Australians are expected to experience severe water restrictions this summer, but Australia's leading business group says those restrictions are unnecessary and are costing the economy $9 billion a year.
In a new report, the Business Council of Australia is calling for a free market in water, saying that if the price of the resource increased then there would be plenty of water for everyone.
Australia faced it driest August on record last month, and most state and territory governments are considering or have already imposed water restrictions.
But the Business Council of Australia's policy director, Maria Tarrant, argues that such restrictions are unnecessary.
"The reliance on reducing people's use of water is unsustainable in the long-term," Ms Tarrant said.
"If you think about a population growth projected to be 25 million by 2032, we've really got to do something more than simply constrain water consumption."
She says the scarcity of water in the urban environment is a man-made problem, and it is one that can be fixed by adjusting the price paid for water to cover investment in infrastructure.
"We're saying that we should have the Productivity Commission have a look at pricing strategies for urban water, and that at some level there will need to be an adjustment to the price paid for water in our cities, to recognise the cost of bringing on the new investment in infrastructure," she said.
"But it may well be that you have a pricing mechanism which is a sliding scale, so that those who want to invest in watering large gardens are paying for that, those of us who have small courtyards or dry-scape gardens aren't going to have to pay the additional cost."
Malcolm Turnbull, the Federal Government Parliamentary Secretary with responsibility for water policy, says the Business Council report confirms the Government's policy on water reform.
"It underlines the truth that our cities can have all of the water they are prepared to pay for," he said.
"We simply have to make the investments and stop ... state governments treating their water utilities as cash cows."
Mr Turnbull says with the right investments Australian cities can make as much water as is needed.
Criticism
Away from the cities, however, rural irrigators are currently at the mercy of the Independent Pricing and Regulatory Tribunal, and they complain that recent price rises for water are unsustainable.
The chief executive of the New South Wales Irrigators Council, Doug Miell, is encouraging the private sector to buy into water delivery.
"Private enterprise and contestability of the services delivered by government agencies will start driving you towards the most efficient outcome of service delivery, there's no question about that," Mr Miell said.
"As far as are we being charged too much? We have no problem, as industry, paying for full cost recovery of prudent and efficient services that are required and that are delivered in a contestable environment, and we just don't have those factors satisfied yet."
Environmentalists worry that striving for economic efficiency in water supply has other long-term costs.
The director of the Total Environment Centre, Jeff Angel, says increasing the price of water associates national and state policies with having to buy water for the environment.
"We shouldn't have to pay out billions of dollars to irrigators in order to put water back into our rivers in order to get river health," Mr Angel said.
"Efficiency is one thing at an economic level, but it has costs, and we have to have a social and environmental input into those policies and not just rely on those market-driven instruments which can do enormous environmental damage.
"The water belongs to everybody, and we shouldn't have privatised it." ----------------------------------------------
Personally I disagree with what the business council is saying as their proposal would result in plenty of water for the rich and very little water for everyone else.
