Urban water users face water bills that will increase by half within a decade and continue to climb without "substantial" reform as rising population and climate change add stress to ageing networks, Infrastructure Australia said in a new report.
The future surge will build on a steady run-up in costs in recent years even as total water consumption has stagnated since the 1980s, with consumers responding to calls for more thrifty use.
The paper, Reforming Urban Water, also argues poor planning processes led to an $11 billion splurge on desalination plants that - with the exception of Perth - have largely gone unused and precluded cheaper short-term measures.
Victoria earlier this year ruled out a second plant after its multi-billion dollar Wonthaggi was left on standby since its completion five years ago.
Among 12 recommendations, the report calls for the creation of a national independent body to provide states with inducements to implement reforms. The report also calls for privatisation of water assets once regulations and governance are "sufficiently robust".
Such an entity would "congratulate reform where it occurs, hold the feet to the fire where it doesn't occur, and makes sure that it calls out backsliding against those reforms", Adrian Dwyer, executive director of Infrastructure Australia, said.
Typical residential water and sewerage bills had already risen by an average of 8 per cent a year after inflation to about $1226 in 2017.
Bills are projected to increase to $1827 in today's dollars by 2027, and more than double - to around $2550 - by 2040 and would continue to rise, the report said.
"If we don't want water bills to go the same way energy bills have over recent years, then the governments need to act on this now," Mr Dwyer said.
Stuart Khan, an Associate Professor in the School of Civil & Environmental Engineering at the University of NSW, welcomed the report.
"Increased water efficiency and the increased use of strategies such as recycling take time to develop and implement," Professor Khan said. "We can't allow ourselves to sit back and wait for the next crisis."
"The abolition of the National Water Commission in 2015 [by the Abbott government] has left Australia with no effective national oversight of water management or reform issues," he said.
"That leaves the states to go off on their own with conflicting approaches and variable levels of interest or capability for improvement."
Professor Khan also cautioned about selling off water assets: "Government ownership can work very well and has some clear advantages when effectively managed."
One driver is the expected population jump. Sydney, Melbourne, Perth and Brisbane will swell by almost six million people in the two decades to 2031, adding some three million new residences.
Total annual water supplied will double to more than 15,000 gigalitres, the report said.
Adding strain to the ageing infrastructure will be climate change, which is "likely to have a growing influence on how urban water is supplied, used and managed", it said.
The climate stressors - already a feature given Australia's highly variable annual rainfall - will likely worsen as a warming planet generates more frequent and intense rainfall events, especially in the north.
In the south, the lower rainfall patterns that appear to have become entrenched in recent decades could become drier.
Rising temperatures will also likely add further threats to water storages by boosting evaporation and the number of high-risk bushfire days each year.
States, though, had been getting some things right.
Urban water use had been largely static since the 1980s even as millions more users arrived.
Sydney's water use, for instance, dropped about 20 per cent in the quarter century to 2016 even as the population rose 25 per cent. (See chart below.)
A changing industry mix was one factor, as were public campaigns, including mandatory curbs and higher prices.
Victoria was the "standout performer" for economic regulation, given its "high degree of independence and transparency" that gave incentives to promote efficiency.
By contrast, NSW's Independent Pricing and Regulatory Tribunal could have its independence "strengthened", while regional NSW had "no effective regulation", the report said.
Without the recreation of a national water regulator, higher water costs would become an increasing economic drag, as well as raising the odds that costly stopgap steps would follow any sudden disruption or challenge.
"Reform usually happens when there's a burning platform," Mr Dwyer said. "The taps work today and they may continue to work tomorrow but we shouldn't take this for granted."
With better processes, investments in desalination plants "may have been made differently over a longer planning horizon rather than making them when we're pumping silt off the bottom of the dams", he said. "We're not saying it was the wrong decision at the time, but it was a costly response to an immediate challenge."
With most dams filling up near major cities after the Millenium Drought ended in 2007, only Perth has had to resort to major desalination plant use.
Professor Khan said one of the problems in urban water management currently had been the politicisation of decision-making.
"Decisions like the Sydney desalination plant were made in the lead-up to state elections to beef up election platforms, rather than to produce long-term sustainable solutions," he said, with an ALP focus group the primary prompt
"Government ministers then went into overdrive to try to kill off talk of alternative water supply solutions, such as water recycling and urban stormwater harvesting," he said, adding decisions were made without the close involvement of Sydney Water.