This chapter has provided an overview of the present institutional frameworks for water and wastewater management throughout Australia with the aim of identifying where opportunities might exist for third parties to compete with public utilities for service provision.
This was followed by an examination of the legal frameworks under which applications may be brought for access to monopoly infrastructure essential for competing in the upstream and downstream markets for service provision. The first considered was the Commonwealth legislation, contained in Part IIIA of the Trade Practices Act 1974, on which Services Sydney relied.
The Water Industry Competition Act 2006 (NSW) was then examined as the first example of state-based legislation designed, in part at least, to facilitate competition through the provision of third-party access to infrastructure services. The chapter observed the importance of WICA in its potential to serve as a model for other states’ legislation.
The final part of the chapter provided a discussion of some of the key issues associated with third-party access to infrastructure services. They included: coverage declarations; access and resource pricing; building customer trust, step-in rights; property rights; negotiating inexperience; and leases.
What emerged is that legal regimes and frameworks are capable of being designed to facilitate third-party access by providing frameworks for the negotiation and arbitration of the terms of access to the essential infrastructure service, along with appropriate health- and consumer-protection safeguards, for example. However, it is possible that such regimes will still fail, often for reasons beyond the law. Third-party access regimes in the sewerage sector may flounder because of access-pricing issues, a lack of confidence in new entrants and market shrinkage due to shifts in favour of home- or community-based recycling schemes, for example. The legal problems that potentially exist in relation to third-party access, such as ownership of the raw resource, would seem capable of being resolved. Some of the political, economic, social and cultural problems would appear to present greater difficulties.
The third-party access regimes may also fail in relation to sewer mining for a lack of coverage. If sewage appreciates in resource value, the sewerage-service providers, as potential ‘owners’ of the sewage, will have considerable power in allocating the resource to the highest bidder, especially if the regulatory authorities do not or cannot regulate the price of sewage to the sewer miners. In NSW, the current legislation authorises IPART to regulate pricing by governmental water agencies, but what will be the position for private sewerage-service providers? It is possible that there is a legislative gap, deliberately left because of notions of private property pertaining to ownership of sewage. Will governments and parliaments be forced, at some stage in the future, to legislate for a resource-regulation regime based on public ownership of sewage and governmental allocation of this fantastic new resource?
Although it is legally possible to ‘unbundle’ various aspects of the wastewater sector (for example, by separating out extraction, treatment, distribution, household connection, billing, maintenance and construction of infrastructure) in order to create spaces for competitive third-party involvement, problems may still emerge. For example, if obligation is broken up and shared along the supply chain, it may be easier to avoid responsibility for system failures. If there is a problem, it is always potentially the fault of someone else. Bearing in mind Godden’s warning (in Chapter 8, following) that ‘[m]oves to deregulate urban water authorities have created models of governance that transcend the simplistic view of dichotomous public and private spheres and public/private property’, it is perhaps still possible that David Hare captured some of the difficulties associated with the unbundling process in his play the Permanent Way, which dealt with the privatisation of British Rail. One of his characters observed:
Everyone knows: the Balkanisation was a complete disaster. The thing was broken up into 113 pieces, like beads thrown onto a table, all to be held together by local contracts and all in pursuit of the idea of competition. Well, competition on the railways is a great idea in the theory, hopeless in practice. (Hare 2003: 18)
On this analysis, an unbundled water sector may lead to enhanced competition, which, of course, is the aim of WICA, but whether that competition, in turn, leads to better outcomes for society, the environment and consumers is more problematic.