The State Government of Queensland, Australia, has recently embarked on unparalleled reform of the water industry in the populous South-East corner of the state. This reform goes well beyond that previously seen in either the Australian electricity or water industries, and involves the geographic aggregation of 25 separate local government-owned water authorities into a five-tiered, vertically disaggregated series of new water supply and delivery businesses. Particular priority has been placed on establishing the bulk and manufactured water, trunk distribution and grid management entities that will be crucial to meeting the short and long-term water supply needs of this rapidly-growing region, however the scope of reforms covers the full water supply chain through to the consumer. The scale and pace of the reform poses significant challenges for both the industry and its regulators. To achieve the Government's aggressive timetable and delivery outcomes, all parties have had to mobilise quickly and manage the complex task of business transformation while maintaining service continuity - and against a backdrop of severe drought, unprecedented capital works programs, ongoing population growth and concurrent local government amalgamations and boundary changes. If executed properly, however, the reforms offer many potential benefits for the Government, the water authorities, and the community. This paper examines the progress of the Queensland reforms to date, and discusses the approaches taken, key observations, and challenges and opportunities for both the water businesses and the regulators.

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