Key Takeaways:
- Greater Western Water is facing financial difficulties due to billing issues and system problems, requiring a letter of financial support from the government.
- The water corporation’s debt levels have increased significantly over the past five years, with a gearing ratio of 69% in 2025.
- The corporation’s interest coverage ratio is below one, indicating that it does not have enough cash to meet its interest repayments.
- A $130 million redress scheme has been implemented to compensate affected customers, including writing off unbilled charges and providing credits.
- The government has promised to provide financial support to Greater Western Water until November next year if needed.
Introduction to the Crisis
The annual report of Greater Western Water has revealed that the water corporation is facing significant financial difficulties due to billing issues and system problems. The report states that "management expects these delays to continue until the system issues are fully resolved," and that "cash flow forecasting indicates that additional financial support will be required in 2025-26 to fund operations." This has led to a letter of financial support from Treasurer Jaclyn Symes, confirming that the government will prop up the corporation if required, to ensure it continues operating. The arrangement will remain in place until November next year.
The Extent of the Problem
The water corporation’s billing issues have had a significant impact on its financial performance. The annual report reveals that the corporation did not make enough money in the past financial year to meet its interest payments, with an interest coverage ratio of minus 0.3. This means that the corporation does not have enough cash to meet its interest repayments and would have to take on more debt or find cash from elsewhere to meet these payments. The corporation’s gearing ratio, a measure of how much debt is on the books compared with assets, has risen from 59.2% in 2021 to 69% in 2025. This is above the Essential Services Commission’s benchmark of 60%.
Government Support and Criticism
The government’s decision to provide financial support to Greater Western Water has been criticized by the opposition. Opposition Leader Jess Wilson described the letter of financial support as a "de facto bailout" and criticized the release of the report on Christmas Eve as a "shameless attempt to avoid accountability." However, the government spokesperson said that four in five residential accounts held by Greater Western Water were now functioning properly, and that the corporation was working to regain the trust of its customers and return its financials to a sustainable position.
The Cause of the Problem
The billing issues at Greater Western Water were caused by the launch of a new $100 million-plus upgraded billing system in May 2024. The new system could not create bills automatically, and staff had to check each bill manually, resulting in delayed and incorrect bills. The corporation has acknowledged that the billing issues have impacted the community and has apologized for the stress and inconvenience caused. The Essential Services Commission has overseen a $130 million redress scheme, which includes writing off any 2024 charges that were not billed before September 1, 2025, and giving credits of between $80 and $240 to customers who received delayed bills.
The Future of Greater Western Water
The future of Greater Western Water remains uncertain, with the corporation’s financial difficulties likely to continue until the system issues are fully resolved. The government’s letter of financial support provides some reassurance, but the opposition has criticized the government’s handling of the situation. The corporation’s acting managing director, Craig Dixon, has said that while the billing saga played a role in its finances, the corporation had increased borrowings to fund infrastructure projects. However, RMIT University emeritus professor in public policy David Hayward has warned that if the trend continues, the state government would eventually have to bail out Greater Western Water, taking money from another part of the budget.
Customer Impact
The billing issues at Greater Western Water have had a significant impact on customers, with many experiencing bill shock and payment difficulties. The corporation has reported a 23% increase in customers on flexible payment plans, and payment issue complaints have soared by more than 200%. Customer Tony Way described the situation as a "circus" and expressed little confidence in the corporation’s ability to turn things around. The Essential Services Commission’s redress scheme provides some compensation for affected customers, but the situation remains a concern for many.
Conclusion
In conclusion, Greater Western Water is facing significant financial difficulties due to billing issues and system problems. The corporation’s debt levels have increased significantly, and its interest coverage ratio is below one, indicating that it does not have enough cash to meet its interest repayments. The government’s letter of financial support provides some reassurance, but the opposition has criticized the government’s handling of the situation. The future of Greater Western Water remains uncertain, and the corporation’s ability to regain the trust of its customers and return its financials to a sustainable position remains to be seen.
