The direction of the UK water industry has been a significant watching brief for the Australian water industry in recent years. Although privatised, we have a lot in common: vertical integration, independent economic regulation, and a strong focus on health and environment outcomes.
Of greatest interest has been the direction of the economic regulator Ofwat. In conjunction with SA Water, we took the opportunity to invite for the first time, the Chairs and non-executive directors of water utilities to meet in Adelaide with Jonson Cox, Chair of Ofwat, to hear in detail the journey but most importantly the future planning around the delivery of urban water services in the UK. To add to the UK flavour, we also were very pleased to have Geoff Aitkenhead from Scottish Water discuss the institutional and regulatory changes in Scotland and the huge improvements that the utility has delivered.
For the UK, the case has been made many times, and reiterated by Jonson Cox, that the privatisation of the industry during the Thatcher years was probably the right decision. At the time the government was staring at a ‘challenging’ balance sheet and needing to achieve stricter EU directives. There was quite simply a need to raise capital from the private sector to lift the industry.
If there was one message that came through with complete clarity from Jonson Cox’s discussion it was around transparency, trust and choice. It’s not well known that the ‘Thames Water’ customers interact with (through bill payment, service delivery etc) is actually 12th in line in a set of holding and investment companies. Of course there is nothing wrong with that structure but the point Jonson was making was that transparency is paramount, and complex commercial and institutional structures may not always ‘sync’ with the clarity customers are looking for. After all trust is hard won and easily lost and with trust built on transparency, water company boards should be looking hard at what they can do better. Ofwat is working with UK water companies to develop even more transparency, particularly with the advent of non-residential retail competition in 2017 and public discussion around the potential benefits of residential retail competition. As Jonson noted "nothing empowers customers more than choice."
The Scottish Water model is different to that of England and Wales, and Geoff Aitkenhead discussed the customer engagement that now occurs. Including deliberative groups, in depth panels, customer experience analysis, validation groups and engagement with young customers, it became crystal clear that the depth and breadth of engagement across the entire UK is certainly a high water mark that Australian and NZ utilities can attempt to emulate. Geoff included a quote from Douglas Millican, CEO of Scottish Water: “Our success depends totally on knowing what matters to our customers.” A clear priority at Scottish Water is that staff engagement drives performance and should, ideally drive customer satisfaction. Scottish Water has measured its own performance in how well staff are engaged and they have come out a very high 68% which compares to a UK top quartile of 71%. The complete picture demonstrates real success: in 2002 customer satisfaction was at 63% and by 2010 it has increased to 89.9% accompanied by 40% opex reduction.
Diversity has been an emerging theme in the antipodean discourse for the past few years and Lucia Cade (Chair) and Kevin Hutchings (CEO) from South East Water stimulated the forum with work occurring in Victoria through VicWater around a water industry diversity strategy. With an objective of ‘an inclusive and equitable water industry, reflective of the richly diverse communities we serve’ the Victorian water industry is aiming for 40% females in senior leadership roles, 2.5% identifying as Aboriginal and Torres Strait Islander peoples, and 20% will speak a language other than English. Michael Thomson from Power and Water, Northern Territory is lifting their indigenous workforce to 20% to better reflect the community they serve. Diversity is a topic that is galvanising thoughts, opinions, and actions: for an industry that has been widely acknowledged as dominated by white males in the past, those actions will be incredibly important in attracting the millennial generations now moving into the workforce to deliver not only excellence in science and engineering, but excellence in customer engagement, communication, policy and advocacy, and to help us transform into the digital economy.
This was really just the tip of the iceberg in discussions at the forum. I can’t encourage you enough to take a look at the compilation of vox pops which neatly summarise from WSAA Chairs, CEOs and our visitors from the England and Scotland what the industry should be looking out for in the future.
3 Aug 2016
