Chapter 4
Management of stormwater by state governments, local governments and water
utilities
4.1
Stormwater management is the responsibility of state and local
governments. This chapter considers the evidence received about the roles that water
utilities, local governments and state governments perform in stormwater
management, and the implications of these arrangements for how stormwater is
managed.
Local governments and water utilities
4.2
Many submissions commented on the stormwater management roles performed
by water utilities and local governments. One issue that was noted is the legal
ownership of stormwater as a resource, and the implications that this has for
the overall approach to stormwater management. The limited resources available
to local governments were also noted. These issues were summed up by the Cooperative
Research Centre (CRC) for Water Sensitive Cities, which observed in its
submission:
There are very few incentives for water authorities/utilities
to co-develop water resource management strategies with local government, and
local governments have limited resources and jurisdictional role in delivering
public space strategies around the cleansing of stormwater and managing it as a
resource.[1]
4.3
The following paragraphs explore these issues.
The 'ownership' of stormwater is
seen as a problem
4.4
The Australian Water Association noted that the one consistent attribute
in how water and wastewater is managed is that 'the water utilities do not
manage or own the stormwater assets'. Instead, local government is responsible.[2]
Various stakeholders consider that this arrangement, where different water
sources are managed by different entities, is problematic. The Stormwater
Industry Association WA, for example, argued that:
Significant pressures on our water resources in recent times,
particularly from declining rainfall runoff and population growth, have
highlighted the importance of urban and regional water planning. It is no
longer appropriate to consider elements of the water cycle independently, in order
to provide for water supply, sewerage or drainage, as this will result in
disconnected systems which often lead to impacts on the water quality of
waterways, wetlands and the groundwater as well as the inefficient, single use
of water.[3]
4.5
Some submissions argued that stormwater has been seen by local councils
as a problem that needs to be 'avoided and discharged as quickly as possible',
and that this has shaped the approach taken to stormwater management.[4]
As Stormwater Australia put it, 'stormwater is not "owned" by any
agency'.[5]
Mr Andrew Allan, President, Stormwater Australia, observed that stormwater-related
projects are, at present, 'probably a public good type investment' because
stormwater is not owned by anyone at the moment. As such, Mr Allan reasoned
that stormwater management 'is different to the other types of water supply and
services that are provided in the urban context'.[6]
4.6
The CSIRO stated that the 'separation of management functions among and
within institutions in each jurisdiction for water supply and sewage,
stormwater, groundwater, streams, and aquatic ecosystems in and near urban
areas' has been a factor in the urban water sector being 'slow to adopt basin
water planning approaches'.[7]
4.7
The City of Melbourne explained that the governance of stormwater, which
it considers is 'currently quite complicated', has implications for decision-making
on the use of stormwater as a resource. The City explained that although the
council owns and manages the majority of stormwater drainage infrastructure, it
does not own the water. The following overview of the legal status of
stormwater in Victoria, and some of the implications of the current
arrangements, was provided:
Current legislation is interpreted to state that water
falling on building roofs (rainwater) is the property of the building owner,
but once it reaches the ground and becomes stormwater it become the property of
the crown. This puts council in a position of owning and maintaining the
assets but not its contents. To date this has not been a problem as it is an
undervalued resource and we have good working relationship with the relevant
authorities. But there is not surety of supply with upstream landowner able to
capture water irrespective of any downstream systems. For example, if the
parliament building in Spring St was modified to capture all the stormwater
falling on it, then the 45 million [litre] Fitzroy garden scheme would lose 25%
of its catchment and hence the corresponding inflow volume.[8]
4.8
Different approaches and policies of various local governments also
present challenges for the stormwater industry. Stormwater Industry Association
WA advised that 'standards and policies of local governments are often
inconsistent and this significantly reduces efficiency of approach for the
stormwater industry as time is spent negotiating minutia instead of focussing
on outcomes'.[9]
4.9
The Waterway Ecosystem Research Group stated that 'certainty around
"ownership" of the stormwater resource is required to facilitate
investment'. It was suggested that the committee 'should consider the
merits of facilitating the involvement of water authorities and municipalities
as "providers" of stormwater services (treatment, mitigation and
supply as a resource), overseen by a suitable body with the power to ensure
optimal outcome'.[10]
The Australian Water Association called for the management of stormwater
infrastructure to be integrated into the water/wastewater utility 'once the
basic flood mitigation role has been resolved'. The Association noted that
'the skill sets involved in management and maintaining water and wastewater
assets are very similar to those required to manage and maintain stormwater
assets'. Water utility models in New Zealand were cited as examples.[11]
4.10
In Australia, Melbourne Water was put forward as being 'one of the
better models in existence'. Mr Adam Lovell, Executive Director, Water Services
Association of Australia (WSAA), explained that as Melbourne Water operates the
trunk mains for water, wastewater and stormwater, they are well-placed to work
with retail water companies. Mr Lovell continued:
In Melbourne there is the bulk supply, which is Melbourne
Water, and you have got the three retailers that operate in the rest of the
city. They operate the smaller, defined area of water and wastewater
reticulation systems. But what Melbourne Water can do under their model,
because of their legislative nature, is bring in councils, the local water
utilities and government very effectively to deliver fantastic projects. In our
submission there is a case study of a project in Clayton, in the wetlands,
which produced a fantastic outcome. That is the sort of model which could
potentially apply here or in other places. Brisbane City Council had a very
similar type of model.[12]
4.11
Mr Lovell argued that, although debates about ownership tend to arise,
he considers that attention should instead be given to 'who has actually got
the stewardship to bring in stormwater as part of the urban water cycle'. He
concluded:
That is our last frontier in Australia. We lead the world in
everything except having stormwater properly incorporated into the urban water
cycle. So one model for South Australia could be the Melbourne water model.[13]
4.12
Professor Tony Wong, the Chief Executive Officer of the CRC for Water
Sensitive Cities, highlighted how the growing global population will require a
reassessment of current practices. Professor Wong observed that the traditional
approaches to managing this pollution 'served us well when we had plenty of
resources and the environment had plenty of capacity to assimilate the
pollution that we discharge'. In relation to water management, he argued that a
different institutional framework is now required so that better outcomes are
encouraged. Professor Wong explained:
...many cities all over the world—it is not just us—were able
to get away with simply compartmentalising water management in the past.
The delivery of taps and toilet services was seen as one that would be
revenue generating, while the delivery of flood mitigation, water quality
protection and drainage is simply seen as a community service. We have now got
to a point whereby those institutions are impeding our ability to integrate all
of those services such that we can actually look at multiple outcomes delivered
by multiple stakeholders to address this issue of climate extremes.[14]
4.13
Witnesses suggested that there are business opportunities available from
alternative water management models. When asked why water utilities do not
appear to utilise stormwater to a greater extent, Professor Timothy Fletcher, a
professor of urban ecohydrology at the University of Melbourne, suggested that
this outcome can be partly explained by such actions being outside of the water
utilities' charters of operations, as well as the lack of economic incentives.[15]
Professor Fletcher outlined an alternative water management model that could
encourage the greater utilisation of stormwater:
If someone has a problem, because they now cannot discharge
water, and someone has a demand for that water we have a marriage made in
heaven. How to create that incentive is the real challenge...we have tended to
find that water authorities stick to their narrow remit, and yet a lot of the
work that has been done...suggests that there are attractive business models in
water authorities being integrated across all sources of water.
Rather than just saying, 'I take water from a bulk water
supplier who has a dam upstream of me; I take it and sell it to the punters,' a
water authority could instead say, 'I manage a portfolio of water sources and I
provide that to the community, including the services that facilitate those
services.' For example, in a new development that is going to be
constructed, a water authority might choose to be the provider of the
water-tank system on individual houses and, with the very sophisticated
telemetry systems that exist now—for example, telemetetric flood control so that
when a big rain is coming those rainwater tanks can be dropped down to provide
protection for the upcoming flood—we can really imagine those water authorities
having a much more integrated portfolio. I would argue that in terms of
business models that makes them more resilient, in the face of a change in
climate.[16]
Resources available to local
government for stormwater management
4.14
Local governments face direct costs associated with managing the runoff
caused by impervious surfaces. Several submitters, however, questioned whether
local governments have sufficient resources and are otherwise well-placed to
manage stormwater effectively. Stormwater Australia, for example, noted that:
-
local governments find it difficult to raise a sustainable
revenue stream to support the management of stormwater; and
-
many of the public good outcomes that could be achieved from
better stormwater management are not within the mandate of local government to
deliver, or are benefits that would be derived by 'a broader community outside
the specific local government's area of responsibility'.[17]
4.15
The various priorities that local governments have, the limited funding
available to them and the implications of this tension for stormwater
infrastructure was highlighted. Local Government NSW stated that its councils
have a stormwater drainage infrastructure renewal backlog of $633 million at 30
June 2012, which will 'continue to constrain local government's ability to
renew existing and provide new infrastructure'.[18]
4.16
eWater submitted that often 'councils or other responsible authorities
have no operational plans or funding to support the ongoing maintenance of
stormwater infrastructure'. eWater added that where funding is available for
infrastructure, it 'is also important to allocate sufficient funding to
support the ongoing maintenance of stormwater infrastructures, not just to fund
their capital costs'.[19]
4.17
Stormwater industry associations also noted asset management issues. In
its submission, Stormwater Victoria advised that the estimated asset value of
local government stormwater infrastructure is over $11 billion. Stormwater
Victoria contended that, with a general trend for competitive contracting of
maintenance services, 'only the absolute minimum of service as required by the
contracts' occurs. Stormwater Victoria argued that this is unsustainable and
that a new funding model is needed 'so that the costs of renewing and replacing
drainage infrastructure are not unsustainably transferred to future
generations'.[20]
Stormwater offsets and levies
4.18
The costs that local governments face can be recovered by stormwater
levies, such as those used in New South Wales,[21]
and offsets, such as the offset scheme used in Melbourne. A stormwater
offset program allows developers to 'pay an offset where it is not technically
or economically feasible to meet best practice stormwater management onsite'.[22]
Stormwater Australia explained that the offset schemes involve the use of a
'proxy pollutant', such as nitrogen, to calculate contribution rates. The
developer may either 'pay an offset or undertake water quality improvement
works which achieve the desired regulatory outcome'. Stormwater Australia
submitted that:
These schemes are considered effective at managing a
component of stormwater impact (eg nutrient pollution as opposed to stormwater
volume), however, they are generally limited to new (greenfield) developments,
are not universally applied and because of their focus on the development
phase, are not set up to address longer term operational issues.[23]
4.19
The committee received evidence that demonstrated some of the
limitations of existing levy and offset arrangements. Stormwater South
Australia submitted that 'there is difficulty in establishing meaningful and
legally enforceable cost‐sharing
provisions with developers for the upgrade of drainage systems which their
development flows to but is not actually part of their development'.[24]
Stormwater Victoria submitted that local governments need a mechanism to secure
dedicated revenue for stormwater management. In Victoria, the water utility can
levy a drainage charge, however, local councils cannot do so even though they
control 'a significant proportion of the drainage network'. Instead,
funding 'must be sourced from general rate revenue in competition with other
services delivered by councils'.[25]
4.20
In Local Government NSW's view, the ability for NSW councils to impose a
stormwater levy on rate payers for new stormwater infrastructure 'has not
removed the stormwater infrastructure backlog'.[26]
4.21
SPEL Environmental was critical of stormwater offset schemes as it
considers the introduction of stormwater offsets is not resulting in better management
of stormwater. SPEL Environmental noted that Gladstone, Ipswich, Redlands,
Logan, Toowoomba and Mackay councils started to collect offsets in 2012,
however, none of these councils have implemented a treatment system.
SPEL Environmental called on the Australian Government to:
...ban the use of stormwater offset schemes by councils as it
is very damaging to the stormwater industry economics and the environment
because the treatment is not occurring![27]
Role of state governments in stormwater management
4.22
State governments can have clear policy and leadership roles with
respect to improving stormwater management in their jurisdiction. For example,
in 2009 the South Australian Government released its water security strategy, Water
For Good. That strategy included a target that, by 2025, up to 35
gigalitres per annum of stormwater is to be harvested in urban South Australia
for non-drinking purposes (where economically and technically feasible). This
target increases to 60 gigalitres by 2050 for Greater Adelaide, and an
additional 15 gigalitres per annum in regional areas.[28]
4.23
Evidence was received, however, which suggested that the effectiveness
of state government efforts to improve stormwater management outcomes can be
affected by jurisdictional arrangements within state public sectors and the
relationship between state and local governments.
4.24
Stormwater Australia suggested that the 'disparate responsibility
arrangements' for stormwater at the state government level are a 'frustration',
that results in attention being given 'to more familiar aspects of the water
system...such as water supply and sewerage'.[29]
4.25
Dr Peter Dillon, a retired CSIRO researcher and co-chair of the
International Association of Hydrogeologists Commission on Managed Aquifer
Recharge (IAH‑MAR), stated that in some states, the state and local
governments 'are not sharing water infrastructure nor cooperating on integrated
urban planning, water resources planning and management, which would benefit
all'. Using the federation‑era rail gauge issue as an analogy, Dr Dillon
stated:
...at this junction, it is not a problem of train tracks and
different gauges. The gauges actually fit; we just have two different sets of
assets that are run independently. If they were joined together, huge benefits
could emerge, as long as the policies are appropriate.[30]
4.26
The Stormwater Industry Association WA submitted that state governments
need to provide better support to local councils. It stated:
Generally support for innovation is high within state
government departments but unfortunately this rarely relates to practical
assistance as a result of poor resourcing. There is a substantial need for
increased investment in technical skills within State Government to provide
support and guidance to local government and to assist the development and
stormwater industries to develop and implement more innovative approaches to
water management.[31]
4.27
Dr Darren Drapper suggested that there are other problems with the
relationship between local and state government. To illustrate his concerns, he
advised that when the Toowoomba Regional Council wanted to introduce rainwater
tanks, it 'required a concerted effort, and significant additional
reporting, to challenge the [Queensland] Public Works Minister'.[32]
4.28
It was also claimed that state governments could be reluctant to promote
the utilisation of stormwater for financial reasons. Dr Drapper, for
example, noted that the utilisation of stormwater is potentially a threat to
the revenue streams of both state‑owned and privatised water utilities.[33]
Regulation of water utilities
4.29
One area where state governments can significantly influence stormwater
management is the regulation of water utilities. Several submitters argued that
the regulation and limited mandates of water utilities presents challenges for efforts
to improve stormwater management outcomes. An example of this argument is that
provided by Mr Adam Lovell, Executive Director, WSAA. Mr Lovell stated that 'there
is no innovation in the way we fund nor in the way that we regulate stormwater'.
A reason given for this is as follows:
Water utilities are regulated to death. One of the criticisms
that I have seen in submissions and you will hear it in general is that water
utilities have not done enough in this space. The fact is most water utilities
operate off a very strict statement of obligations, operating licences or
whatever you want to call them, which an economic regulator will look to in
black-letter right down to the last cent. A water utility does not have licence
to launch itself into stormwater, which it does not operate. Around the
country, only Melbourne Water has a very strong legislative role in managing
stormwater. Sydney Water operates about 10 per cent of stormwater assets in
Sydney. In the rest of the country, zippo. Perth operates it from a drainage
perspective.[34]
4.30
Mr Lovell advised that more desirable outcomes could be achieved if the
water utility sector was able to 'work with customers to see what they want'.
He provided the following example from the United Kingdom where a water
utility had the opportunity to involve its customers in decisions about its
priorities, which revealed a preference for improved stormwater management:
...South West Water, over in the UK, has just gone through a
price review. It is very similarly structured to Australia. The regulatory
agency there said: 'We want to restore the primacy of the relationship between
the customer and the water utility. We don't want to be the go-between. We
don't want to be wagging our finger at the water utility, saying, "You
must do this, you must do that, and this is the price you are going to
charge." We want to say to the water utility, "Here is your price cap
or here is your revenue cap. You work with your customers to understand
what they would like to see from the local water system."' South West
Water is a beautiful part of the coast down there in England. A lot of the
customers said, 'We'd like to see stormwater management improved.' Just like in
Australia, that water utility does not have control over the stormwater.
Through that process, they went back to the regulator and said: 'Customers have
asked for better stormwater management. They love their beaches and they want
them to be clean as much as possible.' The regulators said: 'Fine, you go and
work with the local councils. Here is the funding that the customers actually
agreed to to go and do that.'[35]
4.31
As water utilities generate significant revenue, Mr Lovell acknowledged
that it could be considered that the money for stormwater management already
'is there'. In his view, 'it is about the way utilities are regulated'. Mr
Lovell concluded that the water utilities need greater flexibility to identify
and work to achieve the outcomes their customers and local governments want:
I agree that taking a light-handed approach is like a piece
of string, but we need to loosen that up. The utilities should be given a revenue
or price cap—whatever suits the local circumstances. But they should be told,
'Go and work with your customers and the local councils to determine what
sort of outcomes you would like to achieve and then go and achieve it.'[36]
4.32
Other stakeholders also recognised the difficulties that water utilities
can face if they want to perform a greater role in stormwater. Dr Coombes
suggested that it could take water utilities 'years of argument with all sorts
of different state agencies with different opinions' to gain support for a
stormwater project. Dr Coombes used the term 'exhaustion cost' to describe the
situation:
It is not the opportunity cost. I would call it the
'exhaustion cost': the cost of battling through all sorts of perceptions and
different agendas in different departments and different rules that are set for
them in their statement of obligation that get in the road of being able to
efficiently deliver those solutions..[37]
4.33
Dr Coombes illustrated his concerns by referring to a project known as the
Werribee Employment Precinct:
We found the best option there in the west of Melbourne was
to put stormwater in the aquifer, bring it back out and make it part of the
water supply solution—therefore, making more water available to farmers downstream—approving
the water quality and deferring some fairly substantial augmentation to get
this new city running...When the water authority went to the Essential Services
Commission to say, 'This is a great solution,' they said, 'No, we can't
consider that because we do not consider stormwater to be water supply and it
is outside of our jurisdiction. Go away and do a traditional solution.' They
did not quite say that but that was the battle. That is why we need
intervention at a higher level.[38]
4.34
Dr Coombes also recognised that the water utilities handle significant
revenue. Dr Coombes stated:
I am not saying you take more
money off our friends in the water monopolies; I am saying that we better
target those funds so we get best use of public money because there is
currently a substantial amount of money in environment levies and dividends
that has been taken.[39]
Lack of economic incentives and private sector involvement
4.35
How state and local governments manage stormwater has implications for
whether the private sector is able, or has adequate incentives, to develop
solutions to stormwater challenges or to become involved in stormwater
management.
4.36
Dr Peter Dillon told the committee that, although private sector
investment exists for wastewater reuse, in established areas there is 'currently
no private sector investment in stormwater management'. He argued that this is
'due to barriers to entry in urban water markets, monopoly positions of state
owned water utilities, and the public-good nature of other benefits such as
coastal water quality improvement and urban amenity space'. Dr Dillon outlined
several developments that, in his view, would need to occur to promote greater
private sector involvement in stormwater:
Market mechanisms such as tradable discharge permits,
scarcity pricing, water banking and water supply insurance, flood insurance
underwriting, greenspace quotas and build-own-operate transfer contracting
await development which would provide economic incentives for private
investment in stormwater infrastructure and management.[40]
4.37
Mr Adam Lovell, Executive Director, WSAA, noted that the lack of
overarching objectives for stormwater management affects the level of private
sector investment. He explained:
...each state, each city, each council has different objectives
for the way they manage stormwater. That is fine in itself but what it does
inhibit is private sector involvement. It inhibits innovation coming into the
marketplace to deliver great new ways of managing stormwater.[41]
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