Water bills would soar by $264 a year if Sydney Water privatised, modelling shows

Residents would be “penalised twice” through soaring water bills and potential new taxes if a state asset is sold to private buyers, new modelling suggests.

Any moves to privatise Sydney Water could increase water bills by 59 per cent, adding up to $264 to the average household bill every year, new modelling shows.

Research released by The Australia Institute’s Centre for Future Work and commissioned by the Australian Services Union (ASU) says the sale of the wholly government-owned body would add between $174 and $269 to water bills; however, this figure would likely increase due to inflation and potential population growth.

The report comes as privatisation has become a hot-button election issue, with Labor stoking claims the Coalition will need to sell state-owned assets to fund infrastructure projects like an 11km toll-free tunnel in the Blue Mountains. NSW Premier Dominic Perrottet has repeatedly maintained there are “no plans” for further asset recycling.

Sydney Water is Australia’s largest water utility and services more than 5 million people in Sydney, the Blue Mountains and the Illawarra. It’s combined assets total more than $23b.

Sydney Water is Australia’s largest water utility and services more than 5 million people in NSW. Picture: Generic

Report author, economist and Centre for Future Work director Jim Stanford says the sale of Sydney Water would cost NSW an annual average $870m in revenue from dividends and income tax.

“Sydney Water returns strong dividends and tax revenue to the state government each year, well in excess of interest costs on an equivalent amount of state debt,” Dr Stanford said.

“Losing these annual revenues would require an increase in taxes from other sources.

“Transferring Sydney Water to private hands would penalise its customers twice. Not only would they pay higher water bills, but also higher taxes, or alternatively reductions in services.”

The report also says a focus on profit margins and dividend payouts to private owners could incentive cost-cutting measures which would be detrimental to water quality and “jeopardise public health”.

ASU NSW secretary Angus McFarland also feared for the job security of the water body’s more than 3000 employees if it were to be managed by a private operators.

“Customers and workers are relying on Sydney Water remaining in public hands; Sydneysiders are entitled to affordable safe water and workers deserve job security,” he said.

“More than 3000 essential and dedicated Sydney Water employees deliver services to over five million people every day.

“They have worked tirelessly through weather and Covid-19 emergencies to maintain world-class water, wastewater and stormwater services.”

NSW Premier Dominic Perrottet denied his government would sell off any new state-owned assets if it won the election. Picture: NCA NewsWire / Gaye Gerard

Labor leader Chris Minns has questioned whether the government is able to keep its no-privatisation promise. Picture: NCA NewsWire / Simon Bullard

The potential privatisation of public-owned assets like Sydney Water was most recently brought up on Wednesday when Mr Minns and Mr Perrottet went head-to-head during a leaders’ debate broadcast on Channel 7.

“My big fear is (that) straight after polling day, the same pattern will repeat; Sydney Water will be privatised and then we’ll be shovelling out compensation for people to turn on their taps,” said Mr Minns.

Mr Perrottet maintained privatisation helped build essential infrastructure like schools, hospitals, motorways and metros.

“You make the decision that suit the times,” he said.

“Our approach has ensured we have the biggest infrastructure building program in our state’s history.”

In February, Mr Perrottet labelled suggestions the government would sell off Sydney Water as a Labor “scare campaign”.

“I couldn’t have made it any clearer; we have no plans in relation to Sydney Water. That’s the position I’ve made abundantly clear every time I’ve been asked,” he said.

However, Mr Minns pointed towards a broken promise dating back to the 2019 state election when then-premier Gladys Berejiklian said she would not sell off the government’s 51 per cent stake of WestConnex.

Less than a year after the Coalition’s win, the Sydney motorway was sold to Transurban for $9.26m in September 2019.