6.2 Case study description
6.2.1 Experimental investigation
While water and sewerage services for Aboriginal communities managed by Aboriginal Land Councils were not within the terms of reference for this Inquiry, the NSW Government’s $205 million Aboriginal Water Supply and Sewerage Program, which involves a 25 year plan to achieve sound operation and maintenance of services for these communities was
canvassed. This plan will require local water utilities to be partners in the program, to ensure that water and sewerage services for these communities are significantly improved, and potable water is compliant with Australian Drinking Water Guidelines 2004.
CONCLUSION
This report has provided indicative costs of the binding alliance model as provided by RAMROC and has estimated that each new Alliance (of which 17 are proposed in Option 1) would require between $375,000 and $720,000 to resource per annum. This equates to approximately $7 – 14 million across the state per annum. The benefits of this expenditure have been articulated throughout this report, and can be summarised as providing local water utilities with the governance structure and specialist technical skills to enable them to:
respond and plan in advance to the challenges facing the industry;
be financially self sufficient;
be able to consistently comply with appropriate stringent environmental and public health requirements; and
implement appropriate and cost-effective service standards.
Three groups of local water utilities in particular have expressed a desire to shift to a new governance structure in the near future, to enable them to seek these benefits. These are:
1. Riverina and Murray Regional Organisation of Councils (RAMROC) Alliance comprising 18 councils in the south west of NSW;
2. Lower Macquarie Water Utilities Alliance comprising six councils in the mid-west of NSW; and
3. Port-Macquarie Hastings, Kempsey and Nambucca councils which have each advocated forming a council-owned regional water corporation.
This Inquiry is part of an evolving process – a process to review the status quo, and to identify how water and sewerage management – the most fundamental of human needs – can be best provided into the future. The industry has provided its views, as have
stakeholders and community members, and these views have provided the substance of this report.
The recommended options presented in this report have sufficient flexibility to enable adaptive management to occur, and if implemented diligently, would support the continued existence of small towns and villages by having positive impacts on employment and skills development opportunities.
Importantly, the recommended options presented in this report would establish a governance structure that ensures water supply and sewerage in non-metropolitan NSW is managed in a sustainable, accountable, and integrated manner well into the future.
APPENDIX LIST
Number Appendix Related to
Chapter
1 Groups proposed in submissions to the Inquiry 4
2 Binding alliance model 6
3 Indicative costs of Regional Water Utilities (Binding alliance)
11
4 Skills Training Program for Water and Sewerage in NSW
9
5 Schematic of recommended reforms 11
6 Explanation of each group in Option 1 (32 groups) 4/5/6
7 Explanation of each group in Option 2 (15 groups) 4/5/6
APPENDIX 1: OPTIONS FOR LOCAL WATER UTILITY REFORM – POTENTIAL AGGREGATIONS
Map 2 - Industry submissions proposed groups
These maps show 8 groups proposed by local water utilities in their submissions.
The groups proposed by councils as shown in this map are as follows:
Name of grouping Number of councils in
This submission from Lismore City Council proposes the creation of a community owned Regional Water Authority exclusively responsible for all urban water and wastewater services in the 6 council areas of the far North-East NSW. This is not the consensus view of all councils mentioned in proposal.
The New England Strategic Alliance is already in existence, providing administrative, IT, water meter reading and billing services to the four member councils. Armidale has stated that it would consider forming a council-owned regional water corporation for the provision of water and sewerage services with the four member councils.
Port Macquarie advocates the creation of new regional corporatised water utilities across the state. This group is for the mid-north coast region.
Kempsey Shire Council similarly propose the establishment of a new regional corporatised water utility with the transfer of assets, staff and operations from current water utilities to the new council-owned regional water corporation.
Kempsey recommends that the council-owned regional water corporation for the Mid North Coast comprise nine existing utilities from Gloucester/Great lakes to Grafton.
As its second preference,
Nambucca Shire has also stated that it would be prepared to form a local government owned water and
Barwon Darling
Proposal by Bourke Shire Council to deepen the existing non-binding alliance with councils in the existing Barwon Darling Alliance.
The Barwon Darling Alliance was born out of a desire of the Murdi Paaki Regional Council of ATSIC and the participating Shire Councils (Bourke, Walgett, Brewarrina, Coonamble and Central Darling) to address their common regional
Proposed binding alliance with in principle support from all member councils.
Proposed binding alliance with in principle support from all member councils. The councils of Wentworth and Balranald have advocated for status quo to remain, but if not accepted, would participate in the RAMROC alliance as its second preference.
GTT 3 Tumbarumba, Tumut
and Gundagai.
Proposal by the councils of Tumut and Tumbarumba that if status quo is not accepted, then they will hold discussions with each other and Gundagai regarding forming an alliance for water and sewerage operation across the three local government areas. Gundagai advocates for the status quo only.
Goulburn County
Proposal by Goulburn to create a County Council with asset
ownership. Agreement on a unified position was not reached by these councils, so the county council proposal is only endorsed by Goulburn Mulwaree Council.
Map 3: Industry submissions proposed groups
This provides a map and discussion of the second layer of alliances proposed by councils.
Name of grouping Number of councils in creating a regional binding alliance across the Tweed, Richmond and Clarence Valleys.
This proposal is also supported by Richmond Valley Council as its first preference, and Kyogle as its second preference.
Coffs Harbour-Bellingen Alliance
2 Coffs Harbour and
Bellingen
Propose to expand a non-binding alliance between Coffs Harbour and Bellingen Shire councils. Both councils are in agreement.
Mid Coast Model 4 Kempsey,
Port-Macquarie Hastings,
expanding Mid Coast Water county council to include three additional local government areas to the North and West of its existing jurisdiction.
CWG 3 Coonamble,
Gilgandra and Warrumbungle.
Alliance proposed by Coonamble and Warrumbungle councils with each other and Gilgandra for
strategic management and planning.
Gilgandra has advocated for the status quo.
Bathurst-Oberon Alliance
2 Bathurst and Oberon Proposal by both Bathurst and Oberon councils to form an alliance, although Bathurst would prefer the status quo.
Palerang Proposal 3 Palerang, Yass
Valley and Queanbeyan
Palerang while preferring the status quo has suggested that a county council could be centered in Bungendore and include the local governments immediately
surrounding the ACT –
Queanbeyan, Yass Valley and Palerang.
Map 4. Industry submissions proposed groups Name of grouping Number of
councils in
Water Authority 22 Cobar, Bogan, Warren, Narromine, Dubbo,
Orange City Council as its second preference proposes the creation of a large water
authority covering the Lachlan and Macquarie catchments in the central west of NSW, under a board structure similar to the CMA model.
Kempsey Regional Water Corporation Proposal
9 Clarence Valley, Coffs Harbour, Bellingen,
proposes the establishment of a new regional corporatised water utility with the transfer of assets, staff and operations from current water utilities to the new
corporation. The council-owned
15 Bland, Young, Temora, Cootamundra, Harden, proposes the development of a Corporate Structure to
undertake all Water and Sewer supply operations within the present areas covered by the Riverina Regional Organisation of Councils (REROC),
Goldenfields Water County Council (GWCC), Riverina Water County Council (RWCC), Young Shire and Harden Shire.
Map 5: Option 1 Regional Aggregations Name of group Number
of
councils in group
Constituent local water utilities Proposed organisational structure
1 RAMROC
Murray region /
Murrumbidgee Region
18 Balranald, Carrathool, Griffith, Hay, Leeton, Murrumbidgee, Narrandera,
6 Bogan, Cobar, Dubbo, Narromine, Warren and Wellington.
Binding alliance 3 Central Tablelands
Region
9 Blayney, Cabonne, Central
Tablelands County Council, Cowra, Forbes, Lachlan, Orange, Parkes and Weddin.
Binding alliance
4 Northern Rivers Region 5 Ballina, Byron, Kyogle, Lismore, and Richmond Valley, and Rous County Council.
Binding alliance
5 North-West Region 3 Bourke, Central Darling and Brewarrina.
Binding alliance
6 Southern Tablelands Region
4 Boorowa, Upper Lachlan, Goulburn Mulwaree, and Palerang.
Binding alliance
7 Coffs Harbour-Bellingen 2 Coffs Harbour and Bellingen. Binding alliance 8 Northern Highlands
Region
3 Glen Innes-Severn, Inverell and Tenterfield.
Binding alliance
9 Upper Hunter Region 3 Muswellbrook, Singleton and Upper Hunter.
Binding alliance
10 Snowy Monaro Region 3 Bombala, Cooma Monaro and Snowy River.
Binding alliance
11 Bathurst Region 4 Bathurst Regional, Lithgow, Mid-Western Regional and Oberon.
Binding alliance
12 Border Rivers 4 Gwydir, Moree Plains, Narrabri and Walgett.
Binding alliance 13 Western Ranges 4 Yass Valley, Gundagai, Tumut and
Tumbarumba.
Binding alliance
14 Northern Plains 5 Coonamble, Gilgandra, Gunnedah, Liverpool Plains and Warrumbungle.
Binding alliance
15 New England Region 4 Armidale Dumaresq, Guyra, Uralla and Walcha. 16 MidCoast Water Region 2 MidCoast water and Gloucester. County Council
or
Council-Owned
Regional Water Corporation 17 Mid North Coast Region 3 Kempsey, Nambucca and Port
Macquarie-Hastings.
8 Bland, Coolamon, Cootamundra, Harden, Junee, Temora and Young.
Sewerage Alliance 19 Wagga Wagga/Lockhart
Region
(sewerage only)
3 Lockhart and Wagga Wagga. Sewerage
Alliance 20 Queanbeyan City
Council
1 Queanbeyan Stand Alone
21 Bega Valley Shire Council
1 Bega Valley Stand Alone
22 Eurobodalla Shire Council
1 Eurobodalla Stand Alone
23 Clarence Valley Council 1 Clarence Valley Stand Alone
24 Tweed Council 1 Tweed Council Stand Alone
25 Tamworth Regional Council
1 Tamworth Regional Council Stand Alone 26 Wingecaribee Shire
Council
1 Wingecarribee Shire Council Stand Alone 27 Shoalhaven City Council 1 Shoalhaven City Council Stand Alone 28 Goldenfields Water
County Council
1 Goldenfields Water County Council Stand Alone – County Council 29 Riverina Water County
Council
1 Riverina Water County Council Stand Alone–
County Council 32 Fish River 1 Supplies Oberon and Lithgow areas Stand Alone –
State Owned Corporation Summary of Organisational Structure Models Proposed.
14-15 Binding alliances 2 Sewerage Alliances
1-3 Council-Owned Regional Water Corporations
8 stand alone council-owned water supply and sewerage utilities 2-3 county councils
3 stand alone water supply authorities Total: 32
Recommendations for existing County Councils under Option 1 Goldenfields Water County Council
It is suggested that Goldenfields retains its current water supply responsibilities.
In relation to sewerage, the councils in the operating areas of Goldenfields Water County Council would become members of a sewerage binding alliance.
Riverina Water County Council
Riverina Water County Council would retain its current responsibility for water supply.
In relation to sewerage, two of the councils in the operating areas of Riverina Water County Council would become members of a sewerage binding alliance (Wagga Wagga and Holbrook). The other two councils which receive water supply from Riverina Water have opted to join RAMROC Alliance for their sewerage services (Urana and Greater Hume) and for the part of Greater Hume not served by Riverina Water.
MidCoast Water County Council
It is proposed that the water supply and sewerage functions of Gloucester Council be transferred to MidCoast Water. There may be a case for the new structure to form a council-owned regional water corporation.
Rous Water and Central Tablelands Water County Councils
Rous Water County Council is the bulk water supplier in the Northern Rivers region and Central Tablelands County Council provides water supply to the Blayney and Weddin council areas and to part of the Cabonne area. It is proposed that these county councils are
disbanded and their responsibilities absorbed by the binding alliance, or that they become members of the alliance council. It is expected that greater integration of planning and
services would occur if the responsibilities of the county councils were taken over by the new alliance council.
Far Western Binding Alliance
If an alliance was to be put in place in the areas of Broken Hill, Central Darling, Bourke, and Brewarrina, a number of options could be considered. Due to the geographically disperse and socio-economically disadvantaged nature of many communities in these regions, continued community service obligation funding is likely to be required.
Two options are:
1. The three councils (Central Darling, Bourke, and Brewarrina) could form an alliance, and commission Country Water to manage its strategic planning functions; and 2. Country Energy continues to operate on a stand alone basis, and the three councils
would form an alliance and receive community service obligation payments.
Fish River and Cobar Water Board
Fish River Water supply and Cobar Water Board would continue to operate as separate water supply authorities.
Map 6: Option 2 – Catchment Aggregations Name of grouping Number of
Local Water Utilities in grouping
Constituent local water utilities
Murrumbidgee
19 Balranald, Coolamon, Cootamundra, Griffith, Gundagai, Goldenfields County Council, Harden, Hay, Junee, Leeton, Murrumbidgee, Narrandera, Riverina County Council, Temora, Tumut Shire, Wagga Wagga, Wentworth and Yass Valley.Murray 12 Jerilderie, Albury, Berrigan, Conargo, Corowa, Deniliquin, Lockhart, Murray, Urana, Wakool, Tumbarumba and Greater Hume.
Lachlan 14 Bland, Blayney, Boorowa, Cabonne, Carrathool, Central Tablelands County Council, Cowra, Forbes, Lachlan, Orange, Parkes, Upper Lachlan, Weddin and Young.
Macquarie 10 Bathurst Regional, Bogan, Cobar, Dubbo, Lithgow, Mid-Western Regional, Narromine, Oberon, Warren, and Wellington.
Mid-North Coast 6 Armidale Dumaresq, MidCoast Water, Gloucester, Kempsey, Port-Macquarie Hastings, and Walcha
Far North Coast 7 Ballina, Byron, Kyogle, Lismore, Richmond Valley, Rous Water County Council, and Tweed.
Far West 4 Bourke, Brewarrina, Central Darling and Country Energy
Goulburn-Shoalhaven 4 Goulburn Mulwaree, Palerang, Shoalhaven and Wingecarribee
North Coast 4 Bellingen, Clarence Valley, Coffs Harbour and Nambucca Border Rivers 7 Glen Innes Severn, Guyra, Gwydir, Inverell, Moree Plains,
Tenterfield, and Uralla.
Upper Hunter 3 Muswellbrook, Singleton and Upper Hunter.
Snowy Monaro 3 Bombala, Cooma Monaro and Snowy River
Namoi 8 Coonamble, Gilgandra, Gunnedah, Liverpool Plains, Narrabri, Tamworth Regional, Walgett, and Warrumbungle Shire.
Queanbeyan City Council
1 Queanbeyan
South Coast 2 Bega Valley and Eurobodalla
APPENDIX 2: BINDING ALLIANCE MODEL
What Is a Binding alliance?
The Institute for Sustainable Future’s (ISF) option paper describes a mandatory alliance (in this Report referred to as a ‘binding alliance’) as being a “minimalist option imposing least change on participating local water utilities (local water utilities)”. The alliance would conduct certain services (not specified) centrally and these would be paid for by each member council on an apportionment basis. The benefits flowing from the model include access to specialist technical skills for all member councils and efficiencies from pooling resources. Assets would continue to be owned and operated by each member council. The control and delivery of services would continue to be provided by each member council.
A separate body, distinct from the council members of the alliance, is established to
coordinate the agreed functions of the alliance. This body could take the form of a committee appointed by councils or a distinct legal entity.
The Institute for Sustainable Future’s option paper states that the alliance must be mandatory “or it risks falling apart in the face of difficulties or a lack of interest”.
Mandating membership of an alliance will require legislation.
The Riverina and Murray Regional Organisation of Councils (RAMROC) binding alliance model is proposed by 18 general purpose councils. This model takes a step beyond the mandatory or binding alliance outlined in the ISF report. A distinct legal entity (the Alliance Entity) is established as a corporation that has responsibility for the strategic and financial planning function of member councils and for providing specialist technical skills to the member councils. Assets and the responsibility for service delivery are retained by member councils. However, asset management is directed by the Alliance Entity and service delivery is provided in accordance with the asset management plan developed by the Alliance Entity.
Service levels are agreed to between the Alliance Entity and member councils. Member councils are compelled to remain members of the alliance and implement the directions of the Alliance Entity. The model described below builds on the RAMROC model.
Alliance Entity
The Alliance Entity is a corporation. It is responsible for strategic policy and management of the region’s water supply and sewerage services and for providing specialist technical skills to the member councils.
The Alliance Entity develops the water supply and sewerage strategic business plan and financial plan for the region after carrying out community consultation to determine the levels of service the community wants and is willing to pay for. For each member council, the business plan identifies the following for each of water supply and sewerage:
levels of service to be provided
capital expenditure required
operation and maintenance expenditure required
long-term financial plan
revenue needed to fund the capital and operating expenditures
projected volume of water supplied and number of properties to be levied
proposed charges to raise the required revenue.
The Alliance Entity would also determine the operating expenditure required to maintain the Entity.
The Alliance Entity will also be responsible for:
integrated water cycle management planning
demand management planning
drought management planning
development servicing plan
risk based drinking water quality management planning
environmental management planning
regulation of sewerage and trade waste
liquid trade waste policy
facilitating and procuring major capital works
developing a comprehensive data collection and reporting system
performance reporting, monitoring and benchmarking
decision making on water restrictions
The Alliance Entity is responsible for setting water supply and sewerage charges for member councils and this is to be done in accordance with either:
mandatory pricing principles with independent oversight; or
determinations of the Independent Pricing and Regulatory Tribunal.
The Alliance Entity would publicly exhibit the proposed charges for each member council in its draft annual management plan, which it would finalise after addressing any public submissions received on the draft. The Alliance Entity would also publish an Annual report for the Alliance and annual financial statements for its activities.
Member Councils
The member councils own the water supply and sewerage assets. Their function is to manage, operate and maintain water supply and sewerage assets in accordance with the asset management plan and levels of service determined by the Alliance Entity.
This includes billing and all customer interface.
The revenue, capital and operating plans and budgets are allocated to member councils.
The member councils are required to:
implement the capital and operating plans in accordance with the asset management plan and their budgets.
bill customers;
collect the budgeted revenues and expend the revenues in accordance with the capital and operating budgets;
remit to the Alliance Entity the member council’s share of the Entity’s operating cost;
maintain assets in accordance with the Alliance Entity’s asset management plan;
provide water supply and sewerage services in accordance with service level agreements between the Alliance Entity and the member councils;
provide customer service facilities; and
implement the data collection and reporting system Costs
The additional costs of this model compared to the status quo are the costs associated with the operation of the Alliance Entity less the strategic management costs currently expended by member councils. The alliance entity may involve additional costs for providing strategic planning and specialist technical skills. RAMROC estimates these annual costs to be a total of between $375k and $700k for the18 member councils. Please see Appendix 3 for details
The additional costs of this model compared to the status quo are the costs associated with the operation of the Alliance Entity less the strategic management costs currently expended by member councils. The alliance entity may involve additional costs for providing strategic planning and specialist technical skills. RAMROC estimates these annual costs to be a total of between $375k and $700k for the18 member councils. Please see Appendix 3 for details