7.4.2 Projected demand

Demand for water and sewerage infrastructure is closely related to the growth or decline of the sectors it services. For example, increased industrial activity will generally result in increased water usage, while decreased industrial activity will generally have the opposite effect. Growth in the number of properties served will likewise generally grow in line with regional population growth, though other trends such as a recent rise in single-person dwellings in urban centres may have an impact.

Several key factors influencing demand and supply in the water and sewerage sector, in particular climate variability and rainfall, fall outside the control of suppliers.

Table 30 illustrates the total projected national utilisation in 2020-21 and 2031, including the total volume of water supplied, volume of sewage collected and the number of properties served by water and sewerage services in Australia.

The total volume of water supplied is expected to grow by 100 per cent between 2011 and 2031. This is much greater than the growth expected in sewage collection, or the number of properties served. This result flows from Audit projections that water supply will grow rapidly as drought conditions ease across much of Australia, resulting in the restoration of water allocations to irrigators.

Table 31 illustrates the DEC of water and sewerage services in 2011 and projections for 2031, as well as the projected growth in each state and territory. The national DEC for water and sewerage infrastructure services in 2031 is projected to be $15.9 billion (in 2011 dollars). This represents growth of 50 per cent from 2011.

Table 30: National projection of water utilisation measures

Source: ACIL Allen Consulting (2014a)

Table 31: Projected DEC of water and sewerage infrastructure in 2011 and 2031 by state/territory (2011 prices)

Source: ACIL Allen Consulting (2014a)

The largest absolute growth in DEC for water and sewerage infrastructure is projected to occur in the states with the fastest projected rate of growth - namely WA and Queensland. The water and sewerage sector in the NT is expected to grow by 132 per cent from 2011 to 2031, although it will remain relatively small compared to other states.

A key issue in the calculation of DEC for water and sewerage is that these infrastructure services have traditionally been under-priced (i.e. the infrastructure does not earn a sustainable return on capital). In the past, governments have funded significant investment in water infrastructure without requiring a full economic return on that investment.

This under-pricing of water is likely to have resulted in an understatement of DEC, and an understatement of water's share of GDP.

The projected growth in DEC of water and sewerage infrastructure (50 per cent) from 2011 to 2031 is somewhat lower than the projected growth in GDP (84 per cent) over the same period, suggesting that spending on water and sewerage infrastructure services will decline as a share of GDP.