Pricing Impacts
In Australia, the aim is for water prices to be cost reflective. This helps to ensure ongoing investment in water services and sends price signals to users that may influence demand.
Pricing for water services in Western Australia follows this principle. Prices for wastewater and drainage services are based on the improved value of land, seeking to ensure these services remain affordable.
The Government of Western Australia sets prices in Cabinet, generally with advice from the Economic Regulation Authority and the Department of Water.
Concessions are provided to seniors and pensioners to help maintain the affordability of these essential services. Recognising the higher per capita cost of services in regional areas, the Government also provides subsidies for water services in country towns, including Mandurah.
Currently, the combined price of water and wastewater services to Perth is comparable with other states.
As in other parts of Australia however, there is an expectation that significant investment in water services will be required through to 2060 to meet the needs of our growing city. It is likely that prices will rise as a result.
There are some factors that are expected to favourably influence these prices (keep them low):
- densely populated urban areas benefit from economies of scale;
- technological innovations may reduce capital and operating costs; and
- for the next 10 years, Perth will benefit from a well maintained, relatively young infrastructure base.
However, other factors are expected to push water prices up. These include:
- price increases required to fund investment to date;
- an increasing reliance on technology to source and treat water that is more expensive than traditional sources and wastewater treatment options;
- a continued and increasing competition for key resources including land, contractors, raw materials and appropriate energy sources;
- a growing need to maintain ageing infrastructure, particularly after 2020; and
- increasing regulatory standards.
Water Forever will outline the estimated impact on prices for water, wastewater and drainage for the first 10-year investment horizon to 2020.
Consideration will be given to how this price path can be structured to minimise price shocks and maximise affordability, while noting that the State Government makes the final decision in this regard.
Price impacts for future years can be estimated as greater certainty over the actual timing and nature of the investment program is known. This can be monitored and reported on, after the release of the final plan.