The Australian Financial Review


By Rod Pearse
Chairman
CEO & Managing Director
Boral Limited

It's imperative to revive water reform, argues Rod Pearse.

Australia, the driest inhabited continent on Earth, is running out of water so we should cut back our water use and accept that we may have to put the brakes on growth until the rain comes. Right?

Wrong. This view is based on a myth that we cannot do anything to make more water available. But our water problems are in fact man-made.

This myth of unavoidable urban water scarcity is used by governments around the nation to hide their failure over many years to plan for and implement reforms that would ensure our urban water supplies into the future.

When it comes to responding to our water problems, various initiatives focusing on demand management have been a proud boast of governments around the country. But it is our water supply system, not the amount of water available for use, that is the real problem threatening our future.

In rural Australia, although many parts of the country are suffering under one of our worst droughts, it is the failure of governments and water authorities to implement measures already agreed under the National Water Initiative that is making life more difficult.

Trends in population and economic growth, particularly in urban Australia, have been understood for more than 20 years. So too has the importance of reliable water supplies to both quality of life and economic sustainability. And significantly for well over 20 years, the patterns of irregular rainfall have been known.

Yet the preparedness to plan for this growth and provide the water resources required has been lacking. The Business Council of Australia poses this question: what is the economic cost to Australia of not acting now to reform our water infrastructure to ensure more sustainable water management practices?

In our report released today, Water Under Pressure: Australia's man-made water scarcity and how to fix it, the BCA highlights that we are forgoing at least 1 per cent of our gross domestic product or $9 billion - by failing to accept the need for reforms that can unlock new water supplies to meet our future needs.

 But this figure represents only the direct impact of not addressing comprehensive national water reform.

 There is also an unquantifiable cost and that is the forgone additional investment and growth that would result in better access to water.

 Access to water will get worse if urgent action is not taken. The Australian Bureau of Statistics estimates that by 2032, Australia's population will reach 25 million people, and the vast majority will be living in our already strained major cities along the east coast. At the same time, unless there is investment in new sources of urban water supply, the available water will remain relatively static or possibly reduce as a result of changes in weather and water flows.

 This makes it clear that demand measures now used, such as restricting when you water the garden or the size of the shower head, will not alleviate the looming pressures.

 Consideration of how to address water scarcity is not new. In 1994, the Council of Australian Governments (COAG) agreed on a strategic framework for water resource policy. This objective has not been achieved.

Not only is COAG the only forum for achieving agreement between the states and the federal government on major national reform, but it provides the opportunity to elevate water reform to a national level with direct input from the prime minister and first ministers.

It is time for our governments and water authorities to take the politics out of water and stop presiding over a water supply system that turns a sufficient supply of water at the source into scarcity for end users.

The impediments to new urban water supplies should be removed. All the competing options to increase water supply should be considered and evaluated on their relative merits.

Important and critical to successful water reform is that water prices should be sufficient to make investment in new water infrastructure viable.

Establishing a properly functioning water market would also ensure the health of our river systems and our environment, either by achieving efficiencies in rural water use to reduce the strain on our rivers or by creating the market to encourage the purchase of water for environmental use.

Water reform is the great unfinished business of COAG.

A renewed commitment by COAG members with clearly articulated actions, timelines and incentive structures will ensure Australia's economic growth is not constrained by the perception of unavoidable water scarcity.