WATER INDUSTRY REFORMS

The Hon. I.K. HUNTER (Minister for Sustainability, Environment and Conservation, Minister for Water and the River Murray, Minister for Aboriginal Affairs and Reconciliation) (14:23): I seek leave to make a ministerial statement on water industry reforms.

Leave granted.

The Hon. I.K. HUNTER: I am pleased to release a draft bill to establish a state-based third-party access regime for water and sewerage infrastructure for consultation. This draft bill is a key milestone in the ongoing water reforms, major reforms to the water industry in South Australia. It began with the passage of the Water Industry Act last year. The Water Industry Act promotes greater efficiency, competition and innovation in the water industry. It appointed the Essential Services Commission of South Australia as the independent industry regulator and, to ensure customer rights are protected, also appointed an independent Water Industry Ombudsman and Consumer Advisory Committee.

The Water Industry Act also committed the government to the establishment of a state-based third-party access regime. The establishment of an access regime was also a commitment under action 77 of Water for Good. The implementation of access arrangements will be another key step towards an efficient, dynamic and transparent water industry for South Australia. In February this year, I published a report entitled 'Access to Water and Sewage Infrastructure'. That report was intended to facilitate consultation with industry participants and interested community members on the eventual implementation of state-based access arrangements for water and sewerage infrastructure services.

This draft bill is closely based on that earlier report and the feedback we received. It also builds on our experience with economic regulations and access regimes for maritime services and railway operations, which have been certified by the National Competition Council. Current arrangements allow access seekers and SA Water to negotiate access on a commercial basis. This draft bill formalises those arrangements and provides a regulatory framework that will apply consistently to all South Australian water industry entities.

The access regime proposed in the draft bill would initially adopt a light-handed approach to suit the stage of development of our local water industry. Under a light-handed approach, the parties to an access request are required to negotiate in good faith without the regulator's direct involvement in the negotiations. This approach also provides for binding arbitration if negotiations break down.

The access regime will apply to the following water infrastructure services: bulk water transport, water distribution transport, local sewage transport, and bulk sewage transport. Initially, it is expected that the access regime would only fully apply to SA Water's bulk water transport infrastructure. The other infrastructures would be partially covered, which will only require the owners to comply with basic contact and information requirements. It is also expected that small-scale water facilities which are provided as a community service will be exempt from the state-based access regime.

There will be mechanisms built into the regime so that, over time, as the water industry develops and demand for access grows, the regime can be reviewed and adjusted. It is essential that third-party access to SA Water's infrastructure does not compromise public health, environment and safety standards. The draft bill explicitly states that the arbitrator cannot make an award that will be inconsistent with an existing law or legislative requirement relating to health, environment and safety. Further, the arbitrator must accept any advice provided by a department of the Public Service (such as the Department for Health and Ageing) which administers the legislative arrangements pertaining to health, environment and safety.

ESCOSA would be appointed as regulator for the access regime. Their role would include monitoring and reporting to me (as the Minister for Water and the River Murray) on their work and in regard to access, conciliation and appointment of an arbitrator in the event of a dispute. ESCOSA would also conduct a five-yearly review of the regime.

I have tabled this legislation as an exposure draft to give the community and industry further opportunity to consider the drafted provisions and allow time to assess any implications of the Productivity Commission's review of the national access regime to be completed by the end of October and to negotiate over provisions regarding the commonwealth Water Act following our recent federal election.

On 24 September 2012, the Treasurer referred to ESCOSA an inquiry into pricing reform for drinking water and sewerage retail services provided by SA Water. The inquiry's final report is due by the end of 2014. Subject to parliamentary processes, the commencement date for a state-based access regime will be set, taking account of the timing of ESCOSA's inquiry and to allow sufficient time for water industry entities and the regulator to prepare for commencement of the regime.

We have already undertaken considerable consultation in drafting this bill, including a public submission process earlier this year. I now invite anyone with an interest in the state's water industry to take this further opportunity to provide written comments on the bill and the explanatory paper, which are available on the Department of Treasury and Finance website. Written submissions are due by 29 November 2013. The government regards the work on third-party access as important and believes the implementation of access arrangements will be another key step towards an efficient, dynamic and transparent water industry for South Australia.