CORPORATIZATION AS A MEANS OF IMPROVING WATER QUALITY: THE EXPERIENCE IN VICTORIA, AUSTRALIA

Abstract

Factors including fragmentation, a lack of direction, poor accountability, poor water quality, and a sizable state government subsidy contributed to the rural water industry in Victoria, Australia, in 1993. In 1993 the state government set out parameters for reform to change the size, structure, performance, and culture of the water industry. The path taken was not privat ization, but corporatization. Tools used included amalgamation of organizations; separating water provisions from local government; changing the composition and reporting mechanisms of the boards; establishing clear benchmarks and performance criteria; making information publicly available; and providing a commercial orientation. The outcomes of the reforms were to be a focus on water quality and effluent management. In 2001, 15 water authorities were in place. There were significant improvements in accountability, finances, and performance. The authorities provided information on performance to both the state and the public. Reductions of operating costs have been in the range of 20–35%, with savings put back into new infrastructure. Water quality has significantly improved in a number of parameters and effluent management has also improved. This paper describes the challenges faced before the reform process, the reforms initiated, and the outcomes. It argues that privatization is not the only path to improvement: Developing a corporate structure and accountability can also deliver substantial improvements.

Notes

* Government of Victoria (2000b), para. 2.14. Financial indicators include long-term profitability, owner's investment, long-term financial viability, liquidity and debt servicing, movement in real service prices, and operating efficiency.

* Victoria Water Industry Association Inc. [online] [accessed 2 September 2002], www.vicwater.org.au.

*Further details on Victoria may be found at Victoria 2002 [online], accessed 9 September 2002.

^†In 1980 a Public Bodies Review Committee was established to address in part fragmentation within the water industry.