State of the Water Sector Report 2014 presentation

State of the Water Sector 2014

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© 2014 Deloitte Touche Tohmatsu
Demographics
The State of the Water Sector Survey 2014 was open to all water professionals from 14 April 2014 to 19 May 2014. The survey was facilitated using the Deloitte online survey system, Qualtrics, and was completed by 1,162 respondents.

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The need to improve operational efficiency has been articulated as the top issue facing the water sector, reflecting the continued concern about the need to control costs and demonstrate value for money within the sector. Improving operational efficiency was identified as one of the three most important issues by 46% of respondents, an increase from 35% that identified it as a key issue in 2013.
Operational Efficiency

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Water professionals were also focused on the need to place attention on maintaining and augmenting infrastructure, which was ranked as one of the top three issues by 45% of respondents. This was the top issue in 2013 and 2012.
Maintaining and Augmenting Infrastructure

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Ensuring secure water supplies was ranked third by 39% of respondents as a current issue, and was identified as the top issue in five years time by 41% of respondents.
Ensuring water supplies are secure

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•Water professionals identified the area of greatest concern in five years time as ensuring we have a sustainable water supply.
•Although the sector believed the security of supply was being managed well, this shows the acknowledgment of the challenges of increasing competing demands, climate change and population growth.
Emerging Issues

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Water Supply Options
•84% of respondents at least ‘somewhat agreed’ that dams are an effective method of managing water security within their region.
•55% felt that there is scope for more dams to be built.
•87% think there is capacity to use recycled water for drinking.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Desalination Water
Recycled Water
Urban Stormwater
Can be treated and managed to a level that is sufficient for safe and reliable potable supply?

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Climate Change
•Climate change was identified as a significant or moderate risk to the sustainable management of water by 86% of respondents.
•To address climate change the majority of respondents believed the water sector should;
-Focus on diversifying sources of water supply (67%)
-Ensure that systems can withstand extreme weather and events such as fire or flood (63%)
-Ensure asset management strategies account for longer term changes (57%).
Emerging Issues

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•In 2014 respondents were asked to nominate their top three priorities for reform in the water sector.
Water Reform, Economic Regulation and Water Pricing
0%
10%
20%
30%
40%
50%
60%
% Respondents

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•Water pricing remains a ‘hot topic’ in the industry. Although price rises in 2013 in most jurisdictions were less than in previous years (Melbourne and Perth being exceptions) the industry is clearly concerned about the public view’s on household water bills.
•In the 2014 survey, responding to community concern about rising prices was the fourth most frequently identified issue, with 37% of respondents nominating it. This is a significant increase over the 25% of respondents who identified it as an issue in 2013.
Water Pricing

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•Perceptions of whether bills are too high vary across states and aren’t entirely correlated with bills.
Pricing and pricing perceptions
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
$-
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
South East
Water
Queensland
Urban Utilities
Sydney Water
ACTEW
Water
Corporation
SA Water
Typical bill ($)
Concern that prices a little or much too high
(%)

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•Confidence in economic regulation is improving
•But regulatory regimes are being weakened or under review in some states – including Victoria and Queensland
Economic regulation
Year
Regulation is quite or very effective
2010
41%
2012
44%
2013
47%
2014
52%

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•A September 2014 report from the NSW Chief Scientist and Engineer stated that Australia is in a good position to rise to the challenge of managing the various water issues associated with CSG production
•It suggested that risks associated with CSG exploration can be managed but that in and near drinking water catchments, risk management needs to be of a high order
•The water industry is not yet convinced - 87% of respondents in the ACT, Qld and NSW said CSG poses a risk to water resources, with 74% considering this risk significant or moderate
Coal seam gas

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•83% of NSW Respondents either agreed or strongly agreed that dams are an effective way to manage water security. Well above the national average of 68%.
•NSW respondents also deemed economic regulation of water in their state as effective, with 61% indicating a level of quite or very effective regulation. Notably higher than the national average of 52%.
State Based Notes - NSW
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10%
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60%
70%
80%
90%
Dam Effectiveness
Effective Economic Regulation
Australia
NSW

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•A noteworthy shift in Queenslanders identification of big issues in the water sector included a 16% increase in identifying the importance of ensuring water supplies are secure and a 13% increase in responding to community concern over rising prices.
State Based Notes - QLD
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Responding to community concern over
rising prices
Ensuring water supplies are secure
2014
2013

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•South Australian’s showed strong support when asked how well the sector is responding to climate change impacts. 74% indicated climate change impacts are being well responded to compared to the national average of 51%.
•Dissatisfaction with economic regulation remains high with South Australian respondents. With 39% indicating minimal if any satisfaction with the effectiveness of economic regulation of water.
State Based Notes – SA

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•Victorian’s believe repairing irrigation infrastructure should be the top priority for meeting the water supply needs of rural and agricultural needs (57%), above the response rates of the rest of the country (≥9%). This area is being addressed through the Northern Victorian Irrigation Renewals Project.
•Despite significant price rises in 2013-14 in Melbourne, the proportion of Victorian’s who considered water prices to be much or a little too high fell from 27% in 2013 to 20%.
State Based Notes - VIC
0%
10%
20%
30%
40%
50%
60%
NSW
VIC
QLD
SA
WA
ACT
NT
TAS
Repair irrigation infrastructure

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•In Western Australia, 74% of respondents considered the state of the water sector across Australia to be quite or very sound, an increase of 11% from 2013.
•To address the impacts of climate change, most Western Australians (77%) indicated there should be further diversification of water supply sources, a large increase of 20% from 2013.
•Only 11% of respondents consider urban water prices a little or much too high, a drop from 20% in 2013 and considerably lower than the national average of 24%.
State Based Notes - WA
0%
10%
20%
30%
40%
NSW
VIC
QLD
SA
WA
ACT
NT
TAS
A little too high
Much too high

General information only This presentation contains general information only, and none of Deloitte Touche Tohmatsu Limited, its member firms, or their related entities (collectively the “Deloitte Network”) is, by means of this presentation , rendering professional advice or services. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. No entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person who relies on this presentation.
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