Improve the regulatory and support framework

Lake Rowlands spills - August 2020

Improve the regulatory and support framework

We are partnering with the sector to develop and implement an improved regulatory framework for local water utility strategic planning, technical assessment and approvals, and performance monitoring. We also commit to improving our approach as a regulator.

We have surveyed the sector on their perceptions of the department as a regulator of local water utilities. Thanks for those who participated. Download the results (PDF, 324.14 KB).

In June 2021, the Program team engaged with over 260 stakeholders from across the local water utility sector in virtual and regional workshops. We discussed the problems stakeholders saw with the department’s regulatory framework and approach and collaborated on potential solutions and a possible path forward. Download the summary of engagement (PDF, 446.5 KB).

Figure 4: Roadmap
Figure: The department’s three key regulatory functions

Roadmap to an improved regulatory framework for local water utilities

Our roadmap to an improved regulatory framework for local water utilities was developed to reflect the outcomes of our engagement with the local water utility sector and our commitment to continue to work in partnership with the sector improve the department's regulatory framework.

Improved regulatory settings and approaches are crucial so that local water utilities and their NSW Government regulators can identify and manage risks effectively and efficiently. The regulatory framework should promote and enable utilities to address risks and strategic challenges effectively and efficiently based on locally developed plans and management systems.

The roadmap focuses on improvements to the regulatory framework for local water utilities. However, recognising that the regulatory framework is just one element of a new partnership approach between local water utilities and the NSW Government, where relevant, the roadmap also identifies opportunities for improvements to the department’s related advisory and support role and the coordination of strategic planning across all levels of government.

The roadmap:

  • articulates agreed sector objectives and the department’s regulatory objectives, functions and principles
  • contains actions to design in detail an improved regulatory framework and approach that is more outcomes-focused, risk-based, proportionate, transparent and accountable, particularly on the department regulation of utility strategic planning, its technical assessments and approvals, the regulation of incident and emergency management and the monitoring or performance.
  • sets out how we will continue to collaborate with the sector on regulatory options and improvements, including through working groups that bring together the diverse experience and knowledge of the sector.
Figure: Our roadmap collaboration approach and timeline
Figure: Roadmap to an improved regulatory framework

This roadmap to an improved regulatory framework for local water utilities was developed in partnership with the local water utility sector and sets out the actions the department will undertake to improve the regulatory framework for local water utilities.

Download the Roadmap to an improved regulatory framework for local water utilities (PDF, 350.78 KB).

Working groups to improve the regulatory framework

We have two working groups focussing on areas of:

  • Working group 1 – Strategic planning
  • Working group 2 – Technical assessment and approvals.

Expressions of interest (EOI) were sought from members of the local water utility sector to join voluntary working groups and collaborate with the department to design improvements to our regulatory approach to strategic planning and technical assessment and approvals.

The working groups will:

  • address relevant roadmap actions, consider regulatory options and design improved regulatory framework
  • collaborate and tap into the different perspectives and diverse expertise and experience of working group members
  • consider other input, such as IWCM strategic planning pilots and IP&R integration project

Pilots to test and improve the regulatory framework

  • Co-design and test different and more flexible approaches to regulating local water utility strategic planning
  • Co-design and test regional approaches to strategic planning
  • Test integration between LWU’s strategic planning and framework
  • Test new approaches to secure yield analysis
  • Test approaches to co-regulators’ collaboration

Integrated Planning and Reporting Framework integration project

Councils have expressed a strong interest in investigating the use of the Integrated Planning and Reporting (IP&R) framework of the Local Government Act 1993 as a vehicle for an outcomes-based approach to local water utility strategic planning. The Roadmap  to an improved regulatory framework for local water utilities commits the department to developing such an approach in consultation with the Office of Local Government (which administers the IP&R framework) and the local water utilities sector.

In mid-2021, the department commissioned Common Thread Consulting (CTC) to undertake a review of the existing integration of the IP&R framework with the Integrated Water Cycle Management (IWCM) framework. CTC found that many councils are using IP&R for local water strategic planning in the absence of IWCM strategies and strategic business plans, and suggested an approach to better integrate the two frameworks.

The department team undertook consultation on CTC’s work through two workshops on 5 and 8 October 2021. The workshops were attended by 63 participants from 11 councils, as well as Central NSW JO, Central Tablelands Water, Goldenfields Water, Riverina Water, Rous Water, the Water Directorate and LGNSW.

Workshop participants expressed strong support for improving integration but recommended that a considered approach be taken in determining how this should occur. Participants noted that, as many councils are significantly progressed in developing their IP&R documents (due for adoption by 30 June 2022), it would be more prudent to examine the integration of the two frameworks in the next cycle of IP&R. Following the workshops, a number of councils also volunteered to participate in integration case studies over the coming months and into the next IP&R cycle.

Additionally, the department team briefed the LG Professionals Integrated Planners Conference on this work in September 2021 and sought comment from the Stakeholder Advisory Panel and a number of councils General Managers on the draft report.

We are preparing a “What we heard” document to summarise the outcomes of the consultation and considering what guidance and support should be provided to councils to improve integration. The final review report and case studies will also inform the Town Water Risk Reduction Program Strategic Planning Working Group in developing a new approach to local water utility strategic planning under the improved regulatory framework.