June 1, 2022
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Our rapidly growing cities create economic opportunities but also strain our environments, infrastructure and investment reserves. Increasingly, communities also expect healthy, liveable urban environments. Climate change amplifies the size of the challenges facing our cities. The latest IPCC report outlines the ‘compounding and cascading’ impacts of climate change on urban areas and the need for urgent investment in more resilient and robust essential services.
Integrated Water Management (IWM) is widely accepted as an important mechanism for enhancing resilience and responding to the challenges facing our urban areas. However, while significant progress has been made in collaborative and inclusive planning, many of the resulting initiatives have struggled to access sustainable funding. As a result, the associated benefits are not realised and vulnerability to climate and other hazards increases.
Water utilities have and will continue to play a key role in IWM. Given this, it is important that water utilities’ obligations are made explicit (e.g. stated explicitly in the Statement of Obligations, reflected in performance metrics). Further, the IWM accountabilities assigned to water utilities need to be resourced. Currently this is done through a combination of regulated customer bills, developer contributions, government grants or water utility reserves/shareholder returns. This project examines the current process for determining the largest funding stream available to Melbourne Water and other water utilities to implement IWM projects – regulated customer bills. In particular, it uses Melbourne Water’s most recent price determination to look at how IWM and regulated price determination processes fit together and ask whether they can be more mutually reinforcing in serving the long term interests of customers and the community.