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The Productivity Commission’s National Water Reform Inquiry: What Utilities Should Be Watching

  • Writer: Kelsey Hannah
    Kelsey Hannah
  • 2 days ago
  • 5 min read
National Water Reform 2026 Inquiry Timeline
National Water Reform 2026 Inquiry Timeline

The Productivity Commission has been tasked with its fourth national water reform inquiry, with a final report due to the Treasurer by 4 September 2026. The inquiry will assess the National Water initiative (NWI) progress and inform a refresh of national water pricing and economic regulation guidance.


On 27 March 2026, the Albanese Government announced that the Productivity Commission (PC) would lead a new national water inquiry focused on keeping Australia's water secure and affordable while making the sector more productive and sustainable. The inquiry is the fourth of its kind under the Water Act 2007, which requires the PC to independently assess government progress in implementing the 2004 National Water Initiative. Previous assessments were conducted in 2017, 2021 and 2024.

The inquiry has two functions: a statutory NWI progress assessment, and advice on how to promote a more sustainable water service industry to inform a refresh of national guidance on water pricing and independent economic regulation. What the 2024 assessment found, where the 2026 inquiry is likely to focus, and what the parallel development of the new National Water Agreement means for utilities are the key questions for executive teams and boards to be across before the interim update feedback window opens in June 2026.

The final report is due to the Treasurer by 4 September 2026. The inquiry is led by Commissioner Joanne Chong, supported by Associate Commissioner Dr Paul Wywroll, a research fellow at the ANU Institute for Water Futures.


What the 2024 inquiry found

The PC's 2024 national water reform report provides the immediate backdrop to the 2026 inquiry. That report found that while most jurisdictions had largely achieved their 2004 NWI commitments, several fundamental problems identified in the Commission's 2021 report remained unaddressed.

On pricing and economic regulation, the 2024 report found that some jurisdictions had moved away from NWI commitments to deliver cost-reflective and consumption-based pricing. In Queensland, Western Australia and the Northern Territory, independent economic regulators do not have the power to set water prices, and opaque cross-subsidies persist where beneficiaries of water use do not bear the full costs of supply. The report specifically noted that Queensland was moving further away from full cost recovery for water services.

On urban water, the 2024 report found that some regional and remote areas still do not have access to safe drinking water supply consistent with the Australian Drinking Water Guidelines, and that there continues to be a lack of consistency and transparency in the publication of drinking water quality data. On First Nations water interests, jurisdictions were found to be in the early stages of implementation, with engagement often characterised as not meaningful.


Four areas the 2026 inquiry is likely to examine

Pricing and cost recovery: The inquiry will inform refreshed national guidance on water pricing. Given the 2024 findings on pricing erosion, Queensland utilities in particular may face scrutiny of developer charge caps, the Maximum Adopted Charge, and the adequacy of current cost recovery arrangements. The Queensland Competition Authority (QCA) price-monitoring investigation into Urban Utilities and Unitywater, running concurrently, adds further context.

Independent economic regulation: The 2024 report identified the absence of independent price-setting powers in Queensland, Western Australia and the Northern Territory as an ongoing gap. The 2026 inquiry is expected to revisit this, alongside the broader question of whether current regulatory frameworks support the long-term financial sustainability of the water sector.

First Nations water interests: Progress against NWI First Nations commitments was found to be in early stages in 2024. The new NWA elevates First Nations interests to a dedicated objective and element. The 2026 inquiry will assess whether jurisdictions are meeting these commitments, including through the work of the Committee on Aboriginal and Torres Strait Islander Water Interests (CAWI).

Regional, remote and small utilities: The 2024 report found ongoing drinking water quality issues in some remote areas. The 2026 inquiry will examine whether current pricing, governance and funding arrangements are delivering secure and sustainable services for regional and remote communities, including the case for Community Service Obligation payments to replace competitive capital grants.


Implications for state-regulated utilities

Most Australian urban water utilities are regulated at the state level, with pricing, licence conditions and performance benchmarks set by state economic regulators. The PC inquiry does not directly alter those arrangements. However, refreshed national guidance on pricing and economic regulation is likely to influence how state frameworks evolve over subsequent regulatory cycles, particularly in jurisdictions where the 2024 report identified gaps.

The new National Water Agreement (NWA), a proposed replacement for the 2004 National Water Initiative, adds a further layer. For jurisdictions that sign, the NWA replaces the NWI and introduces updated objectives covering water service provision, climate adaptation and First Nations interests. New national water policy guidance to implement the NWA is expected to be developed in consultation through 2026, running in parallel with the PC inquiry. Utilities should monitor both processes, as they will shape the operating environment over the next regulatory period.

The PC's independent statutory review role under the NWA, expected every three to five years, means the Commission will remain a standing feature of the national water policy landscape beyond this inquiry. How the 2026 report frames best-practice pricing, economic regulation and service delivery for regional and remote utilities will establish reference points that persist through subsequent reviews.


Options for utilities and boards

  • Engage via industry bodies. qldwater submitted to the 2026 inquiry in April 2026, addressing pricing, economic regulation, regional equity and national consistency. WSAA and state-level associations are also expected to engage. Utilities can contribute their operational context through these channels, and should confirm their position is reflected in relevant submissions ahead of the June to July interim update feedback window.

  • Review the 2024 inquiry report. The PC's 2024 report sets out the Commission's most recent published findings on pricing, economic regulation, NWI progress and urban water issues. Reviewing those findings against current utility arrangements, particularly on cost recovery, independent regulation and drinking water quality reporting, provides a useful baseline for understanding what the 2026 inquiry is likely to examine.

  • Consider whether a direct submission is warranted. Utilities with circumstances not well captured by an industry-body submission, such as specific pricing structures, cross-border service arrangements or documented regional infrastructure funding gaps, may find a direct submission useful. The interim update feedback period in June to July 2026 is an available opportunity.

  • Monitor the NWA process alongside the inquiry. Consultation on national water policy guidance to implement the new National Water Agreement is expected to begin in 2026. This is a separate but related process that will translate the NWA's objectives into operational guidance for jurisdictions. Both the PC inquiry and the NWA implementation process are worth tracking through the second half of 2026.


The Productivity Commission's 2026 national water inquiry has a tight timeline, with the interim update open for feedback from June 2026 and the final report due to the Treasurer by 4 September 2026. Its findings will inform refreshed national guidance on water pricing and independent economic regulation, with implications for how state frameworks develop in the years following.

Running in parallel, the new NWA is moving toward sign-on by states and territories, with national policy guidance to implement it expected through consultation in 2026. Together, these two processes will shape the regulatory and policy environment for Australian water utilities through the remainder of the decade. The June to July interim update feedback period is the nearest practical opportunity for utilities to engage with the PC inquiry directly.


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