Under the Australian Constitution state and territory governments have the primary responsibility for water management. The Commonwealth Government works with governments at all levels to develop a nationally consistent and fair approach to the management of Australia's water resources. The Water Reform Framework agreed by the Council of Australian Governments (COAG) in 1994 and enhanced by the 2004 National Water Initiative established national policies for the efficient and sustainable reform of Australia's urban and rural water industries. These policies have been formulated in response to concern about the state of many of Australia's river systems and a recognition that an important part of the solution lies in significant policy and institutional change.
COAG's reforms recognise the unique characteristics of water resources and their important contribution to the economic, social and environmental fabric of Australia. These reforms are designed to ensure that in both rural and urban areas our water industries will be both economically viable and ecologically sustainable.
One of COAG's major achievements was to commit governments to separating the responsibility for water resource management policy, standard setting, regulatory enforcement and service provision from the agencies which actually delivered and sold water to customers. This led to the establishment of corporatised government-owned water utilities and encouraged the development of a more commercial focused and efficient water sector, particularly in the larger urban centres.
These changes have also provided greater opportunity for the private sector in providing services to the water sector, largely related to the contracting out of non-core services. Changes have also occurred across the rural sector with many of the rural water suppliers being managed as private sector cooperatives or trusts.
COAG reforms have had a major influence on the size and structure of water utilities across Australia. For example, the Water Services Association of Australia (WSAA), established after 1994, consists of 29 Members and 27 Associate Members servicing approximately 15 million customers or three quarters of the population but making up only about a fifth of the total number of water utilities.
In terms of geographic area some of the largest water utilities are in South Australia, Western Australia and the Northern Territory where they operate state-wide in rural and urban areas. In South Australia, retail urban water services are provided entirely by one private operator (United Water) although SA Water retains ownership over the assets and control over core functions, such as strategy and planning (note that United Water contract applies only to water supplies in Adelaide not rural towns).
In New South Wales there are over 120 water service providers. Bulk water supply for Sydney, the Illawarra and the Blue Mountains is provided by the Sydney Catchment Authority while retail services in those areas are provided by Sydney Water. Both bulk and retail services in the Newcastle area are provided by Hunter Water. Councils provide urban water services in all other cities and townships in New South Wales and the state government manages separate bulk water supplies in a number of regions.
In Queensland, 125 local governments supply water in all urban areas while some bulk water supply is provided in a number of regions by corporatised entities of the state government. Victoria on the other hand, has four main metropolitan water providers with Melbourne Water being the wholesaler providing bulk supplies and wastewater services to three large retail service providers. Outside of the Melbourne area there are fifteen non-metropolitan urban service providers to country towns and there are also five regional water authorities providing water, mostly for irrigation purposes.
In Tasmania, individual councils provide retail water and wastewater services to the regional areas. In Hobart, eight local councils jointly own Hobart Water which services Hobart and all the councils in the greater region. In the Australian Capital Territory, water and wastewater services are managed through a joint venture between the Australian Capital Territory Government and a private operator to form ActewAGL.