Victorian government offers life raft after water giant’s $200 million IT disaster
Greater Western Water reported nearly $200 million in operating cash losses and rising debt following a failed IT system upgrade and could be backed by public funds next year.
State Treasurer Jaclyn Symes wrote to the company pledging financial support until November 2026.
The full extent of Greater Western Water’s precarious financial situation may be revealed when the company finally publishes its annual report on Christmas Eve.
The company, which provides water and sanitation to almost 600,000 households, has significant debt and is increasingly dependent on borrowing to maintain its operations.
The document, published 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 cash surplus of $50 million in the previous year.
Another financial measure, profit after tax, was $58 million more. This differs from the operating cash result because it does not take into account a number of measures, such as the significant amount of bill revenue the water company expected but did not receive.
Greater Western Water’s report said the operating loss was primarily due to significant problems with the rollout of the billing system, which caused major delays in billing and collections.
These delays also meant that the company had a “credit loss allowance” of $117.8 million; it was an accounting measure that estimated how many of the company’s future debts were essentially in bad shape and might never be paid.
“Management expects these delays to continue until system issues are fully resolved,” the report says. “The cash flow forecast indicates that additional financial support will be needed in 2025-26 to fund operations.”
To achieve this, Symes wrote a letter of financial support to Greater Western Water, confirming that the government would support it if necessary to ensure it continued operating. This arrangement will continue until November next year.
A government spokesman said four of the 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 and that their services have not met our customers and expectations,” the spokesperson said. “Under new leadership, Greater Western Water is working to regain the trust of its customers and return its finances to a sustainable position.”
The water company also didn’t make enough money to cover interest payments last fiscal year.
The interest coverage ratio, which is the minimum level required to cover debt expenses, was not only below one, but also had a negative ratio of minus 0.3. This means the company does not have enough cash to cover interest repayments and will have to borrow more or find cash elsewhere to meet these payments under current circumstances.
“Billing and collection delays in the new customer billing system led to lower cash collections and higher interest payments from customers,” the annual report stated.
Opposition Leader Jess Wilson said Symes’s letter was a “de facto bailout” and criticized the publication of the report on Christmas Eve as a “shameless attempt to avoid responsibility”.
“Under Labor rule, Greater Western Water does not have enough cash to pay the interest bill on its debt and would likely be bankrupt without urgent financial support from Chancellor of the Exchequer Jaclyn Symes,” he said.
Over the past five years, Greater Western Water’s debt levels have risen rapidly. Gearing ratio, a measure of how much debt is on the books compared to assets, increased from 59.2 percent in 2021 to 69 percent in 2025.
The company aims to keep the gearing ratio below the Essential Services Commission’s 60 percent standard.
David Hayward, retired professor of public policy at RMIT University, said this meant the water company was increasingly reliant on debt to fund its operations.
“If there’s a cash operating deficit, that’s a problem, it means they’re not getting enough cash,” he said.
Hayward said if this trend continued the state government would eventually have to bail out Greater Western Water by taking money from another part of the budget.
Greater Western Water’s acting chief executive, Craig Dixon, said it had played a role in financing the billing saga but the company had increased borrowings to fund infrastructure projects.
“With strong government support and independent verification of our finances by the Victorian Auditor General, we remain a financially secure organisation, providing essential services to more than 600,000 customers.”
Greater Western Water launched upgraded billing system in May 2024, worth over $100 million. However, the new system could not automatically generate invoices and staff had to manually check each invoice.
Therefore, the bills were delayed and resulted in bill shock. These were false, exaggerated or missing required information, and the ability to pay via direct debit was also suspended without notice.
The number of customers using flexible payment plans increased by 23 percent compared to the previous year, reaching 28,981. Payment issue complaints increased by more than 200 percent, with 0.68 complaints per 100 customers.
in October, Age revealed that a billing crisis may occur We extend until June 2026. The treasurer’s November letter of support suggests the company’s problems could continue into next year.
The Essential Services Commission oversaw a $130 million compensation plan that includes writing off 2024 charges not billed before Sept. 1, 2025, and giving credits of $80 to $240 to customers whose bills are overdue. Approximately 70,000 customers affected by the suspension of all direct debit payments will also receive an $80 credit.
In the annual report published on Wednesday, former water minister Lisa Neville, who became chief executive of Greater Western Water in April after the billing saga emerged, apologized for the stress and inconvenience caused by the IT failure.
“Our customers deserve better and we take full responsibility for what happened,” he said. “We sincerely apologize for any inconvenience we have caused, and we are taking decisive action to put things right, including waiving approximately $75 million in unbilled charges and providing approximately $55 million in customer credit starting in 2024.”
Richmond resident Tony Way said in October: Age Part of its bill had been canceled last year, and the company had little confidence that its performance would improve.
“There seems to be no end in sight,” he said. “What a circus.”
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Adam Carey is senior urban reporter (suburban). He has held previous roles including education editor, state political correspondent and transportation reporter. He joined The Age in 2007.Connect with: excitement or email.
Rachel Eddie is The Age’s Victorian political correspondent. Contact her at rachel.eddie@theage.com.au, rachel.eddie@protonmail.com or via Signal at @RachelEddie.99.Connect with: excitement or email.
