3.1  Overview of private sector participation in urban water

Table 2 shows the varying scope of private sector involvement in Australia at present from the participation in design and construction of facilities in most major urban centres through to an ongoing operation and maintenance role.

Table 2: Public and private sector involvement in major urban water facilities

Adapted from: Australian Water Industry Roadmapping Project Discussion Paper, 2004, and Marsden Jacob, 2005.

The private sector provides a range of functions through contracts to the urban water sector in Australia, including:

•  mechanical and electrical maintenance of treatment plants, pump stations and control valves etc

•  civil maintenance of water supply and sewerage systems

•  laboratory services

•  legal services

•  conceptual and detailed design services for capital works

•  project management and construction of capital works projects

•  IT services

•  water meter reading and replacement

•  hydrographic services and hydraulic modeling

•  research through Cooperative Research Centers and other research providers

•  fleet management

•  corporate audit services

•  pollution response

•  land management practices

•  billing services

•  biosolids transportation and disposal, and

•  miscellaneous services such as cleaning and security. 

(Source: personal comment from WSAA 2006)

The extent to which large urban water utilities contract out to the private sector is highlighted by the following summary of the operating expenditure of seven urban water utilities during the 2004-05 Financial Year. They are the WA Water Corporation, Sydney Water, Sydney Catchment Authority, City West Water, Yarra Valley Water, Brisbane Water and Gold Coast Water. These utilities had a combined operating expenditure for water and sewerage functions (excluding depreciation) of approximately $1.5 billion and over 35 per cent of this expenditure was contracted out to third parties. Their combined capital expenditure for water and sewerage functions was approximately $1.15 billion and over 80 per cent of this expenditure was contracted out to third parties (personal comment from WSAA 2006). 

The extent of contracting out is far greater in the major urban water utilities compared to rural and regional utilities, most of which are managed by local governments. Therefore the above figures are not indicative of the broader water industry, particularly rural and regional utilities (personal comment from WSAA 2006).

The contracting out of these services is a direct result of COAG water reforms. It has led to a more cost-effective approach to achieving greater efficiencies in the supply of water and wastewater services and has generally improved customer services.