So, this is slightly Sydney centric post, but your backyard will have similar examples.
The new Sydney metro is amazing. Like jaw-dropping amazing. If you don’t believe me, go for a ride. A whole new rail network deep underground. It must have needed incredible forethought. It is used by 200,000 people a day already, and will still be essential in a 100 years’ time. So too is the western Sydney airport which is nearing completion. Again, go and take a look. Projects that transform a city. Projects supported by multiple governments of both persuasions over a decade or more. They show that Australia can get infrastructure right.
But can we get it right in water?
Water infrastructure is equally vital to Australia’s future. I wrote about the legacy of the past in my last post. The water industry has consistently invested to deliver world class water and wastewater services. But we are now seeing a step change in what is needed.
WSAA data for the 20 or so largest utilities in Australia shows that capital expenditure will increase from $6 billion annually in 2022-23 to around $12 billion annually by 2026-27. We expect that level of investment to be maintained, not return to a baseline.
In total the industry expects to spend around $24 billion over five years to maintain and renew assets and comply with water and environmental regulations. But servicing the needs of a growing population is also a significant challenge. Over the same period the industry expects to spend nearly $18 billion on growth. Growth expenditure is increasing as a proportion of the total and is expected to reach as much as 50 per cent of all capital expenditure. For some utilities the proportion is even higher at around 70 per cent of total capital expenditure by 2026-27. To service a growing population, especially in greenfield areas we cannot stand on the shoulders of the last generation but must accept responsibility ourselves.
Large though these numbers are, the total CAPEX numbers do not include the cost of the next round of water security — desalination and recycling. That expenditure is only starting to emerge in the latter years. Cities such as Perth are further along the road in transitioning to rainfall independent water supplies but most cities have further expansions planned.
As I said in my last post, prices will need to increase to fund the future. No one likes price increases but customers aren’t the barrier. When explained to them, they get it. My personal view is that the barrier lies with governments underestimating the good sense of the population and not wanting a price rise on their watch. Governments need to show the same level of leadership and foresight they have shown with major transport infrastructure — like with the new Metro. They need to recognise that we may not always see underground water and wastewater infrastructure at work but that it is just as crucial to Australia’s productivity, to the lives of people and communities and to the environment, as transport, hospital and education expenditure.
17 Oct 2024
