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How poor governance killed good policy

Newly elected Victorian Labor Premier Daniel Andrews announced on Monday that the Office of Living Victoria will be disbanded.

What does that mean for the urban water policy that promised to green the streets of Melbourne and reduce the price of water?

The abolition of OLV was hardly surprising. The Napthine government had already folded the agency back into the Department of Environment and Primary Industries on 1 July in anticipation of a damning Ombudsman’s report. The CEO and head of Office resigned a few weeks later.

The Ombudsman’s report found the two senior managers at OLV had spent vast amounts of public money without following basic procedures to ensure value for money and avoid perceived conflicts of interest.

The report said they’d appointed firms and individuals who were former colleagues without a merit selection process, and the terms for some of the bigger contracts were unusually favourable to the consultants.

The evidence suggested that the senior managers believed they were under no obligation to follow the usual procurement policies.

They justified their conduct on the basis that they had urgent and important reforms to implement. They couldn't be hampered by the contraints of the public service.

But good governance and expeditious action are not mutually exclusive. Good planning, sound financial management, transparency and active risk management are all part of effective leadership.

By adopting a ‘crash through’ approach the leaders of the OLV risked losing the momentum from widespread support for urban water reforms. That’s a shame because it all started so well with bipartisan support and widespread enthusiasm.

The Coalition’s 2010 Living VIctoria water policy was designed to take pressure off drinking water supplies in urban areas by capturing and re-using stormwater, using the concept of ‘city as a catchment’.

Part of the rationale was the Coalition’s policy to never use the desalination plant by the former Labor government. As it turned out, they didn’t need to because it rained during their four years in government.

The policy incorporated a bundle of environment, health, economics and water engineering ideas that are part of the wider ‘integrated water cycle management’ approach. They include greening urban streetscapes, providing water for sports fields and parks, better managing urban waterways, flood management, reducing the cost of supplying drinking water and sewerage services, and restructuring the institutions that deliver those services.

Many local councils have actively embraced the idea of integrated water manaegment because of their popularity with constituents. You can see it in local planning policies (now part of the state planning scheme), in local water plans, in the way councils are managing drainage and flood mitigation, and new underground rainwater storage for watering parks and sports fields.

I convened a roundtable for leaders in local government in December 2013 to talk about the challenges they face in implementing integrated water cycle management. They were enthusiastic about working through what is needed to deliver decentralised water services.

But when I interviewed the participants five months later, in May 2014 they’d clearly lost interest. One after another local government leader told me they thought the OLV had lost traction. They were waiting to see what would happen after the state election in November.

So what now for the bold urban water reforms that OLV was in such a hurry to implement?

There’s little mention of water in the major parties’ policy commitments for the Victorian election. Not surprising given that water has slipped of the public agenda.

Integrated water cycle management won’t disappear though. It’s now part of water policy in most Australian states and territories and the federal government has supported it through grants programs.

Labor is likely to quietly turn on the desalination plant next year but it won’t have much practical effect while the water storages are full. The $50m Living Victoria fund grants program, which is due to expire next year, may be given a new injection of funds. There are still institutional and regulatory reforms to be implemented and new approaches to building and infrastructure to be adopted.

But the initial momentum for the vision of ‘city as catchment’ has been lost.

The lesson from the OLV is that good governance is crucial to success. If you fail to manage public money wisely and actively manage conflicts of interest you lose the credibility of important reforms.

Disclosure statement: Amanda was engaged by the OLV from November 2012 to June 2013 to establish the grants program under the Living Victoria fund and provide advice on governance and reporting obligations.

Image courtesy of the OLV website.

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