Budget risk to water supply

State-imposed budget cuts are pushing the Water Corporation to the brink in areas of its business, including drinking water quality and the upkeep of sewage plants, a report has revealed.

A confidential "strategic development plan" was mistakenly tabled in State Parliament this week, laying out in unprecedented detail the key risks facing the State-controlled utility.

Water Minister Mia Davies confirmed the error happened when the Government tabled the plan instead of a sanitised "statement of corporate intent".

According to the plan, continuing "efficiency" measures that require the utility to cut its operating expenditure 2 per cent a year - compounded by budget cuts to its capital works program - were becoming harder to bear.

It said the corporation was being forced to slash its spending more than its peers and the upshot was that parts of its business would eventually be exposed to an "unacceptable" risk of failure.

"Particularly vulnerable" were wastewater treatment facilities, drinking water quality in country towns and the dam safety program.

An appendix to the report found the risk of delivering unsafe water to regional areas was "extreme".

It was "high" in Perth, though the corporation said this reflected its extremely conservative planning.

It also found there was an increasing likelihood the corporation would be unable to manage the environmental fallout if its plant failed.

The plan said the corporation needed a minimum of $5.4 billion in capital funding over the next five years to keep its asset base operating within an "acceptable" level of risk.

However, it noted the utility had been allocated only $4.5 billion over the period in the Budget and that the State would have to put up with higher risks as a consequence.

In a warning to the Government, the plan said: "Any further reductions to this capital budget may place the corporation at an unacceptable level of risk of asset or regulatory failure.

"A key concern of the board relates to the risk that in the absence of adequate ongoing capital and operating funds and an agreed pricing framework, the corporation may not be able to perform its ongoing duties and deliver its level of service required by its operating licence conditions.

"Whilst our level of investment is adequate to address the key acute risks in the wastewater system, there is an emerging shift in our overall risk profile as the capacity of many assets and schemes slowly move towards operating at or above design capacity."

The plan said slowing growth in new customer numbers would make it easier for the Water Corp to meet budget cuts.

But the flipside was that it would not be able to maximise economies of scale.

The West Australian

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