Council's Submission to the Water Inquiry
Submission by the Glen Innes Severn Council into the Inquiry into Secure and Sustainable Urban Water Supply and Sewerage Services for Non - metropolitan New South Wales.
Organisation Name: Glen Innes Severn Council
Organisation Contact Name: Hein Basson
Position: General Manager
Contact Phone: 0408 669 931
Contact Email: hbasson@gisc.nsw.gov.au
Submission authorised by: The CouncilEXECUTIVE SUMMARY
The Glen Innes Severn Council is best placed to achieve holistic, fully integrated, sustainable, fourth generation urban water management; as the planning, water, sewerage and stormwater functions all fall within the purview of a single organisation. It is ideally placed and committed to pursuing an holistic, sustainable, long-term planning approach - with a particular focus on achieving economic, whole-of-community outcomes through the proper integration of all the organisation's planning and management activities.
The Council has identified that cooperative engineering arrangements within the Local Government Industry already exists, that the establishment of another Water Utility (e.g. a County Council as an additional governance structure) will add unnecessary cost for local communities, that local communities losing their water and wastewater functions will suffer significant negative socio-economic effects, and that synergies and cost efficient management structures already exist within current Local Water Utilities. It has also been determined that both the Council's Water and Sewerage Funds are healthy and sustainable in their own right. These facts clearly indicate that there is no need for Local Water Utilities to be restructured, particularly relating to Glen Innes Severn.
The Glen Innes Severn Council is unique in that it doesn't share its water sources and supplies with any other local government area. It has a separate water catchment area, is isolated from its neighbouring Council areas by the physical distance to its neighbours and there are no water-sharing, operational or community benefits to be gained in not leaving it to continue to manage and further improve its water utilities into the future.
Loss of the water utility would disrupt the economies of scale within the local area. It is difficult to understand why the water and sewerage functions of Local Government should be targeted by comparison to any of the other many functions that Local Government provides to its community.
There is nothing to be gained by incorporating the Glen Innes Severn Council's water and wastewater functions into a larger organisation, given that its management of the water supply and sewerage services already meets the requirements for Best Practice issued by the Department of Water and Energy.
It is therefore strongly submitted that the status quo remains for the Glen Innes Severn Council.
INTRODUCTION
The Glen Innes Severn Council has taken note that on 12 October 2007, the NSW Minister for Water Utilities, the Hon Nathan Rees had announced an inquiry into the provision of water supply and sewerage services in regional New South Wales (NSW).
It is the Glen Innes Severn Council's understanding, in line with the interpretation of the Local Government and Shires Association, that the purpose of this inquiry is deemed to "identify the most effective institutional, regulatory and governance arrangements for the long term provision of water supply and sewerage services, and to ensure these arrangements are cost-effective, financially viable, sustainable, optimise whole-of-community outcomes, and achieve integrated water cycle management".
The Glen Innes Severn Council has also taken note of the following elements that had verbally been identified by the Minister as prerequisites for a new water utilities model at a special meeting of the New England Local Government Regional Group of Councils (NELG) held on 30 January 2008:
- The model needs to protect and/or replace existing revenue streams;
- The model needs to protect and/or enhance capital works associated with water and wastewater services;
- The model needs to protect and/or enhance existing jobs associated with the delivery of water and wastewater services;
- The model needs to maintain and/or enhance specialised skills sets associated with the delivery of water and wastewater services;
- The model needs to make provision for effective governance arrangements;
- The model needs to make provision for sustainable pricing mechanisms.
Further, the Council has taken note of the following drivers for the Inquiry into Local Water Utilities that had verbally been identified by the Minister at the above-mentioned special meeting of NELG:
- Financial sustainability;
- Councils moving to alliances (as there are reasons for this happening);
- Variances in water quality;
- Variances in water pricing.
The Glen Innes Severn Council would like to highlight the discussion points below for consideration by the Inquiry and the Minister.
GENERAL COMMENTS
Philosophical Position
Council strongly subscribes to the following statement as its philosophical position for any local water utilities reform that is considered:
1. Local Authorities should be the basis for any vehicle established to manage water and sewerage services.
2. The local utility authority should have responsibility for both water and sewerage functions.
3. Variations of socio-economic characteristics, geographic situations, operational pressures and vulnerabilities of local water and sewerage schemes, clearly indicate that it is not practical to propose one reform model for the whole of NSW.
Council therefore argues that, depending on the particular circumstances of any existing water utility, the only management models that should be considered by the Inquiry and the Minister are:
a. A status quo model, provided that the financial and management capabilities exist in the water/sewer authority to deliver 4th generation management of the utilities in the medium to longer term.
b. A corporate model.
c. A water/sewer authority that is based on a common water source.
The Need For Water Reform is Unclear to Council
Although Council supports the above-mentioned philosophical position, Council finds it necessary to state that it has difficulty in understanding the need for water reform.
In reading the 2005/06 Water Supply and Sewerage NSW Performance Monitoring Report (NSW Government, Department of Water & Energy, Best Practice Management), inter alia the following statements are included as part of the executive summary to this report:
Many local water utilities in non-metropolitan NSW are now complying with the requirements of the "Best-Practice Management of Water Supply and Sewerage Guidelines", which require pay-for-use water supply pricing and the implementation of sound water conservation and drought management. The guidelines also require utilities to have a sound strategic business plan and financial plan and 82% of utilities now have such plans. Implementation of these plans should ensure the long-term sustainability of these water supply and sewerage utilities.
The Typical Residential Bill (TRB) for water supply and sewerage has remained relatively constant over the last 11 years (the TRB for 2006/07 is $745 per assessment). At the same time, 99% of the samples tested for E.coli comply with the Australian Drinking Water Guidelines.
A high level of water quality compliance and a low level of water quality complaints have been maintained.
Sewerage odour complaints and sewerage service complaints have remained low.
Median water usage charge has risen to 105c/kL.
Average annual residential water consumption has fallen from 330 to 190kL/property over the last 15 years.
Compliance with the Department of Environment and Conservation (DEC) sewerage licences was 96% for Biochemical Oxygen Demand (BOD) and 93% for suspended solids (SS).
Although Council acknowledges that the above extractions from the mentioned report are selective, reading the report in total and objectively, leaves the reader with an overall impression that much has been achieved since the implementation of the Best-Practice Management of Water and Sewerage Guidelines and that water utilities are generally performing well - viewed from the "Best Practice" angle advocated by these mentioned guidelines. Council therefore has difficulty in understanding the need for the implementation of an urgent water reform agenda.
Furthermore, analysing the Median Economic Efficiency Indicators for four sizes of Local Water Utilities (LWU), as reported in the 2005/06 Water Supply and Sewerage Benchmarking NSW Benchmarking Report (NSW Government, Department of Water & Energy, Best Practice Management) it would appear that the smaller LWUs are performing quite well in comparison with the bigger LWUs. It is indeed interesting to note as an example that the size of LWUs having 1,501 to 3,000 connected properties, consistently out-performs the larger utilities with regards to the provision of sewerage services.
The above information leads Council to ask the question whether a reform of local water utilities is in fact necessary?
Council suggests that a logical next step in the implementation of best practice would be the enforcement of the current guidelines by turning them into standards. It is Council's opinion that such a step would address the majority of the Minister's concerns regarding variances in water quality and water pricing, as well as the financial sustainability of water utilities. Further, it is Council's firm belief that the only reason why a number of NSW Councils have lately entered into so-called "strategic alliance" arrangements is because of the fear of being amalgamated into a single, larger Council. This concept of strategic alliances was not primarily driven by financial considerations and/or the possible achievement of efficiencies as a result of economies of scale or scope.
Council notes that no data or analyses have been presented to support the notion that a centralised body or a series of regionalised bodies would be able to match, let alone exceed, the triple bottom line performances achieved by the existing model. The comparisons noted above would suggest that smaller units often perform better than the larger ones.
A further issue concerns societal equity issues in the servicing of small communities - it is the existing involvement of such communities on a broad range of issues with Council and their proximity to Council that enhances their ability to and empowers them to lobby for and obtain such services as reticulated water supplies.
SPECIFIC COMMENTS
Cooperative Arrangements Within the Local Government Industry Already Exists
Within the local government industry, engineers working groups within regions already exist, and it is possible for individual engineers to draw on the expertise within that group.
Further, water seminars, conferences and other meetings are already taking place and are available to assist local government engineers and staff in the execution of their functions.
In addition, the Department of Water and Energy, as well as the Local Government and Shires Association's Water Directorate, provide support and advice in this area. This mentioned Department also provides a policy direction and monitoring function.
Establishing Other Water Utilities Will Add Costs
County Councils (delivering water services), or another form of a cooperative structure between Councils, would add another layer of communication (with added cost) and will confuse the decision-making processes.
Such a structure would further require duplication of customer databases (and inherent problems with customer and asset data where software packages are different).
Notification of residents about urgent water supply interruptions, works etc. is currently managed using the Council's rating database. If another structure requires access to land/rating information, there will be delays and costs associated with the implementation and ongoing functioning of such a structure.
Significant Negative Socio-Economic Affects for the Local Community
The recent February 2008 Options paper on the Inquiry into secure and sustainable urban water supply and sewerage services for non-metropolitan NSW (prepared for the Local Government and Shires Associations NSW by the Institute for Sustainable Futures University of Technology, Sydney), clearly indicated that "[H]aving water operations as part of council business provides a critical mass of human and physical resources which are mutually reinforcing." Council fully concurs with this statement; having water and wastewater as part of the engineering services provided by smaller and medium sized Councils, enhances the position interest and challenges for an engineer working for such Councils. Council is concerned that the loss of its water and wastewater functions will make it more vulnerable to losing key staff for more challenging roles elsewhere.
Council is further concerned that loss of its water and wastewater service functions might have a negative impact on local employment. The above-mentioned options paper has identified the fact that smaller communities "can be quite seriously impacted by the loss of local jobs and activities, as there is a knock-on effect from the diminished activity, in everything from schooling and housing to the viability of local businesses and services". In line with this quoted statement, Council argues that, in order for any "county council" or other corporate structure to successfully deliver water services to a number of current Councils within a particular geographic region, it follows logically that there will have to be a rationalisation of existing staff numbers in order to demonstrate efficiency gains. Council is concerned that the potential loss of its water services will have loss of local employment as a result; which will impact negatively on its community in a socio-economic sense.
Synergies and Cost Efficient Management Structures Already Exist
If the Water and Wastewater functions are removed from Council, it will be catastrophic for, and potentially threaten Council's long-term financial sustainability.
To optimise available labour and minimise cost, it is common practice for smaller and medium sized Councils to use multi-skilled staff across different local government functions on a matrix basis. Water and wastewater staff could therefore not only perform water and wastewater-related functions, but could also (from time to time) be involved with e.g. road related duties. Especially with smaller and medium sized Councils, this practice enhances opportunities for efficiencies, as well as staff development and training.
Further, it is common practice for smaller and medium sized Councils to share plant and equipment across different functional areas of the Council. The Water & Wastewater Section would not as an example have access to its own backhoe and excavator, but would "hire" these pieces of plant in from the Council's Roads Section.
It is estimated that this Council and the community it serves will be negatively affected by an amount in the order of half a million dollars, if the integrated service delivery model it currently employs with regards to the delivery of water and wastewater as well as other general purpose functions, is to be terminated. Therefore, if the water and wastewater functions were to be separated from the Council's service delivery portfolio, its "General Fund" will suffer greatly as a result of the loss of the particular benefits associated and achieved with its integrated approach to service delivery.
It could therefore be stated that many synergies and healthy, cost efficient management practices would be either completely lost or heavily eroded if the water and wastewater functions are taken away from this Council.
Both Water & Sewerage Funds Are Sustainable
Both Council's Water and Sewerage Funds are financially healthy and sustainable in theirs own rights.
Operationally, both these funds are self-sufficient and no dividends have yet been declared to cross-subsidise Council's General Fund. It is not anticipated for the Council to declare any dividends from either of these two funds into the future.
Currently, the Water Fund has approximately $2M and the Sewerage Fund approximately $1M invested, which accounts for roughly 40% of Council's total investment portfolio.
Local Councils are Best Placed to Pursue Integrated Urban Water Cycle Management
Both professional experts and the community increasingly acknowledge that a more systematic and holistic approach is needed towards urban water cycle management. Local water authorities are arguably best placed to achieve fully integrated water management - requiring a life-cycle context and a triple-bottom-line economic approach (and not only a financial approach) that focuses on providing a range of services rather than merely commodities - described as fourth generation urban water management.
It is difficult to see, for example, how a larger and specialised utility-provider (of water and sewerage services, but in all probability not including stormwater management (?)) would be able to more effectively integrate with land-use planning - now primarily under the operational control of Councils - or encourage localised water harvesting and/or re-use schemes.
Holistic planning should include land-use planning and strategic community planning; it should be sustainable, longer-term integrated planning with a particular focus on achieving economic, whole-of-community outcomes through the proper integration of all the organisation's planning and management activities.
The Glen Innes Severn Council argues that Local Councils who provide full water services among their other services, are ideally placed to pursue the desirable goals associated with Fourth Generation Urban Water Management, since this "will ensure that planning, water, sewerage and stormwater all fall within the purview of one organisation". (Fourth Generation Water Systems, A paper for the Local Government and Shires Association NSW, Chris Davis, University of Technology Sydney, February 2008.)
Fragmenting the management of urban water and sewerage systems, or separating these functions from the other (already integrated general purpose functions of) local Councils, should therefore clearly be viewed as a retrograde step.
THE GLEN INNES SEVERN WATER & WASTEWATER SCENARIO
Water Supply
Council has closely examined the terms of reference and believes that Glen Innes is in a rather unique situation. When one considers the local government areas surrounding the Glen Innes Severn Council, the following observations are apparent:
- North - Tenterfield Shire Council:
This Council covers a rather diverse area and has arrangements in place to obtain water from three (3) separate sources. Tenterfield township's water is sourced from the Tenterfield Dam, Jennings Village's water is sourced from the (former) Stanthorpe Shire, and water to the eastern villages is sourced from Kyogle Shire. Woodenbong, a town in the eastern portion of Tenterfield Shire, is located approximately 240 km from Glen Innes.
- South - Guyra Shire Council:
Guyra Shire Council forms part of the New England Strategic Alliance, which incorporates Guyra Shire, Armidale Dumaresq Shire, Walcha Shire and Uralla Shire. Council understands that the Strategic Alliance believes that it is currently the optimum size and any expansion in size will see diseconomies of scale. The central source of water for the alliance is the Malpas dam, which is located south of Guyra.
- West - Inverell Shire Council:
Inverell Shire takes its water supply from Copeton Dam. Council understands that Inverell Shire is (inter alia) proposing a model based on the water supply point - i.e. Copeton Dam. Since Glen Innes is located approximately 65 km east of Inverell, it is unlikely to be economically feasible to tap into this resource, which is served by a different catchment to the mentioned Copeton Dam.
- East - Clarence Valley Council:
North Coast Water is a business unit of the Council and it supplies water to the Clarence Valley and Coffs Harbour. Once again, distance is the enemy with Grafton being located approximately 160 km to the east of Glen Innes in the Northern Rivers Catchment.
Analysing the different water catchment areas within the region, it is therefore apparent that the Glen Innes Severn Council does not share any catchment areas with any of its neighbouring Councils. Glen Innes Severn Council is isolated physically from the adjoining Councils and it does not form part of a logical structure that is based on a common water supply source.
Glen Innes currently sources its water from the Beardy Waters (river), and recent initiatives have been implemented to ensure a secure supply for the next 20 years. These initiatives include:
- Drought management plan implemented;
- Demand management plan implemented;
- Pressure management and leakage control project in progress;
- Groundwater bores in process of being brought on-line;
- Saleyards truck wash water recycling being investigated.
Council also has a backup water supply located on the Mann River, just east of Glen Innes. The Mann River is an eastward flowing river in the Northern Rivers Catchment (as opposed to the Beardy Waters which is a westward flowing river in the Border Rivers Catchment).
The town of Deepwater has its own separate supply, off the Deepwater River.
Water Quality:
Glen Innes has a modern water filtration plant with a capacity of 15 Ml per day (typical daily consumption 2-3 Ml per day). The water is filtered and chlorinated and consistently meets the Australian Drinking Water Guidelines.
Deepwater currently has an unfiltered water supply, but Council is in the process of calling for tenders for the installation of a suitable filtration system.
This project is currently fully funded within the Council's Management Plan (Budget), and Council has not applied for a subsidy under the Country Towns Water and Sewerage Program.
Typical Residential Bill - Water Supply:
The typical residential bill for the financial year 2005/06 was $331, which compares well with the statewide median of $330.
This indicates that Council is managing its water supply in an economically responsible manner.
Strategic Business Plan for Water Supply:
Council has a Strategic Business Plan for Water dated 1999, which has recently been reviewed and updated. Council is in a position to conduct the review given the completion of the recent initiatives outlined above.
Best Practice Performance
Council has implemented Best Practice Pricing, introduced a Demand Management Plan, and recently updated its Drought Management Plan. It is currently undertaking a water leakage and pressure management program as part of its demand management strategy.
Sewerage
Once again, similar comments apply to the sewerage as per the water supply in terms of the physical isolation of Glen Innes.
Sewerage quality:
Glen Innes has recently opened its new 8000 EP IDEA Sewerage Treatment Works and it produces an excellent quality effluent that conforms to the EPA Inland River Discharge requirements. It is noteworthy that the phosphorus levels have been below 0.3 ppm for the past three (3) months.
Deepwater is serviced with a common effluent system that is relatively modern and effective.
Typical Residential Bill - Sewerage:
The typical residential bill for 2005/06 was $350, which compares well with the statewide median of $370.
This indicates that Council is managing its sewerage service in an economically responsible manner.
Trade Waste Policy:
Council has implemented its trade waste policy for Glen Innes and Deepwater and has issued permits and trade waste agreements to all businesses and commercial properties affected.
Strategic Business Plan for Sewerage:
Council prepared a revised Strategic Business Plan for Sewerage in 2005, as part of its negotiations with the State Government for a subsidy for the new Sewerage Treatment Works.
Developer Service Plan
Glen Innes has a Developer Service Plan, which details contributions required for development within the water and sewerage service areas. This plan was recently updated in November 2007.
CONCLUSION
The Glen Innes Severn Council is convinced that, as a Local Water Utility, it is best placed to achieve holistic, fully integrated urban water management (known as fourth generation urban water management) as an essential step towards achieving a sustainable community. The Council is further convinced that it is best placed to pursue an holistic, sustainable, long-term planning approach with a particular focus on achieving economic, whole-of-community outcomes through the proper integration of all the organisation's planning and management activities.
The Council has also identified that cooperative engineering arrangements within the Local Government Industry already exists, that the establishment of another Water Utility (e.g. a County Council) will add unnecessary cost for local communities, that local communities losing their water and wastewater functions will suffer significant negative socio-economic affects, and that synergies and cost efficient management structures already exist within current Local Water Utilities. It has also been determined that both the Council's Water and Sewerage Funds are healthy and sustainable in their own right.
The Glen Innes Severn Council is unique in that it doesn't share its water sources and supplies with any other local government area. Council has a separate water catchment area, is isolated from its neighbouring Council areas by the physical distance to its neighbours and there are no water-sharing, operational or community benefits to be gained in not leaving it to continue to manage and further improve its water utilities into the future.
There is nothing to be gained by incorporating the Glen Innes Severn Council's water and wastewater functions into a larger organisation, which would become centrally located, given that its management of the water supply and sewerage services already meets the requirements for Best Practice issued by the Department of Water and Energy.
It is therefore strongly submitted that the status quo remains for the Glen Innes Severn Council.
Contact details
The General Manager
hbasson@gisc.nsw.gov.au
