19 Apr 2011

Australian voices of reason

In a scathing draft report, the Productivity Commission yesterday called for an urgent overhaul of the urban water sector, declaring consumers were paying more than necessary for their water as a result of poor government decision-making.

The 600-page report is highly critical of decisions by state governments across the country to overinvest in expensive and inefficient desalination plants...

The report says governments have been too quick to discount recycled wastewater for political, rather than economic, reasons: "Negative community perceptions have become entrenched in the absence of good evidence about the costs and benefits."


The commission wants to open up the market for urban water trading and remove all remaining bans on trading between urban and rural areas that would allow water to be purchased at its highest value. It also recommends that state and territory governments should move away from setting water prices to monitoring how utilities price water and whether they abuse their market power.

The Productivity Commission found water restrictions imposed by state governments were likely to cost the nation about a $1bn in lost production, and governments would be better off charging consumers extra for different tiers of water packages and allow the market to regulate water use.

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