fresh, clean water. Often beginning in pure mountain springs, it gushes down rivers displaying strong, untamed qualities. At other times, the representations are of the salty seawater that provides pleasure for a sun-loving beach culture or, alternatively, they are images of freshwater in life-sustaining rural rivers — part of a lost pastoral era. In bolder and more sinister representations, water may take life. Waves and tsunamis may cause death. However, rarely have art, literature and film taken as their subject water that is polluted by waste, particularly human bodily waste. That subject is left largely to science. The film Kenny was an exception, relying on ‘toilet humour’ and focusing, as it did, on the provision of waste removal. Sewage, outside of the sciences, is largely what might be called ‘unspoken’ water.
This chapter suggests that ‘unspoken water’ is rapidly becoming ‘spoken’ water. Sewage is in the process of being ‘re-imagined’.[3] A paradigm shift is taking place in the community’s attitude towards wastewater and sewage. Water which was once seen as a nuisance is now being recast as a valuable resource. New technology is being developed to treat and use this resource for industrial, agricultural and, even, environmental and drinking purposes (although, as Spearritt observes in Chapter 2, the ‘yuck’ factor posed difficulties in relation to the water referendum in Toowoomba). The recycling of human wastewater is being reinvented as both an environmental and commercial opportunity that can be facilitated by giving ‘third-party’ access to established public-sector sewerage infrastructure and — importantly — to the sewage! The realisation of the resource value of wastewater has spawned a new industry — sewer mining!
But there is a problem — a legal problem. Historically, large public utilities have controlled urban sewerage infrastructure and they have not been enamoured with new private-sector operators entering the field as competitive service providers by means of access to their infrastructure. With some justification, they see the infrastructure and the wastewater resources as their property. Yet, they may not possess the technology or capital to exploit the new water resources in the timely way that the paradigm shift in attitudes suggests is opportune. Conversely, the new private-sector entities may not be able to operate without obtaining access to the established public-sector infrastructure, either to provide a water supply or sewerage service, or to access the wastewater resource with a view to converting it into a saleable product. So, we confront the question of how to provide new third-party (and usually private-sector) access to old public-sector infrastructure in order to make better use of these valuable water resources. We also confront the associated issues of how to maintain health standards and societal protections in the face of private-sector involvement in the supply of fundamental life services.
Providing for private-sector access to wastewater infrastructure and facilitating private-sector wastewater services will require sophisticated levels of science and technology. It will also require the development of an appropriate legislative framework to regulate the private-sector access and services. Regulatory wastewater regimes will need to operate in tandem with the broader legal framework for water-services provision, including the economic regulatory bodies at both the State and Commonwealth levels.
This chapter seeks to highlight where opportunities may exist for third-party access to public infrastructure and, accordingly, it sketches the present institutional frameworks for water and wastewater management throughout Australia. It then briefly reviews the international and national experiences of third-party access in the water sector and discusses the relevant Commonwealth legal framework for facilitating third-party access to monopoly service infrastructure, contained in Part IIIA of the Trade Practices Act 1974 (Cth) (TPA). In particular, we consider the catalytic role of Services Sydney Pty Limited, the private company seeking access under that Act to the sewerage network operated by the Sydney Water Corporation (Sydney Water), a public water utility. The company’s application for a ‘declaration’ that Part IIIA covers the sewerage service operated by Sydney Water demonstrates the access regime in operation and, effectively, gives us a ‘test case’ of the concept.
The chapter then reviews the Water Industry Competition Act 2006 (NSW) as an example of state-based industry-specific legislation incorporating a third-party access regime. This legislation may become a model for other states (such as Western Australia) as they seek to increase opportunities for competition in the water sector. The final section of the chapter attempts to tease out some points of interest and potential concerns associated with third-party access regimes. It considers issues of water-service coverage declarations, access and resource pricing, building customer trust in new third-party service providers, step-in rights for operators of last resort when a service provider fails, ‘property’ in the water resource, and consumer-protection provisions.
We acknowledge at the outset that the sorts of issues discussed here in the context of wastewater may similarly arise in relation to drainage water and drainage infrastructure. However, this chapter reviews only the situation in relation to wastewater.
In order better to appreciate where opportunities for third-party access may potentially arise, a brief survey of the institutions currently responsible for the supply of water and wastewater services throughout Australia is offered. They are discussed on a state-by-state basis.
In Queensland, 125 local governments have been responsible for the supply of water in all urban areas, while in a number of regions some bulk water supply is provided by corporatised entities of the state government. Changes to this structure are likely in response to the Queensland Water Commission’s (QWC’s) Final recommendations, which were designed to allow third parties access to natural monopoly segments in the supply chain. The QWC Report, among other things, recommended that the 25 water entities in Southeast Queensland be collapsed into nine and that the State take control of wastewater in the region (QWC Final Report: May 2007; QWC Fact Sheet 1: 1).
In Victoria, four main metropolitan water providers operate, with Melbourne Water acting as the wholesaler, providing bulk supplies and wastewater services to three large distribution and retail service providers (AGD of PMC August 2006: 2). The distribution and retail businesses buy in water and then distribute it to their customers. Later, they collect the wastewater, bill customers and send the wastewater to Melbourne Water, where it undergoes treatment. No direct competition occurs between the three distribution and retail businesses because they all operate within different geographic boundaries. In Victoria, there are also 15 non-metropolitan urban service providers operating outside of Melbourne. They service country towns. Another five regional water authorities provide water, mostly for irrigation purposes (AGD of PMC August 2006: 2).
In Western Australia, South Australia and the Northern Territory, large state-wide utilities operate in both rural and urban areas. In Western Australia, the Water Corporation provides most of the water and wastewater services, as well as infrastructure building.[4] It contracts out some of these tasks to the private sector (through a tendering process) while it performs other tasks itself.[5] In 2007, the WA Economic Regulation Authority received a brief to explore the issue of increased competition in the water and wastewater sector. One aspect requiring particular attention was third-party access to water and wastewater infrastructure (ERA Issues July 2007: i).
In South Australia, SA Water operates as a wholly government-owned entity responsible for the provision of water and wastewater services throughout the state. It also contracts out many of its responsibilities to private operators. One such operator is United Water,[6] the sole and private retail provider of urban water services for Adelaide, to whom a 15½-year contract was awarded in 1995. The contract covers the management of water and wastewater-treatment plants, water and wastewater mains, billing and the operation of call centres.
In Tasmania, retail supply and wastewater services are provided by local councils in regional areas, while in Hobart eight local councils jointly own Hobart Water, which services all the councils in the Hobart area.[7] In the Australian Capital Territory, a joint venture between the Australian Capital Territory Government and a private operator formed ActewAGL, which manages water and wastewater services (AGD of PMC August 2006: 2).
In New South Wales, the bulk water supply for Sydney, the Illawarra and the Blue Mountains is provided by the Sydney Catchment Authority, with retail services being supplied by Sydney Water, a state-owned corporation. The Sydney Catchment Authority was established as a result of the Independent Inquiry into Sydney Water’s water-supply function, conducted by Commissioner Peter McClellan, in the wake of the 1998 Cryptosporidium and Giardia scare.[8]
Sydney Water provides water (including some recycled water), sewerage services and limited stormwater drainage services to Sydney, the Illawarra and the Blue Mountains. In the Newcastle area, Hunter Water, another state-owned corporation, provides both bulk and retail water-supply services. Local councils provide urban water services in all other towns and cities.[9] The State Government also manages separate bulk water supplies in various regions throughout New South Wales.[10] Overall 120 different water-service providers operate in New South Wales (AGD of PMC August 2006: 2).
We surmise that there would be many opportunities for third-party access to major water infrastructure as a means of supplementing the existing provision of water and wastewater services.
Finally, in all Australian states the primary legislation that facilitates the key functions and obligations of the public water utilities is supported by other legislation and regulations including those relating to state-based economic regulators, standards of water quality and use, local government, protection of the environment, public health and consumer protection. This suite of legislation would also apply to any operators who enter the water-services industry via third-party access to the monopoly infrastructure.