FENNER CONFERENCE ON THE ENVIRONMENT
Four break-out group discussion 2: Water policy
Chair: Professor Stephen Dovers
Rapporteur: Ms Karen Hussey
Karen Hussey: Our group was looking at water policy, and we started by mapping the various levels of government that have varying responsibilities for water in one way or another and we listed key points under each of the different levels of government.
We agreed that there are four levels of government local, regional, state and Commonwealth. And we agreed that there was significant variation across the jurisdictions as to who had responsibility for what, at those four different levels of government. So we spent a fair bit of time mapping that, and we also agreed that there was a fairly significant role for the private sector, through the outsourcing, largely by the state level of government, of the distribution of water.
When we had mapped the different levels of government, Steve Dovers then asked us, 'Do we do it well?' We agreed that, if you take a very long-term perspective, we have done water quite well. We have over the last century had a pretty secure level of supply, and more or less addressed the public health issue. So if you take a very long-term perspective, we should be fairly pleased with ourselves for having supplied the population and rural Australia with enough water to make the nation.
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Then we generally agreed that because we have spent an awful lot of time building the nation, we have got ourselves into a bit of a pickle. After much discussion we distilled the four issues that we felt could explain why it is that we are in the current crisis.
We decided that the first problem was based on historical legacy and path dependency. An awful lot of time, energy and capital expense was put into nation building dams and the like in the 1950s, '60s and '70s. It was a very good job of nation building but it left us in a position where we didn't necessarily have the right infrastructure to meet the population growth and the growth of economic wealth that we have experienced, and so we are now in the current situation where supply is a problem. And of course you have to then complement that with the fact that we have got a drought, which tends to make things problematic.
So we felt that historical legacy and path dependency were the first problem that we were in this situation now, largely in the rural sector but also in the urban sector, because of the decisions that had been made over the last few decades.
We then got into how policy, and the levels of government with various responsibilities for that policy and implementing that policy, had gone wrong. We agreed that the planning had been far too reactive, rather than proactive, so that we tend to suddenly realise we have a problem when we are in the middle of a drought rather than doing anything before the drought hits.
Another problem was that we had administrative fragmentation, as well as regulatory fragmentation. So the planning and institutional settings were fragmented across the different levels of government. But we decided that rather than change the way government works, and the way it is designed in this country however much one would like to do that we should approach it quite differently, but keep the major institutional settings there.
Finally, we decided that there was a very bad culture of water management and use in this country, that we don't have a culture of reuse, that it's been very much 'Supply us, then we throw it away.' There has been no idea that there might be a value to this water beyond the initial, first use. That culture, which is permeated across the population, is then reflected in the way water has been managed at the institutional level.
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We then talked about what, if that's the problem, would be the key principles for a future policy towards water in the urban sector. We came up with the following four key principles for the future, addressing each of those four problems that I have just talked about.
The first principle is fairly obvious, but obviously incredibly difficult that we need adaptive, forward-thinking management, and that within that adaptive, forward-thinking management we need to change the determinants for water management.
One of the points we discussed at length was the idea that water is currently managed in a business model, so that recycling water can't be supplied because it is not necessarily going to make any money or fully cost recover. Perhaps we should change the determinants for water management so that it is not just on an economic basis. Obviously, we have talked about that in terms of the triple bottom line, that you need to account for economic, social and environmental factors in water resource management, but we generally agreed that economics was still the key driver, and if we were going to think outside the box we would need to consider something beyond the traditional business model.
As a second point, we also agreed that we need to change the statutory frameworks for, for instance, regional and local government bodies, to allow for flexibility at local levels. That is related to changing the determinants for water management, in so much as if a particular local council or regional body wants to be particularly progressive or proactive in water resource management they should have the freedom to do that, and it shouldn't just be tied to what the state's water plans say.
The third point is that we felt that now is the time to address those first two points changing the way water management is assessed, how decisions are made, to take it away from an exclusively economic paradigm, and that we allow for greater flexibility and adaptive management at the local level while we exploit the change in the culture among the population. So we could use the drought and the change in the way people see and value water now to say, 'Hang on a minute. We need to change the way we think and make decisions about water planning at the institutional level.'
In coming up with our second principle, we agreed that there was a significant amount of institutional administrative fragmentation, both across and within the jurisdictions, and that this had high transaction costs and was generally counterproductive. (This obviously pertains to many domains, not just water.) We agreed that it was likely to continue in the medium term and that, short of changing the way government is designed, what we ought to look at is doing an audit of best practice institutional approaches across the country. We should devote large sums of money to saying, 'Well, who does it really well?' and then, having found out who does it really well we need to, at a very high level, perhaps at the Commonwealth level, say, 'These guys are doing it really well, so let's try and implement that across the institutions,' so that alternative culture is then permeated across the institutions. So rather than mucking about with how many institutions we have and at what level of government, we just try to change the way those within the institutions think, and base that on best practice. But we don't know who does best practice just at the moment, and that would require a fair amount of R&D.
Also, we need to connect water to strategic regional planning more broadly, which built on Darryl Low Choy's presentation.
The third principle is that we need to frame water in the context of Australia's long-term, national wellbeing and survival. In the same way we pumped all of those millions of dollars and capital expenditure into nation building, we now need to pump the same amount of thought and money into addressing water resource management. If we frame it in those terms, some of those key determinants that I mentioned in the first principle will automatically have to change. So this is not just about the economic model now, and the current paradigm, but rather where we want to be in 50, 60, 70 years' time. And in order to do that, you have to change your determinants now.
Finally, we agreed that the full value of water should be accounted for, which goes beyond the concept of full cost recovery. So, rather than just looking at whether we recover costs for the distribution and the infrastructure associated with supplying water, we need to try to take into account the environmental consequences of using water above and beyond that necessary. There is a lot of work being done on this and it is incredibly difficult, because how do you value it? Economists worldwide are trying to figure that out. But we agreed that that was something that should be an underpinning principle for where we take water policy from here.
Comment 1: I have a suggestion for implementing progress on the last point. A lot of Australia's more progressive water companies for example, Yarra Valley Water are consciously investing in reduction of their ecological footprint, which is fundamental to dealing with climate change and water shortage. If that becomes the logic under which decisions are made, I think you will actually achieve that. It means that if you are causing environmental or social harm, it has to be compensated for within the cost of providing the water, and the cost is internalised fully including Barney Foran's idea of going right up the food chain as well.
Karen Hussey: I was saying to Steve Dovers a few minutes ago that we will know we have made it when that 45-second segment on the 6 o'clock news that tells us what the Dow Jones index is today which none of us understands anyway is replaced with some kind of analysis on 'Our ecological footprint today', or 'BHP's ecological footprint as it stands today' following whatever it has done in Ok Tedi or whatever. We will know we have changed the paradigm when we are no longer looking at the share price but are looking at the ecological price. But I can't see that happening soon.
Comment 2: This is a cross-group linking comment picking up Jenny Goldie's point about population policy and strategic regional planning. I don't think we can sell strategic national land-use planning as a political concept, but I would like to go back to 1980 and Alan Gilpin's proposal that you need to put economic, ecological and social together which sounds a bit like sustainable development before its time and that you do that through what he termed 'settlement' policy. I think it is quite an appealing notion, but we don't do that. We are supposed to, with strategic regional planning, and I wonder whether, if you used the term 'settlement policy' rather than 'population policy', you might not get as much resistance to the idea, because it is about not just who is here but how people live and settle on the landscape. Just an observation.
Karen Hussey: Related to that, I think, is the idea that we continue to look at water as a separate issue, whereas water is really just a component of our attempts to achieve ecologically sustainable development. We can't continue to look at water as separate from everything else.
