Rethinking water and energy affordability in Australia

457 Pages·2016·4.9 MB·English

Rethinking water and energy
affordability in Australia: an analysis
of the efficiency, effectiveness and
equity of current policy

By
Wai Wah Chan

A thesis submitted for the degree of Doctor of Philosophy of
The Australian National University
August 2016

© Copyright by Wai Wah Chan 2016

All Rights Reserved
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Declaration of Authorship

I, (Noel) Wai Wah Chan, declare that this thesis and the work presented in it are
my own, except where otherwise indicated. I declare that:
 the thesis comprises only my original work towards the PhD except where
indicated,
 due acknowledgement has been made in the text to all other material uses;
 parts of Chapter 3 were published in a contributed chapter as ‘Integrating
social aspects into urban water pricing: Australian and international
perspectives’ in Grafton, R.Q., K.A. Daniell, C. Nauges, J.-D. Rinaudo
and N.W.W. Chan (Eds), Understanding and Managing Urban Water in
Transition, Springer Publishing, 2015.
 parts of this thesis were included in a submitted presentation paper entitled
‘Water affordability and state water concessions in Australia’ for the
Australian Water Association (AWA) ACT Branch Postgraduate Water
Prize Competition in 2014. The submitted paper was awarded a Highly
Recommended.
 the thesis is less than 100,000 words in length, exclusive of tables, maps,
figures, bibliographies, and appendices.
I give consent to make my thesis available for loan or photocopying from the
ANU library.

Signed:

Date:
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Abstract
The aim of this thesis is to investigate the challenge of 'affordability' in the
delivery of critical utility services such as water and energy to Australian
households. The experience of utility stress and hardship is not uncommon among
many low-income households in contemporary Australian society. The causes and
associated outcomes of utility affordability are multi-dimensional. My thesis
provides both an analytical framework and a policy perspective to respond to
household utility stress in energy and water in Australia.
The thesis is divided into discrete research studies guided in turn by their own
research questions. In Chapter Two and Chapter Three, I explore the complexity
of water and energy affordability problems from a time dimension and policy
dimension. From a historical perspective, I critically analyse the social
implications of urban water and energy sectors reform. Examining the changes in
policy and governance regimes leads us to elucidate a variety of policy
instruments to address utility affordability problems across sectors and
stakeholders. I demonstrate that a clear responsibility across sectors and a
collaborative policy framework is required to address this emerging social
challenge.
Chapters Four to Chapter Six form a series of empirical research to explore the
concept of water and energy affordability and its measurement in the Australian
context, and to evaluate the efficiency, effectiveness, and social-equity
implications of the major policy instruments – state water and energy concessions.
My overarching conclusion of these chapters is that the current state water and
energy concession schemes need reform towards a more equitable and efficient
approach to target to those most in need assistance.
In summary, the problems of utility stress and hardship are multifaceted. A shared
vision, a clear responsibility across sectors, a collaborative framework as well as a
more equitable, efficient and effective policy design are required to successfully
address utility affordability challenges in contemporary Australia.
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Acknowledgements
It would not have been possible to finish this thesis without the support, guidance,
and encouragement of many people around me.
I would like to express my heartfelt gratitude to my supervisor, Professor Quentin
Grafton, who has provided me with advice and guidance over the last few years. I
would like to express my special appreciation to Dr Karen Hussey who is my
mentor and also provides policy research advice. I want to thank Dr Hoa Nguyen
for her advice on policy research and econometric analysis. Many thanks to David
Stanton who has inspired me to appreciate the complexity and importance of the
social policy discipline in Australia and internationally. I also thank Dr Michael
Ward who encouraged me to research both urban water and energy sectors.
I greatly appreciate the advice on academic skills and research training received
from Dr Megan Moore. She is a valuable asset to me and my fellow PhD scholars
at the Crawford School. I specially thank Dr Inger Mewburn who kindly accepted
me to participate in the ANU Thesis Boot Camp, which has been the most critical
breakthrough in my PhD journey.
Very heartfelt thanks to my friends: Rosemary Lohmann, Kerry Pope, Belinda
Lawton, Yulia Sari, James Low, Joanna Spratt, Marija Taflaga, Vivienne
Seedsman, Rongfang Pan, Jodie Mildenhall, and Hyunsu Kim, for your friendship
and encouragement. Special thanks to Zoe Beckman, Elizabeth Beckman, Thu
Roberts, Rumiko and Casten Makocheskanwa, and particularly to my mum and
my sister, Bingo Chan, who have extended their love and time to care for little
Annalene and Zarah whenever I needed more time to work on this thesis.
To my beloved husband, Andrei Lena, who stands by me at all times, thank you
for having enormous faith in me by taking up the family and financial
responsibilities during this journey. You are a wonderful husband and a lovely
father. Finally, the completion of this thesis is a gift to my two ‘little creatures’,
Annalene and Zarah, and an honour to our God.
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Contents

Declaration of Authorship .................................................................................. i
Abstract ............................................................................................................. iii
Acknowledgements ........................................................................................... v
Contents ........................................................................................................... vii
List of Tables ..................................................................................................... x
List of Figures ................................................................................................. xiii
List of Acronyms and Abbreviations .............................................................. xv
Chapter 1 Introduction ...................................................................................... 1
1.1 Water and energy affordability: does it matter? ...................................... 1
1.2 Literature contribution and research gaps ............................................ 12
1.3 Research questions and analytical framework ..................................... 20
1.4 Outline of the thesis, key results and contributions .............................. 21
Chapter 2 Urban water and energy sector reforms in Australia: an evolving
policy landscape and modes of governance to address water and energy
affordability ...................................................................................................... 28
2.1 Introduction .......................................................................................... 28
2.2 Development of urban water and energy sector reforms ...................... 30
2.3 The social implications of changing modes of governance .................. 46
2.4 Tackling utility affordability: current policy landscape ........................... 59
2.5 Respective roles of key actors in the contemporary utility affordability
policy landscape ............................................................................................. 80
2.6 Conclusions ......................................................................................... 97
Appendix 2.1 Major policy reforms in the Australian urban water sector ... 100
Appendix 2.2: State water and energy concession schemes, 2013-14...... 102
Appendix 2.3: Income support and supplementary payments related to utility
affordability ............................................................................................... 108
Appendix 2.4: Government funded water and energy efficiency measures,
January 2015 ............................................................................................ 110
Appendix 2.5: Utility customer protection policy and guideline (as of 2015)
................................................................................................................. 113
Chapter 3 Integrating social aspects into urban water pricing: Australian
and international perspectives ..................................................................... 115
3.1 Introduction ........................................................................................... 115
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3.2 Overview of social equity aspects in urban water policy ..................... 116
3.3 Australian urban water pricing and concession policy ........................ 129
3.4 Conclusions ....................................................................................... 147
Appendix 3.1 State-by-state water concession policies in Australian cities,
2011-12 ........................................................................................................ 149
Chapter 4 Trends in water and energy affordability and utility stress in
Australia ......................................................................................................... 151
4.1 Introduction ........................................................................................ 151
4.2 Context .............................................................................................. 153
4.3 Data and methodologies .................................................................... 167
4.4 Trends in utility affordability in Australia ............................................. 177
4.5 Trends in utility stress in Australia ...................................................... 190
4.6. Comparing utility affordability indicators ............................................. 203
4.7 Utility stress and other household characteristics............................... 208
4.8 Discussion ......................................................................................... 223
4.9 Policy implications and conclusions ................................................... 230
Appendix 4.1 Key variables from HES and HEC 2012 surveys CURF datasets
..................................................................................................................... 232
Chapter 5 The efficiency and effectiveness of state water and energy
concession schemes: a Victorian case study ............................................. 233
5.1 Introduction ........................................................................................ 233
5.3 Concepts of social policy targeting ..................................................... 246
5.4 Analytical frameworks ........................................................................ 250
5.5 Data and key variables ...................................................................... 260
5.6 Results .............................................................................................. 266
5.7 Discussion ......................................................................................... 284
5.8 Conclusions ....................................................................................... 288
Appendix 5.1: Beckerman (1979) Model ....................................................... 290
Chapter 6 Equity implications of state water and energy concessions in
Australia ......................................................................................................... 292
6.1 Introduction ........................................................................................ 292
6.2 Context .............................................................................................. 295
6.3 Principles of concession design ......................................................... 301
6.4 Analytical framework .......................................................................... 307
6.5 Data and key variables ...................................................................... 308
6.6 Equity implications of current concession schemes ........................... 316
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