The report assessed only the state-run program, which operates in 84 of the state’s 274 remote communities and is not directly affected by federal funding changes.
But the WA Department of Housing, which runs the state-funded essential services program, raised the issue of a lack of federal funds in its response to water safety concerns, saying that while it could address “short-term” risks by supplying bottled water to affected communities, “a permanent solution to long-term and ongoing water quality risks is outside the scope of [the remote area essential services program] and will require significant investment”.
“In this regard the department notes the unilateral withdrawal of the commonwealth from its historical funding role,” the department said.
Guardian Australia understands the auditor general’s office began work on the report before WA’s premier, Colin Barnett, suggested some communities might have to close.
That debate was sparked when the federal government announced it would hand its share of responsibility for essential services in Aboriginal communities to the state government, with Tony Abbott later saying the government did not have a responsibility to fund the “lifestyle choices” of Aboriginal people.
On Friday, Barnett said suggestions that communities would be closed in the near future were false, but said he expected “a significant number” of communities would close as a result of changes to funding and service delivery, the framework for which is expected to be soon released by the state government.
The remote area essential services program discussed in the auditor general’s report is funded wholly by the state government and managed by the WA Department of Housing. It is responsible for providing and maintaining water, power and sewerage services to 49 communities in the Kimberley, 22 in the Pilbara and 13 in the Goldfields.
The report found that not only was the water in many communities unsafe, the service providers had also failed to conduct scheduled sewerage tests, meaning they could not guarantee that sewage was safe. Nineteen communities reported sewerage overflows between 2012 and 2014. In one community, Mowanjum, 10km from Derby, the sewerage overflowed eight times in 11 months.
The report said there was “poor oversight” of contracts and spending on the program and that 24 of the 84 communities failed basic criteria for being included in the program, which is that communities must have a population of more than 50 people.
It said spending was “unplanned and uncoordinated”. It added: “We saw a complete solar-powered system funded by the commonwealth that had been installed but could never be connected because it was incompatible with the existing power system.
“At another community, a mining company built and connected a facility to power, without any prior consultation with [the department of] housing.”
In a foreword to the report, Murphy said the state-run program was likely to continue and grow regardless of the outcome of the community closure debate, and said he hoped the report would “inform … that much wider debate”.
But he said the management of the program limited “its effectiveness and efficiency”.
Talk of remote communities closures was sparked by the loss of the federally funded municipal and essential services program (Muns), which will transfer to the state along with $90m, or two years of equivalent funding, on 1 July.
The Muns program provided funding for diesel subsidies for electricity generators, road maintenance, rubbish collection and dog control.
In a response to the auditor general’s report, the Department of Housing said it was integrating services previously provided by the federal government into its own essential services program.