The National Water Commission announced that it would close as part of the Australian government’s 2014-2015 budget last month. Should water industry investors be worried? Kim Morison, managing director at Blue Sky Water Partners, believes the closure will not have a significant impact on his business.
“As far as I am aware, the ongoing role of the National Water Commission will be largely moved into other existing departments in Australian government,” he told Agri Investor.
“The NWC was established as an independent government agency in 2004 to pursue the National Water Initiative, which is the enduring blueprint for water market reforms and regulations in Australia.”
“At the heart of the NWC is a recognition that water is inherently a scarce resource in Australia. It should be valued appropriately and allowed to be traded to its highest and best use.”
The NWC has influenced many reforms within the industry over the last decade, according to Morison, helping Australia to face the challenge of regulating water rights.
“The NWC has largely initiated change – it has acted as a catalyst – and has sparked a focus on the water sector across the country,” he said.
While the NWC did drive some consistency across states, it did not have any real powers to enact legislation on a national level because water is governed by the states in Australia, not by the national government. “Australia has achieved many great changes over the past decade in the governance of water markets in particular, but these invariably involved state government legislation,” added Morison.
Public sector austerity across the world has seen the private sector becoming more involved in natural resource distribution and administration, and Morison thinks this will be the way forward once the NWC has closed permanently, particularly in terms of government spending targets.
“In light of a focus on achieving a sensible Commonwealth budget, [the NWC’s abolition] is probably a sensible move,” said Morison. “NWC has done a lot of heavy lifting but other government agencies and the private sector have a capacity to continue that work. The NWC has spawned several private sector firms who can be consulted or contracted on various projects if required.”
In view of these changes, he doesn’t see his business being affected significantly by the NWC closure.
“Blue Sky’s water investment business, both investing in water entitlements and separately investing in water infrastructure is not impacted by the decision to close the Commission,” said Morison. “The market opportunities for investment are not diminished whatsoever.”