Australia Urges Water Investments

The Business of Saving Water

What's in the plan
Lost water
The time is now

Most business leaders nominate water as a key issue in executive surveys on national issues, yet when it comes to public comment or participation they become distinctly silent. Richard Pratt, the second richest man in Australia, is the exception.

After making a fortune with Visy Industries, a multi-national company that recycles cardboard boxes, Pratt is now set on a new venture to save Australia's limited water supplies.

Pursuing this vision has not come easy to Pratt. When he entered the national debate on water reform two years ago he was promptly told by the Australian government to go away and “do some homework” on the key issues.

Not to be scolded, Pratt founded and funded the Pratt Water Group and enlisted the participation of the Commonwealth Scientific and Industrial Research Organization (CSIRO), The Australian Bureau of Agriculture and Resource Economics, Charles Sturt University and a host of Australia’s leading water engineering and hydrology companies to aid in the research of water management feasibility.

After two years of extensive research, Pratt formally handed his “Business of Saving Water” report to the Deputy Prime Minister, John Anderson, on December 9, 2004. A potential blueprint for a water strategy, the report cost more than $10 million and the work of 150 people to prepare. Funding for the project was provided by Pratt Water, the Australian Government and the NSW Government.

"Nobody is looking at water as a national resource issue, I mean nobody," Pratt says. "This report is a template for the future of water usage in Australia.” (Source: BTW Magazine)

Emerging as the voice of private enterprise in water management, Pratt believes his report will offer a means for government, farmers and investors in the water sector to join forces in united concern. As writer James Kirby, author of Richard Pratt: Business Secrets of the Billionaire states, “Pratt knows private enterprise must seize the moment for a market-based culture to emerge in the water sector.”

The project is purposely private sector focused rather than government or regulatory focused. Its aim is to implement the business case for alternative investment options for improvement of water use efficiency and a water savings plan.

Currently, the National Water Initiative (http://www.coag.gov.au/meetings/250604/) signed by federal and state ministers in August 2003, is the nearest thing to a national water reform project in Australia. Yet the $500-million plan to save the Murray River, which runs through the eastern side of South Australia, is on hold as the Federal Government and state leaders are locked in a stand-off over Government Financing of the project.

"I think we have done enough studies ... I think the academics are contributing nothing at this stage. Let's get moving," Pratt says. (Source: BTW Magazine)

What's in the plan

Pratt aims to “get moving” by first measuring the nation’s water assets to determine the real price of water as means to attract investment. As new investment stimulates the water sector, then improved irrigation and water storage technologies can be developed, he believes.

Pratt’s plan calls for immediate investment in water measurement systems, along with a refurbishment of irrigation channels that are privately financed and will become profitable ventures for investors (including Pratt himself).

The foundation of Pratt’s plan is that water users manage and account for all water on a business and "balance sheet" basis. The measurement of water as a commodity will create an environment where water savings are rewarded.

Lost Water

Pratt used land in the Murrumbidgee Valley, which runs west of Canberra before entering the Murray River, as the model for his research. The Murrumbidgee Valley is one of the best irrigation areas in the country, and Pratt hopes it will be used to test his plan.

About 1,334,000 mega litres (40%) of water is lost in the Murrumbidgee River Valley system each year because it evaporates or seeps into the ground. With water reforms – such as investment in the creation of new irrigation techniques and products - in place, the report says, 945,000 mega litres could be saved in the Murrumbidgee River Valley. Although the research is based upon a specific geographic area, the intention is that lessons learnt will be applicable to other parts of Australia and beyond.

The time is now

Financing Pratt's schemes depend on the participation of investors who, in turn, will depend on a government guarantee. The Federal Government so far has not signalled that it would act as guarantor to a water bonds scheme.

Pratt himself plans to invest heavily. “I believe so passionately in the need for this investment that I’ll contribute $100 million of my own money on a “not for loss” basis if the government decides to proceed,” he said in a statement.

Australian Conservation Foundation chief Don Henry welcomes the study for revealing "tremendous potential and opportunity to be far more efficient - good news for the environment and irrigation.”

In contrast, Murrumbidgee Irrigation chairman Dick Thompson says the study is one step behind irrigators, who are in the process of recovering much of the wasted water identified and changing to more accurate water meters.

The communities of the Murrumbidgee Valley have established successful and valuable enterprises based on the innovative use of water in agriculture and horticulture. Yet the Valley's water users face many challenges. These include problems with an ageing water supply and distribution infrastructure, limits on current water allocations, future uncertainty regarding climate and growing competitiveness from globalised markets for the region's products.

"I often say that timing isn’t everything; it’s the only thing. It’s better to be approximately right at exactly the right time than to be exactly right at completely the wrong time. Right now we don’t have water anywhere near approximately right in this country. But the timing is exactly right to do something about it. It would be a tragedy if we missed the opportunity,” says Pratt.

Some of the questions that have driven the project's investigations are:
What investments can be made to save water?
How can saved water be harnessed to provide sustainable regional benefits - both human and environmental?
How can the cost of water-efficiency infrastructure be reduced?
How can water-saving infrastructure projects be privately financed?

By: Faye Mallett

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