Taxpayers offer life raft after water giant’s $200 million IT disaster

Greater Western Water has reported a near $200 million operating cash loss and rising debts following its botched IT system upgrade, and could be propped up with public funds next year.

State Treasurer Jaclyn Symes has written a letter to the company promising financial support until November 2026.

The full scale of Greater Western Water’s perilous financial position can be revealed after the corporation finally released its annual report on Christmas Eve.

Greater Western Water launched its $100 million-plus upgraded billing system in May 2024. But the new system couldn’t create bills automatically and staff had to check each bill manually.

Bills were therefore delayed and resulted in bill shock. They were incorrect, inflated or missed required information, and the ability to pay by direct debit was also suspended without notice.

There are 28,981 customers on flexible payment plans, a 23 per cent increase on the year before. Payment issue complaints soared by more than 200 per cent, with 0.68 complaints for every 100 customers.

The corporation, which supplies water and sewerage to almost 600,000 households, has significant debt and is increasingly reliant on borrowings to operate.

The document, released months after every other water company’s annual report was published, revealed an operating cash deficit of $191.7 million in the 2024-25 financial year, compared to a $50 million cash surplus the year before.

Another financial metric, profit after tax, was $58 million in surplus. This is different from the operating cash result because it does not account for a range of measures such as the significant amount of bill income the water company had anticipated but had not received.

Greater Western Water’s report said the operating loss was primarily influenced by significant problems with the rollout of its billing system, which caused major delays in billing and collections.

These delays also meant the corporation had a “credit loss allowance” of $117.8 million, an accounting measure that estimates how many of the company’s future debts are essentially bad and may never be paid.

“Management expects these delays to continue until the system issues are fully resolved,” the report says. “Cash flow forecasting indicates that additional financial support will be required in 2025-26 to fund operations.”

To achieve this, Symes has written Greater Western Water a letter of financial support confirming the government will prop it up, if required, to ensure it continues operating. This arrangement will remain until November next year.

A government spokesperson said four in five residential accounts held by Greater Western Water were now functioning properly.

“We acknowledge that Greater Western Water’s billing issues have impacted the community; their service fell well short of customer and our expectations,” the spokesperson said. “Under new leadership Greater Western Water is working to regain the trust of its customers and return its financials into a sustainable position.”

The water corporation also did not make enough money in the past financial year to meet its interest payments.

Not only was its interest coverage ratio below one, the minimum level required to ensure debt expenses are being met, but it had a negative ratio of minus 0.3. This means the corporation did not have enough cash to meet its interest repayments and, under current conditions, would have to take on more debt or find cash from elsewhere to meet these payments.

“Billing and collection delays from the new customer billing system have resulted in lower cash receipts from customers and higher interest payments,” the annual report said.

Opposition Leader Jess Wilson said Symes’ letter was a “de facto bailout” and criticised the release of the report on Christmas Eve as a “shameless attempt to avoid accountability”.

“Under Labor, Greater Western Water does not have enough cash to pay the interest bill on their debt and would likely be insolvent without emergency financial support from Treasurer Jaclyn Symes,” she said.

Over the past five years, debt levels at Greater Western Water have soared. Its gearing ratio, a measure of how much debt is on the books compared with assets, has risen from 59.2 per cent in 2021 to 69 per cent in 2025.

The corporation aims to keep its gearing ratio below the Essential Services Commission’s benchmark 60 per cent.

RMIT University emeritus professor in public policy David Hayward said this meant the water corporation was increasingly reliant on debt to fund its operations.

“If there is a cash operating deficit that’s trouble, that means that they are not getting enough cash their way,” he said.

Hayward said that if the trend continued, the state government would eventually have to bail out Greater Western Water, taking money from another part of the budget.

Greater Western Water’s acting managing director, Craig Dixon, said that while the billing saga played a role in its finances, the corporation had increased borrowings to fund infrastructure projects.

“We remain a financially secure organisation delivering essential services to more than 600,000 customers, with strong government support and the Victorian Auditor-General’s Office’s independent validation of our financial position.”

In October, The Age revealed the billing crisis could stretch out to June 2026. The treasurer’s letter of support to November suggests issues at the corporation could continue well into next year.

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. About 70,000 customers affected by the suspension of direct-debt-in-full payments will also receive an $80 credit.

In the annual report released on Wednesday, former water minister Lisa Neville, who became chair of Greater Western Water in April once the billing saga was revealed, apologised for the stress and inconvenience caused by the IT failure.

“Our customers deserve better, and we take full responsibility for what’s happened,” she said. “We sincerely apologise for the inconvenience caused and are taking decisive steps to make things right, including waiving approximately $75 million in unbilled charges from 2024 and providing around $55 million in customer credits.”

In October, Richmond resident Tony Way told The Age he had part of his bill written off last year and had little confidence of a turnaround in the corporation’s performance.

“There appears to be no end in sight,” he said. “What a circus.”

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