14 May 2007
Key Points:
The NSW Central Coast is a growing area with a significant future demand for water, wastewater, drainage and sewerage infrastructure. The creation of the new Central Coast Water Corporation may create the impetus for private sector investment in the provision of this infrastructure.
The new legislation
On November 27 2006 the Central Coast Water Corporation Bill received royal assent. Yet to come into force, the Central Coast Water Corporation Act provides for the creation of the Central Coast Water Corporation ("CCWC"), a statutory corporation tasked with the supply of water and sewerage services to the NSW Central Coast. The Act will come into force on a day to be appointed by proclamation by the Minister following the proclamation, the Gosford and Wyong councils ("constituent councils") approval of the CCWC's constitution and their entry into a shareholders voting agreement with each other.
The CCWC will be wholly owned by the Gosford and Wyong councils. Responsibility for water supply and sewerage services to the Central Coast will remain with the councils to the extent the functions do not delegate their functions CCWC. The CCWC will have a similar corporate structure to the other major water utilities serving large urban populations in NSW (Hunter Water and Sydney Water), with the key difference being that the shares in CCWC will be held by the two constituent councils rather than by NSW Government Ministers.
Background to the CCWC Act: the GWCWA Joint Supply System
Currently, the Gosford City Council and Wyong Shire Council are each designated as a "Water Supply Authority" under the Water Management Act 2000. However, the councils have jointly managed their water assets through the Gosford Wyong Councils Water Authority ("GWCWA"), under a long-standing cost sharing agreement. The GWCWA operates as a joint committee of the two councils, however it has no legal status and cannot have functions formally delegated to it. This has meant all decisions have had to be ratified by each council.
The inefficiencies inherent in this structure provided the impetus for reform, with development of a "corporation" model (similar to that of Sydney Water) aimed at enabling improved governance and streamlined decision-making. As noted in the Second Reading Speech for the Bill,
"the full integration of assets and operations of the two councils in the corporation is expected to realise significant cost savings…[and] will provide greater scope for raising capital and greater potential for efficiencies by managing a larger water supply and sewerage system." [our emphasis]
Streamlining the exercise of the CCWC's functions
Under the Act, the CCWC may be granted an operating licence by the Minister to enable the provision of water supply or sewerage management services, and the construction, maintenance and operation of water supply works, sewerage works or drainage works. These functions will be delegated to it by the constituent councils, or will be exercisable by the CCWC in its capacity as a water supply authority.
The Act provides a more streamlined internal approval process than under the Water Management Act. There is no statutory requirement that the CCWC seek approval of the Governor before entering into certain commercial arrangements in connection with the exercise of these functions.
Additionally, there is express provision permitting the CCWC to enter into commercial agreements with the private sector related to the functions of the CCWC.
Opportunities for private sector involvement
The former Minister for Water Utilities, in his Second Reading Speech for the Bill, noted that the combined water supply for Gosford and Wyong Councils is the third largest in NSW. It is well known that the population of the Central Coast continues to grow apace, and that the drought conditions in NSW have been felt acutely on the Central Coast.
As a result, Gosford and Wyong Councils have been working on a number of significant water initiatives, and have been considering the need for water infrastructure both now and in the foreseeable future.
The establishment of the CCWC should facilitate the delivery of water services and new water and waste water infrastructure. Importantly, it should also facilitate the engagement with private sector stakeholders in the delivery of these services and infrastructure.
Potential private sector participants should note that the CCWC will not represent constituent councils or the State of NSW, and it cannot render the constituent councils or the State liable for any obligations, debts or liabilities incurred by CCWC. In this regard, the CCWC will be in a position similar to that of Sydney Water and Hunter Water.
However, the CCWC's obligations can be guaranteed to the extent agreed upon by the CCWC Board and the constituent councils. The Act provides for payment of these guarantees by the CCWC to the constituent councils.
For further information, please contact Nick Thomas and Stuart Cosgriff.
