Water privatisation by stealth?

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In the past few decades, private or hybrid ownership models have become the norm for electricity generation, energy retail and telecommunication assets. Road infrastructure and electricity networks are still largely in public hands, but privatisation is gradually happening in these sectors too, and is now more widely accepted as legitimate and safe by the community.

Water utilities are a different story: there is still strong political resistance in Australia to the idea of this essential service being entrusted to a private, for-profit entity. However, our water industry is in fact substantially privatised already: many major urban water authorities have outsourced their asset maintenance, fleet management, IT, and capital delivery functions. Some have also outsourced some of their non-critical customer service functions. Much of the actual operation of this industry is therefore conducted and managed by private entities: only asset ownership and management remain universally in public hands. In effect, if not in name, this is a form of public-private partnership.

How much essential difference is there between this “PPP” model, and an alternative model where fully privatised businesses operate under appropriate public regulation? Are we likely to see a continued evolvement towards fully privatised water businesses in Australia? Or are balance sheet pressures on state governments no longer acute enough to force them to take this political risk?