Submission: Victoria’s Draft 30-Year Infrastructure Strategy

Infrastructure Victoria
Level 33, 140 William Street
Melbourne VIC 3000 

Re: Victoria’s Draft 30-Year Infrastructure Strategy 

Thank you for the opportunity to respond to the Victoria’s Draft 30-year Infrastructure Strategy. VicWater is the peak body of the Victorian water industry with its membership comprising Victoria’s 19 statutory water corporations. They are responsible for the provision of urban water and wastewater services, rural water supply including irrigation and related drainage services. 

VicWater continues to strongly support Infrastructure Victoria (IV) in positioning the State for a sustainable and productive future. IV plays a critical role in Victoria’s policy and planning landscape by contributing thoughtful, intelligent, and thorough analysis. The commentary herein reflects VicWater’s desire to make an equally rigorous contribution to the topics at hand, in particular the circular economy, the energy transition, and water supply augmentation. 

A strength of the draft strategy is IV’s many practical recommendations for advancing implementation in a challenging environment of political cycles, budgets, sectoral interests. VicWater commends IVs detailed implementation plans and recommendations covering funding, regulation, and roles and responsibilities. Notwithstanding the above, outside some specific recommendations to expand their role in water supply augmentation planning, there is little recognition of the potential for the water sector – as major government-owned sector with considerable scientific, infrastructure and commercial capabilities – to take a greater implementational role in the 30-year strategy. 

During 2020 all Victorian water corporations developed and unanimously endorsed the VicWater Policy Platform (https://vicwater.org.au/vicwater-policy-platform/). The policy platform covers seven topics: water security, financial sustainability, customer affordability, environmental stewardship, circular economy and 

waste, carbon emissions and recreational use. Given the water industry plays a fundamental role in the health and prosperity of Victoria’s communities, environment, and economy, the VicWater policy platform reflects its ambition to take a broader and deeper role, particularly in waste and the circular economy, and its sustainable energy transition. 

This submission highlights opportunities for IV to leverage the water sector’s ambition and capability, a potentially highly effective policy lever for the 30-year strategy. 

Circular economy 

VicWater supports IV’s analysis of challenges facing the state’s resource recovery sector, and the intent of recommendations in the draft 30-year strategy. Nevertheless, recommendations pertaining to ‘building a circular economy’ read more as outcome statements and objectives rather than the clear actions found elsewhere in the Strategy. These less precise recommendations reflect the limited policy levers, relative to other areas, at the disposal of the Victorian Government to pursue its objectives. 

The absence of more effective policy levers than: ‘facilitating’, ‘identifying gaps’ and ‘funding’ (private operators), should be identified as a significant obstacle to be remedied in the 30-year strategy. A balanced circular economy strategy should consider opportunities for government to play a proactive role in the circular economy, rather than focus the way government regulates or subsidises private waste processing companies and landfill operators. 

The water sector is well placed to lead a more proactive role. Our members are government-owned, efficiently run, highly competent asset managers and control a vast network of assets (e.g., wastewater treatment plants) that are close to urban and industrial centres. Successful examples of waste to energy facilities that rely on trucked-in waste streams demonstrate the critical importance of proximity to waste producers in a successful business case. 

The water industry has been on an independent journey toward a circular economy for many years. Wastewater systems have historically been linear in design, collecting sewage and liquid trade waste, treating it to protect public health and the environment and then discharging treated water to the environment. Water corporations have, more recently, commenced transitioning to ‘resource recovery’ systems that produce biosolids, composts, recycled water, and energy. In doing so, water corporations have become leaders and innovators in the State’s growing circular economy. 

An immediate opportunity for the Strategy is to recognise and elevate water corporations’ role in the waste sector and promote greater policy integration across waste streams, to achieve shared health, wellbeing, and economic objectives. This could include formalising links between water corporations, Sustainability Victoria and DELWP’s Waste and Recycling Division, as well as developing a targeted support package to invest in new infrastructure and utilise new waste streams. 

Below is the VicWater Policy Platform position statement on the circular economy and waste management, endorsed by Victorian water corporations (further details are available at: https://vicwater.org.au/vicwater-policy-platform/circular-economy-and-waste-management/): 

• The water industry seeks to deepen its participation in the circular economy and supports the development of a legislative and regulatory framework that enables that participation. 
• Funded research and development are needed to support innovation in waste management and the circular economy in the water industry. 
• The water corporations seek access to government funding on a level playing field with all participants in the circular economy. 
• The opportunities of the circular economy should be approached with the eyes of ‘designers’ not ‘managers’, going beyond sewage treatment and making investment decisions based on how to recover and reuse resources. 
• Collaboration between the water industry, regulators, policy makers, industry, local government, research organisations, and the community is essential to strengthen the role of the water industry in the circular economy. 

VicWater recommends a review of draft recommendations 28, 30 and 31, in consideration of the lack of policy levers available to Government and the opportunity afforded by the water industry’s assets, capabilities, and clear eagerness to promote these shared strategic objectives. 

The energy transition

In 2016, the Victorian Government set an ambitious policy for the Victorian water industry to become carbon neutral. This policy was welcomed by the water sector, which had already taken steps in that direction. Water corporations are currently making considerable investments in renewable energy, both onsite and offsite, as well as improving energy efficiency, and enhancing processes, including: 

• A major roll out of solar photovoltaics at wastewater treatment plants, offices, and pump stations 
• Waste-to-energy facilities capturing biogas from food waste and sewerage that is burned to power treatment plant operations as well as returning power to the grid 
• Large-scale adoption of battery storage making greater use of power generated on site, or returning power to the grid during price spikes 
• The construction of a 48m-diameter wind turbine that will produce more than two gigawatt hours of renewable energy each year 
• Optimised plant operations to reduce power consumption spikes, including via operational changes and system modifications, thus making more effective use of energy generated onsite 
• Maximising the utility of wastewater treatment plants, which often have high-capacity electricity connectors and are well-suited to provide renewable electricity, generated onsite, back to the grid. 

Nevertheless, significant further investment is required to meet emission reduction objectives. 

Our members are aware of the impact of transmission deficiencies on the development of renewable energy projects. 13 water corporations are participating in the joint Power Purchase Agreement process for more than 78 GWh/year with Kiamal solar farm near Ouyen. This project was significantly delayed by grid constraints. 

VicWater supports recommendation 3 to address transmission difficulties in priority renewable energy zones. Resolution of transmission difficulties in these zones has the potential to unleash future water industry investment consistent with the net zero pledge. 

Since commercial imperatives are a key determinate of electricity grid upgrades, the process to identify and coordinate the development of priority zones should include an opportunity for water industry input. Costly investment in upgrading transmission network demands scale as well as long-term certainty of return. The water industry’s need for long-term supply certainty (for example, contracts of up to 10 years), at reasonable scale, means it is uniquely positioned to provide a ‘credible signal’ that investment is justified in a renewable energy sector subject to considerable market and policy uncertainty. 

Water supply augmentation planning

VicWater was asked by Infrastructure Victoria to coordinate input on the recommendations in the Water Governance Reform paper as part of the 2019 Victorian Infrastructure Strategy Update. VicWater consulted with members to provide detailed comments which remain relevant to the Draft 30-Year Infrastructure Strategy. 

The VicWater response to the 2020 Water Governance Reform paper indicated in-principle support for the recommendations with a preference for eliminating barriers, rather than imposing new prescriptive processes to drive implementation. In addition to these policy and governance settings, VicWater promoted greater integration of ongoing engagement and deliberative processes into water supply augmentation planning, rather than proposals to use blunt regulatory obligations as justification for initiatives. 

Similarly, VicWater supports the intent of draft recommendations 11, 12 and 13 (of the draft 30-year strategy). There is strong support for greater delegation of investment decision to water corporations which are well-placed to ensure transparency and community deliberation on fundamental matters that affect their health and wellbeing. 

VicWater support does not extend to the potential creation of an ‘arms-length’, ‘independent entity’ or decision maker hypothesised by the Australian Government Productivity Commission and referenced on p59. Such a proposal would add an additional barrier between customers to the decision processes and constitute imposing new prescriptive processes to drive implementation, which we believe are unnecessary. 

IV’s continued strong advocacy for removing barriers to considering all water supply augmentation options is welcome in public debate. Whilst there remain some political and community barriers to considering and adopting some supply options, such as potable reuse, these must be overcome via ongoing engagement and deliberative processes. The apparent shortcut to the ‘right’ decision offered by an ‘arms-length’ or ‘independent entity’ is illusory. 

In many ways the contemporary policy discussion of water supply augmentation decision-making mirrors the early 2000s policy discussions of environmental sustainability in river systems such as the Murray-Darling Basin (MDB). In that case, environmental sustainability was characterised as a technocratic challenge to be solved by independently determining environmentally sustainable yields to be formalised in the Basin Plan. Similarly, water supply augmentation planning can be simplistically and erroneously characterised as a technical exercise to be undertaken exclusively by experts. 

The technocratic characterisation of environmentally sustainable diversion failed to recognise that there is no ‘right’ answer on the spectrum of environmental outcomes (from pristine to highly degraded). Such questions must be formulated as a question of community values, trade-offs, and an open discussion about what level of environmental conservation communities desire. This failure led to backlash when the results of the independent planning process were unveiled to the public in the draft Basin Plan. 

Similarly, there is no ‘right’ answer to questions of water supply augmentation; options such as desalination, potable reuse, alternative water, and usage restriction all have strengths and weaknesses and should be considered as part of a package of initiative. This point is not made to diminish the importance of factual rigour to inform understanding of the water resource management challenges. Rather, it is to understand that governance arrangements which avoid confronting trade-offs and divergent perspectives by way of arms-length, independent, or expert decision-making processes risk alienating customers and the community. 

VicWater proposes a greater emphasis on preparedness for a range of longer-term options and the community’s role in deciding the most fundamental aspects of the response. Communities must be more deeply involved in setting the overall direction for water resource management, which subsequently influences the choice and adoption of policy instruments and infrastructure. The principles for an alternative approach which could also apply to supply augmentation include: 

• the equitable and efficient use of all water 
• equitable security of supply for all domestic water customers, as far as practicable, across variable hydrological conditions and accommodating climate variability and change 
• transparent cost allocation among all water users 
• transparent frameworks to encourage the use of alternative water sources and investment in liveability objectives 
• transparent frameworks for supply augmentation. 

Integrated water management 

The draft strategy discusses well-known barriers and challenges to the expanded adoption of Integrated Water Management (IWM). Such difficulties associated with operationalising IWM have been known for decades (Biswas, et al 2004). VicWater supports continued work within the existing frameworks, such as IWM Forums, to address these barriers. VicWater also supports policy change that facilitates the higher-value use of stormwater and recycled water in the future, and that which strengthens linkages between IWM and land use planning frameworks. 

VicWater cautions against an overly technocratic approach to integrated water management. IV should consider recommendations to better incorporate community perspectives into IWM and avoid relying on the promise of integrated assessment and quantification of IWM project benefits as the basis for investment. 

IWM produces many potential benefits (including water security, urban cooling, flood mitigation, green space, habitat, water quality, human welfare, regional equality), which are potentially qualitative. This is often the cause of a dilemma attached to innovation as limited methodological information and measurable data can limit comparability and confidence to pursue these alternatives to conventional practices. Multi-criteria analysis at this scale (and integrating qualitative and quantitative elements) is likely to remain impracticable beyond pilots and showcase projects. 

VicWater supports an approach that characterises IWM opportunities as the manifestations of community values, trade-offs, and transparency about the outcomes communities need and desire. We encourage a greater emphasis on reflecting community values rather than attempting to measure and value benefits (such that the “right” options can be presented for community consultation) would provide a clearer path for IWM implementation. 

Emergency water networks

VicWater welcomes further engagement on recommendation 15 to upgrade Victoria’s emergency water network. Many nodes in the existing network are in a water corporation supply districts and must be considered holistically so as not to leave existing users vulnerable. Many regional communities rely on groundwater sources and may be significantly impacted by surging demand during an emergency. 

Co-design an Aboriginal Community-Controlled Infrastructure Plan 

VicWater supports recommendations for greater indigenous involvement and co-design of community infrastructure, noting that similar principles are already in place for waterway and catchment planning after recent amendments to the Water Act 1989 and the Catchment and Land Protection Act 1994. 

Climate change scenarios and impacts 

Planning for climate change is core business for water corporations. A strategic and consistent approach to meeting obligations under the Climate Change Act 2017 is of merit. VicWater support existing processes that are managed in conjunction with DELWP. 

The core objective of this submission is to demonstrate the benefits and opportunities of a greater water sector contribution to the infrastructure strategy and, more broadly, Victoria’s prosperity. We look forward to further opportunities to promote this objective. 

Please contact James Cleaver (James.Cleaver@vicwater.org.au) should you have any questions, or if you would like to discuss any of the issues raised in our submission. 

Yours sincerely 

Peter Morison
Chief Executive Officer