Greater Sydney has been left more vulnerable to climate change and drought because of failures by the key agencies charged with water security in the region, a report says.

The Department of Planning, Industry and Environment (DPIE) and Sydney Water have not effectively investigated, implemented or supported water conservation initiatives, NSW auditor general Margaret Crawford has found.

In her report handed down on Tuesday, Ms Crawford says the agencies have not met key requirements for water conservation.

She says there has been scant policy or regulatory reform, little focus on identifying new options and investments, and limited planning and implementation of water conservation initiatives.

“As a result, Greater Sydney’s water supply may be less resilient to population growth and climate variability, including drought,” Ms Crawford concludes.

Poor governance

The report found poor governance around water conservation, exacerbated by frequent structural change and staff turnover in the department, and said there had been no detailed analysis of water conservation options since 2013.

It also found a failure to secure funding for water conservation, limited evaluation of current initiatives and failure to act on initiatives like water recycling and stormwater harvesting.

DPIE hasn’t done community engagement over the option of recycled drinking water as required by the Metropolitan Water Plan, Ms Crawford said, and hasn’t expanded its recycling capacity for more than eight years.

“The Department has not developed policy, engaged the community, and consolidated an evidence-base around water conservation.

“As such, opportunities have been missed for the Department to support Sydney Water’s water conservation initiatives, and to engage directly with the community on opportunities to save water,” the report says.

The report also criticises Sydney Water for its tardiness in responding to the recent drought, saying it didn’t increase its water conservation investments until more than two years after dam levels dropped in 2017.

“Sydney Water’s lack of planning led to its water conservation initiatives being limited and not timely in response to the recent drought,” it says.

The auditor says that failing to improve water conservation could lead to more costly large-scale water supply options down the track.

Clearer policy, more transparency

The report recommends that DPIE develops a clear policy position on water conservation, improves governance around water conservation funding and works with Sydney Water on new initiatives.

Planning and reporting on water conservation also needed to be more transparent, the auditor said.

DPIE Secretary Jim Betts said in a letter to the auditor general’s office the department  acknowledged the need for a greater emphasis on water conservation and agreed with all the recommendations in the report.

Mr Betts said DPI was currently developing the Greater Sydney Water Strategy which would establish “a future vision for water” in the region.

Sydney Water Managing Director Roch Cheroux said a number of significant achievements in water conservation had been made but it acknowledged there was room for improvement.