Cold shower on water reform

THE Water Corporation’s plan for a major efficiency drive has turned into something of a fizzer, with the latest proposals much less ambitious than expected.

The efficiency drive, initiated by the Water Corp’s board, was designed to improve the performance of the business.

Water Corp staff had anticipated major staff cuts and big changes to the organisational structure but few changes have been forthcoming.

Chairman Tim Ungar said he was “pretty happy with the outcome” of the change process, which is understood to have cost some $1.5 million in consultancy fees.

“It’s a reasonable reform that can be implemented without turning the organisation on its head,” he said.

Mr Ungar dismissed suggestions that Government Enterprises Minister Nick Griffiths vetoed changes that would have resulted in job cuts in regional areas.

He said the board went to the minister with “broad concepts” but did not advise him of specific proposals.

“The minister made it clear very early in the process that he favoured retention of the regional structure,” Mr Ungar said.

“But the board also directed, early in the piece, the consultants to continue with a regional structure.”

He said the board concluded the Water Corp’s regional structure, which provides jobs in many country towns, was “critical to our future”.

The reform process adopted by the board may have lifted expectations of major change.

“We gave the people involved licence to think as broadly and as radically as they wanted,” Mr Ungar said.

“That led to a lot of free thinking but not all of it was practical.”

One suggestion had been to increase the amount of contracting out.

“The board felt comfortable with the current balance,” Mr Ungar said.

Since 1995, the Water Corp has outsourced the operation and maintenance of water, wastewater and drainage systems in Perth.

It extended this arrangement in October 2002, when it awarded a five-year $90 million ‘alliance’ contract to Thiess to provide these services north of the river and a similar five-year $70 million contract to United Group for south of the river.

The Water Corp has also outsourced most of its design and construction work.

The efficiency review assessed a number of organisational changes but will not proceed with them.

“We can achieve 90 per cent of the process changes without the reorganisation,” Mr Ungar said.

He emphasised the Water Corp would change from a reactive to a proactive maintenance program.

“That means we can start to get on top of problems that occur like sewerage spills,” Mr Ungar said.

“I also think we can do our capital program far more efficiently than in the past.

“And we will be a lot tougher and smarter in our corporate sourcing and purchasing policies.”

The Water Corporation recorded a profit of $328 million last financial year, an increase of $32 million on the previous year.

The higher profit was helped by a 7.6 per cent increase in total revenue to $1.13 billion.

This included higher payments by property developers as a result of the boom in housing construction.

The result was also aided by efficiency savings of $18 million.