Owners of properties in Sydney with rain tanks, detention and retention tanks – anything that keeps rain water on site – can claim reduced stormwater charges in their Sydney Water bills if the NSW Independent Pricing Tribunal’s draft prices are finalised.

But the amount of reduction is miniscule.

This is important because a growing number of single and multi-lot projects are going to great effort to keep stormwater, and what happens in one state is likely to influence action in other parts of Australia.

In NSW examples of such projects include Mirvac’s The Finery at Waterloo in Sydney, with landscape architecture by Sacha Coles of Aspect Studio; Figtree Place in Newcastle; and The Kylie project, a single lot project at Newtown, Sydney.

In Victoria there is the Meridian subdivision, and the 60L office project in Melbourne. In Western Australia projects include the single lot Josh’s House and the MGV. In Queensland the Eco Village at Curumbin has a long track record of work in this area.

So with these projects and many more in mind, what does the NSW Independent Pricing and Regulatory Tribunal’s draft new pricing say? Here are some key excerpts:

For households in Sydney Water’s stormwater area, annual stormwater service charges would decrease from $86.02 in 2015-16 to $74.40 in 2016-17 (without inflation). For residents in apartments, annual stormwater service charges would decrease from $31.55 in 2015-16 to $23.61 in 2016-17.

We have introduced a new category of low impact houses for residential stormwater customers who demonstrate that their property makes a relatively small contribution to stormwater load. These customers would be charged $23.61 in 2016-17, the same rate as apartments, and a reduction from $86.02 in 2015-16.

This would accommodate, for example, a situation where a customer invests in significant on-site water retention facilities. Many stakeholders support this change to stormwater prices. Sydney Water currently requires non-residential customers to apply for the low impact discount: there is a simple two page form, which is followed by Sydney Water’s assessment (at Sydney Water’s cost). We consider that this process should be extended to residential houses.” (1)

Submissions on the proposal closed Monday 18 April 2016 and a final decision is expected in June.

The tribunal’s decision is a good start to ending a tragic pricing system that maintains a highly damaging monopoly abuse of power over property owners.

But a fair price for properties that keep most or all rain water on site is nil.

There are two reasons for a nil charge. One is that by investing in on-site rain water storage the owner provides a public benefit of cutting pollution beyond their land. The other is that there is no cost to the councils and Sydney Water who build and maintain stormwater systems.

Since it began setting water prices in 1992, the tribunal has directly approved the huge pollution of Sydney Harbour and the city’s waterways.

For over 20 years the tribunal has approved much of the annual 500 billion litres of stormwater pollution of Sydney Harbour and the Pacific Ocean.

The 500 billion litres is the same amount of water that’s in Sydney Harbour.

The pricing tribunal summed up its 2016 pricing approach thus:

“We reviewed Sydney Water’s capital and operating expenditure proposals (see consultant report). We then set prices to raise the revenue Sydney Water requires to recover its prudent and efficient costs.”

Notice in the summary the absence of any consideration of, or evidence about, the stormwater pollution?

In the full draft report the closest the tribunal gets to considering stormwater pollution, climate pollution and other externalities is this:

“The NSW Government is responsible for determining any negative environmental impacts associated with Sydney Water’s activities, and for imposing standards or requirements on Sydney Water to address these impacts.”

Sydney Water is NSW’s 20th biggest climate polluter. A huge amount of energy is required to clean and pump water and sewage. No mention of this.

And not one word about stormwater pollution.

This tribunal’s passing of the pollution buck back to the state government was not what was intended by the then Premier Nick Greiner when the bill was introduced in 1992. He said that Parliament understood the bill required the tribunal to consider and put a price on “externalities” such as pollution.

Therefore the pricing decision, in my view, may be unlawful and could be overturned if challenged in legal proceedings.

But first, sticking to the tribunal’s criteria of “prudent and efficient costs”, there is no evidence in the draft decision that there are any costs to Sydney Water for properties that disconnect from the main stormwater system. Key considerations include:

  1. What are the “efficient” costs the tribunal identified Sydney Water achieving for a property from which no stormwater leaves? Sydney Water makes no contribution to that result. In addition, charging such a property owner sends a punitive pricing signal that discourages competition and self-reliance. After all, customers are the best competitors to Sydney Water, aren’t they?
  2. Fixed charges are not paid for a property that is not connected to mains water or sewer. Why then are fixed charges paid for a property that is also not connected to either a council or Sydney Water’s stormwater system?
  3. Where is the financial or hydraulic evidence that a house that retains all its stormwater has any quantifiable impact on the depreciation costs of the stormwater infrastructure of a council or Sydney Water, or on the costs of maintaining it?

Let’s see what was said in the Second Reading speech for the tribunal’s bill. This speech is typically referred to by a court in any judicial challenge to a tribunal’s decision where the scope of a tribunal’s powers and duties is being reviewed.

(Tribunal decisions, like those of most other such bodies, are amenable to judicial review.) The bill was read in 1992 by the then Premier, Nick Greiner:

The purpose of this bill is to establish a government pricing tribunal to determine the maximum price for monopoly services supplied by nominated government agencies and to report on the pricing policies of those agencies. Its principal aim is to ensure that the interests of the citizens of New South Wales, both as consumers and taxpayers, are protected and are seen to be properly protected. Many government businesses in New South Wales are monopoly suppliers of services, notably, electricity, water and transport. As a result, these agencies are not subject to competitive forces and are able to set their prices without reference to the prices of substitutes for their services. In the absence of regulation these monopolies can charge prices which are higher or lower than they would be if set in a competitive market…

The pricing tribunal established by this bill with power to review and determine prices charged by monopolies will ensure that monopolies do not abuse the power which they have by being the sole supplier of a good or service. The tribunal will provide a proxy of conditions which would operate were the monopoly in a competitive market . . . Its approach would encourage efficiency, equity or the appropriate allocation of resources either in the short term or the long term. The introduction of a price formula and nothing more would encourage a mindset within authorities and the Government whereby government charges are simply allowed to increase by the consumer price index each year.”

The premier went on to make clear that the environmental impact of government monopolies is central to the Tribunal’s decision-making – (my accent):

The tribunal will, therefore, be constrained by strict efficiency and cost issues but will take a broader range of matters into account when making determinations and recommendations. This will ensure that environmental and social issues form part of the equation and the tribunal will need to weigh these matters against strict cost-related factors. Honourable members would be aware that any reasonable analysis of the price or pricing structure of monopoly services, such as electricity, water and sewerage, must take into account the externalities relevant to the supply of the services. The cost of avoiding or minimising any environmental damage which might occur as a result of the supply of monopoly services should be taken into account when determining the appropriate price to be charged. This action will promote sound environmental practices and decisions as well as determining economically appropriate prices for the benefit of the people of this State. It will be a further factor operating to discourage and minimise environmental degradation.”

There have been several legal challenges to planning approvals to coal mines and new ones are underway. But water decisions have never been legally challenged.

Yet, moving water around requires huge amounts of energy for pumping and for building and maintaining water infrastructure – that’s why Sydney Water is NSW’s 20th biggest climate polluter. We can’t turn the tap on without burning coal and we can’t send stormwater away from our land without replacing it for gardening with hosed water that’s also powered by coal.

Isn’t it time for litigation to stop the climate pollution caused by pumped water, given that the tribunal has said plainly it doesn’t care about it?

At the heart of any litigation would be the failure of the tribunal when determining water prices to do what the premier said the legislation intended it to do:

“Any reasonable analysis of the price or pricing structure of monopoly services, such as electricity, water and sewerage, must take into account the externalities relevant to the supply of the services.” (3)

The tribunal doesn’t take into account at all the pollution – an externality –  it causes as a direct result of its stormwater prices. The pollution is obvious whenever it rains as rivers of wasted, polluting stormwater running down millions of street gutters in Sydney. It runs there directly because the Tribunal’s prices rewards and maintains and funds the construction of the stormwater systems.

A NSW Parliament publication says this of the pollution:

“Stormwater is the most significant contemporary source of heavy metal contamination in Sydney Harbour. It has been estimated that Sydney Harbour receives an average annual loading of arsenic, cadmium, chromium, copper, nickel, lead and zinc of 0.8, 0.5, 1.7, 3.2, 1.1, 3.6 and 17.7 tonnes respectively (28.6 tonnes in total). Copper concentrations in stormwater almost always exceed the guidelines, zinc concentrations frequently exceed guidelines and arsenic, chromium and lead concentrations exceed guidelines on occasion. Nickel concentrations never exceed guidelines. [6.1.2]

Researchers have modelled the length of time it would take for heavy metal concentrations to decrease to two times pre-anthropogenic concentrations based on recent trends. The time taken for particular metals to decline to two times background concentrations ranged from 2 to 92 years. However, this is optimistic given sediment concentrations cannot decrease below the levels found in stormwater entering the Harbour, which is up to 10-20 times background levels in some locations [6.1.3].”

This readily available research shows that each year a toxic mix of over 28 tonnes of arsenic, mercury, cadmium, lead and other heavy metals pour into Sydney’s waters while Sydney Water and councils profit from systems causing it.

When fixing prices the tribunal must consider 12 criteria, but the draft decision seems to completely ignore these three (in section 15):

“(f) the need to maintain ecologically sustainable development (within the meaning of section 6 of the Protection of the Environment Administration Act 1991 ) by appropriate pricing policies that take account of all the feasible options available to protect the environment…

(i) the need to promote competition in the supply of the services concerned

(j) considerations of demand management (including levels of demand) and least cost planning…”

Section 6 of the Protection of the Environment Administration Act lies at the heart of NSW pollution legislation and has been directly imported into the tribunal’s Act as something it must consider when setting prices. The key words in it which decision-makers such as the tribunal must be guided by appear below:

“. . . if there are threats of serious or irreversible environmental damage, lack of full scientific certainty should not be used as a reason for postponing measures to prevent environmental degradation.

In the application of the precautionary principle, public and private decisions should be guided by:

(i) careful evaluation to avoid, wherever practicable, serious or irreversible damage to the environment, and

(ii) an assessment of the risk-weighted consequences of various options”

The method of applying the precautionary principle in section 6 is set out in the leading judgement of Telstra v Hornsby Telstra Corporation Limited v Hornsby Shire Council [2006] NSWLEC 133. The precautionary measures are triggered by the satisfaction of two conditions precedent:

  • a threat of serious or irreversible environmental damage; and
  • scientific uncertainty as to the nature and scope of the threat of environmental damage.

The Tribunal’s draft price does not mention either the pollution or the threat of serious or irreversible harm to Sydney Harbour’s waters. The decision explicitly and implicitly assumes that the current stormwater infrastructure:

  • needs no competition
  • is ecologically and financially sustainable
  • will remain
  • the climate and water pollution it causes must and will continue

Back to the rain and more evidence of the pollution the tribunal approves:

“Harbour sediments contain a variety of contaminants, the worst of which are dioxins, heavy metals and organochlorine pesticides (e.g. DDT). Except for a small area near the entrance, all sediments exceed guidelines for at least one contaminant. The most polluted sediments are found in Homebush Bay, Hen & Chicken Bay, Iron Cove, Rozelle Bay, Blackwattle Bay and Long Bay.

Microplastics (fragments smaller than 5mm) are an emerging problem. Early studies have found alarming levels. While the Government is working towards eliminating one source – microbeads in products like shampoo – it appears that the largest source are clothing fibres from washing machines.

Most sediment contaminants entered the Harbour prior to 1970, when industrial practices were poorly regulated. Today, three primary sources pollute the waters and sediments of the Harbour: stormwater, sewage overflows and leachate from contaminated reclaimed land.

Microplastics

The term microplastics was first coined in 2004 as researchers attempted to account for all the plastic in the ocean. Microplastics are tiny plastic fragments, fibres and granules generally smaller than 5mm in diameter. A wide-ranging study into microplastics published in 2011 concluded that microplastic particles in the marine environment are mainly derived from sewage via washing clothes, rather than fragmentation of larger pieces or cleaning products. [7.1]

In 2014, researchers from the Sydney Institute of Marine Science found “alarming” levels of microplastic pollution in Sydney Harbour. Sediment samples taken at 27 sites across the Harbour found concentrations of microplastics ranged from 0-10 to a high of 61-100 particles per 100ml of sediment in Middle Harbour. In August 2014, Rob Stokes, the NSW Minister for the Environment, announced that he had convened a working group to work towards phasing out microbeads by 2016 through voluntary means. Rob Stokes also called for a national ban on the sale and production of shampoos and other products containing microbeads.”

The best competitors to councils and the Sydney Waters of our cities are property owners who may choose to invest in providing their own non-polluting stormwater systems. The tribunal is blind to the potential property owners provide for disrupting the monopoly services it is intent on maintaining.

True it is, that no legislation ever rises above the level of its administration.

By presiding over the massive pollution of Sydney harbour and the ocean the tribunal is far below the dreams held by so many associated with its creation.

Michael Mobbs is a sustainability coach and author of Sustainable House (2nd Ed 2010) and Sustainable Food 2012. See his website Sustainable House.

Notes:

(1) The tribunal’s decision on stormwater:

4 Draft stormwater prices

Only some customers fall within Sydney Water’s stormwater area and therefore pay stormwater charges to Sydney Water. Local councils, rather than Sydney Water, are the main providers of stormwater services in the Sydney area.

For households in Sydney Water’s stormwater area, annual stormwater service charges would decrease from $86.02 in 2015-16 to $74.40 in 2016-17 (without inflation). For residents in apartments, annual stormwater service charges would decrease from $31.55 in 2015-16 to $23.61 in 2016-17.

We have introduced a new category of low impact houses for residential stormwater customers who demonstrate that their property makes a relatively small contribution to stormwater load. These customers would be charged $23.61 in 2016-17, the same rate as apartments, and a reduction from $86.02 in 2015-16.

This would accommodate, for example, a situation where a customer invests in significant on-site water retention facilities. Many stakeholders support this change to stormwater prices. Sydney Water currently requires non-residential customers to apply for the low impact discount: there is a simple two page form, which is followed by Sydney Water’s assessment (at Sydney Water’s cost). We consider that this process should be extended to residential houses.

a. 2015-16 prices were not available when Sydney Water finalised its pricing proposal. The prices for 2015-16 have been updated to reflect actual inflation and prices.

According to Sydney Water, this area covers 30 local government areas, and generally includes the central business district and inner west of Sydney. It provides stormwater drainage services to around 548,000 residential and non-residential properties (2015-16), which we estimate to represent around 28.6% of the 1.9 million properties that it supplies water services to (2015-16). Sydney water pricing proposal to IPART, June 2015, p 52 and Sydney water pricing proposal to IPART – Appendices, June 2015, p 48.

(2) Thanks to Tom Parry and Joan McClintock, founding chair and member, respectively; Premier Greiner, who created the tribunal; and hat tip to that mountain of Australian public sector thinking, Gary Sturgess, the then premier’s cabinet director. Long shadows you cast.

4 replies on “Bathurst Burr: Our lost opportunity with stormwater”

  1. Thanks Michael for you advocacy with this and for your article. It’s been some 13 years since I was living in the UK but I recall that surface water drainage and sewage charges were contestable in the UK. The process was very simple and was a standard part of utility cost reduction services to our clients. So to double check I quickly ecosia’d (green version of google) a few UK water utilities…and all those that I saw very simply showed how both residential and commercial customers could reduce charges. Basically if your roof and surface water drain to soakaways, or you use the water in some other way, you pay no surface (stormwater) charges, and if you don’t have sewage going to the sewage drain then you pay no sewage fee…and that’s not all, you can back date and get paid for as far back as 2001 and if your property was built after 2001 then you can get refunds back for the last 6 years. I also remember that for commercial and residential properties it wasn’t a situation of you pay all or nothing, even if a fraction of the water or sewage was reduced you would get the reduction based on calculations or from site measurements. Clearly even in the sunny UK 1 in a 100 year rain events occur and overland flow must occur, nevertheless that did no disqualify customers from receiving their discounts. I really hope that other readers would respond if they know of other countries where the citizens are also rewarded and incentivized by fair utility pricing. Thanks again. Peter

    1. Hello, Peter

      Well, your comment has made my day.

      Such excellent information – I was unaware of that search facility (https://www.ecosia.org/) and, tho’ I knew the water market had been made more contestable in the UK I did not know the market had been opened up so well.

      The delights of the internet – and The Fifth Estate community.

      I hereby gift you a free tour of Sydney’s Sustainable House; we can toast the news with a glass of Chippendale champagne – some rainwater cleaner than mains water.

      Michael

  2. Hi, Zorana

    It’s terrific to have your feedback. Thank you.

    And what you say is probably widely accepted.

    It was to answer that concern that I mentioned the projects referred to in the article which variously keep all or almost all water on site. They show that good design and a curious mind can indeed keep all water on site, even sites with clay soils.

    All were financed by the developers at no cost to monopoly service providers or local authorities.

    The Tribunal seems to accept that, too, but I wrote the article to show how widespread and various are the solutions.

    I hereby gift you a free tour of my house to see this at first hand, where no stormwater has left the site in 20 years, right in the heart of Sydney. Many others are doing this.

    Keep an eye on my website for tour dates and come and smell the humus.

    Kind regards, Michael

  3. The notion that any building can keep all of the stormwater on site at all times is an abject nonsense. No one installs the stormwater collection tanks equivalent to triple volume of expected rainfall in a 1 in 100 year storm. And that is what (in particular Sydney) gets not that rarely. So, what happens with the surplus rainwater when every building is collecting rainwater ? The proposition that the city stormwater system would not be required if every building collected rainwater is silly. And how would the city finance the drainage of the roads, parks, public areas etc?

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