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Welcome to The Executive Exchange, a premier podcast series for on-the-go senior executives. Each episode features short, impactful podcasts where industry leaders share key insights and experiences from the water industry.
[00:00:00] Piers Clark: Welcome to the Exec Exchange, 15 minute podcast, in which a leader from the water sector shares a story to inspire, inform, and educate other water sector leaders from around the globe.
[00:00:10] Piers Clark: My name is Piers Clark and my guest today is Darren Cleary, the new Managing Director at the largest water utility in Australia, Sydney Water.
Darren, wonderful to connect with you today. Thank you for taking the time.
[00:00:23] Darren Cleary: Hi Piers. Great to be here.
[00:00:25] Piers Clark: Now, we're gonna get into what it's like to be the new managing director of the largest water utility in Australia, and what your hopes and the things that keep you awake at night are for Sydney water.
[00:00:37] Piers Clark: But let's start with a little bit of your background. What did you do before you joined Sydney Water?
[00:00:43] Darren Cleary: So I've been in the water industry my whole career. I was an engineer by training . Spent a very short time in consulting and realized I wanted to be in an operating business. So interestingly, I joined Sydney Water on their graduate program. I spent about seven years there.
[00:00:57] Darren Cleary: I then, for lifestyle reasons, went a little bit further north to a regional city, Newcastle, and I joined Hunter Water Corporation and I stayed there for over 20 years and I became CEO there.
[00:01:08] Darren Cleary: And, now coming back to where it all started at Sydney Water.
[00:01:10] Piers Clark: I love the way Australians describe a little bit north. Newcastle, it's a two hour drive north of Sydney.
[00:01:19] Piers Clark: Alright, I hadn't realized you'd started your career at Sydney Water, and that is wonderful to be coming back with that, completing that loop.
[00:01:26] Piers Clark: Now, let's talk a bit about Sydney Water, what sort of activities does it do? How many people does it serve? Those sorts of facts.
[00:01:33] Darren Cleary: We are the water utility that services Sydney, the largest city in Australia. We service around 13,000 square kilometers and we service around five and a half million customers. So, we provide water and wastewater services, as well as recycled water services and some storm water services.
[00:01:51] Darren Cleary: We operate all of the infrastructure from the water treatment plants down to distribution and billing of customers. And we operate the entire wastewater system. We get our bulk water from another sister organization, Water New South Wales. So they operate the dams and the catchments that service Sydney. We also have a desalination plant that's privately owned, but also has a very important source of water for us.
We are a state owned corporation, which means that we are a commercial entity with an independent board, but our shareholders are the New South Wales government. And of course we are economically regulated. So, we have an economic regulator that sets our prices and our operating license requirements.
[00:02:31] Piers Clark: Brilliant. Alright, you've been in the role for four months. I wanna take you back, probably eight months ago, when you saw the job advertised or someone rang you up and said, "Hey, this thing's coming up. Do you want to put your name in the ring?"
[00:02:45] Piers Clark: And what was that first impression because you'd already been at Sydney Water, you knew it perhaps too well? Was there a, shiver of excitement or was there, oh, this would be going backwards?
[00:02:56] Darren Cleary: No, it was certainly excitement of the opportunity. So, you know, Sydney is the largest water utility in Australia and it is got some big challenges. So, there's very rapid growth occurring in Sydney. Much of this growth is occurring in greenfield areas in providing the infrastructure required to service that. Plus the normal challenges of renewing the existing assets and dealing with changing customer expectations and what does digital mean.
[00:03:21] Darren Cleary: So for me, the opportunity to join a large and very, very capable organization was quite exciting. And I felt that the leadership that I could provide and some of the lessons that I'd learned operating, in essence, the same regulatory and stakeholder environment at Hunter can help the business continue to grow.
[00:03:40] Piers Clark: Alright, so how's it going?
[00:03:41] Darren Cleary: I'm in my fourth month and I'd say I'm still certainly getting my head around the business.
[00:03:46] Darren Cleary: Well, as I said, it's a very capable business with very great passionate people. Certainly in my experience, people in the water industry really believe in what we do and in the community service ethic . So from that perspective, it's a wonderful organization to lead because we've got passionate people.
[00:04:00] Piers Clark: Excellent. Darren, you never know how long you are going to be managing director for, but let's assume that you've got a good tenure, you've got a good five years at least. What is it you are hoping to achieve in that five year period?
[00:04:12] Darren Cleary: What I'm hoping to achieve in this five year period is that the trust and confidence that our community and stakeholders has in Sydney Water has actually increased. That we've been able to meet the needs for service growth and manage some of the renewal challenges that we have. And we've been able to manage some of the emerging challenges that are coming at us right now that we hadn't anticipated. One of those is data centers are really increasing the water demand for our region. And how do we respond to that in a timeframe that meets that stakeholder group's expectations.
[00:04:44] Darren Cleary: So, if I talk about the trust and confidence, Sydney Water has been through a challenging time. It's identified that it has a large need to invest capital in the business, over $32 billion over 10 years, that's leading to significant price rises. And that's at a time of clearly affordability challenges with the community. As well as a time when government, and government is our owner, is looking to do, fiscal repair and repair its budget.
So, a particularly challenging time around how do we balance all of those needs. And there's been some emerging issues around PFAS in our drinking water supply. We've also had some challenges with our ocean treatment plants and the unexpected appearance of oil and grease appearing back on our beaches that hadn't occurred for 30 years, but has now all of a sudden occurred because one of our ocean outfall facilities is not performing as we expected.
[00:05:33] Darren Cleary: So that's really the challenge for us to navigate. We have a real efficiency and prioritization challenge about how do we make the most out of the capital that we do have available.
[00:05:42] Darren Cleary: And then thirdly, we have this rapidly changing environment with data centers wanting to come into the region with a very large potential increase in water demand. And how do we best service that in a way that doesn't increase prices for the broader customer base and doesn't reduce their level of service.
So, they're the three big challenges I'd say that we've got ahead of us
[00:06:01] Piers Clark: The thing about those challenges is some of them are traditional legacy related, infrastructure related challenges. You know, just stuff getting too old. It's expensive to replace. We're in a cost of living crisis. Nobody can do it. You know, all of those things, which actually play in brilliantly to your background in asset management and operations and maintenance. Hopefully you can hit the ground running really fast with those, or at least have some experience that you'll be able to build upon.
[00:06:28] Piers Clark: The data center one is intriguing because it's a whole new market. It's a new important client that you've got to serve, and that they're drawing a significant proportion of the resource that you want to keep for the good citizens of Sydney.
[00:06:42] Darren Cleary: Well, that's right. And they are powering the new economy. The government obviously is very keen to encourage this investment because it will be a real multiplier of economic activity and these data centers are providing some quite critical functions.
So often we think about data centers, you know, as I initially did, it's all about ChatGPT and wanting to do gaming. And of course that's a component of it, but also, banking, transport, including air traffic control are putting increasingly more of our computing needs into data centers. So, it is a critical service as well.
[00:07:13] Darren Cleary: It's one that the community is questioning, I think the social license of. Potentially, there's been some examples overseas of data centers increasing infrastructure needs and not having social license with those communities. So, I think that they're increasingly aware of that and the government's aware of that.
[00:07:31] Darren Cleary: So, how do we do this in a way that they are appropriately funding the infrastructure required to service them? Certainly we are looking at and trying to preference the use of recycled water for many of these operations. And looking at how we do get the funding mechanisms and pricing mechanisms right so that they contribute appropriately towards that infrastructure.
[00:07:50] Darren Cleary: And we're getting the trade off right from a system perspective between how much water they use and how much energy they use, which is a quite interesting interplay there. So, that system perspective is really important.
[00:08:00] Piers Clark: How are you gonna prioritize the data center versus providing water and wastewater services to the public?
[00:08:07] Darren Cleary: This is all about engaging with the industry and getting the policy settings right with government so that the way that we price means that the investment needed to specifically service them is met by those industries. So, they do have the financial wherewithal to provide or fund that infrastructure.
[00:08:22] Darren Cleary: For us it's about how do we get those commercial frameworks and how do we work with government and with the data center industry.
[00:08:28] Piers Clark: Yeah, I get that with the data centers, you've got a technology angle around reusing water to minimize the impact on the raw resources and the commercial side. So, it feels like that's a problem, with sufficient brain power, you can resolve.
[00:08:44] Piers Clark: Now, let's come back to the one you mentioned earlier, the oils and fats coming out of the wastewater treatment plant. How's that one gonna be solved?
[00:08:51] Darren Cleary: There's no obvious solution is part of the challenge. The exact reason why we've seen a plant that operated quite reliably for 30 years and all of a sudden is now not operating as we expected, we're still trying to work through.
[00:09:04] Darren Cleary: This facility services 2 million of our customers, so it's our largest facility, and it's in a very constrained area. So, it's on the coast in Sydney and there's a very limited land to expand this facility. Very expensive to expand.
[00:09:17] Darren Cleary: So, we need to continue to investigate exactly why this is occurring. We certainly need to work with our customers because there's a source control angle here. We've seen a substantial increase in the oil and grease load coming into the facility. And we need to work with our regulators and our community around what is the long-term plan here, because there is no easy solution.
So, this comes back to the fundamental characteristic and most important value we have with our customer community is trust, and that we are working with them in a transparent way and they trust that we are doing the right thing and bringing them along on that journey.
[00:09:49] Darren Cleary: As a water business, not only do we need those really core technical capabilities that we have around how do we build and operate and maintain and renew infrastructure, but how do we talk to community in a way that is meaningful to them that they can understand and that we are reflecting back their preferences and bringing them into some of this decision making.
[00:10:07] Piers Clark: Excellent. I love that answer because what I love is the brutal honesty you shared there of we don't quite know how we're gonna solve it. We don't quite know what's causing the problem, but I've got a good team who are gonna work on this.
[00:10:18] Piers Clark: And you've mentioned at the beginning the thing about Sydney Water is it does have scale, and by having scale it means it's got a depth of expertise that may be some of the smaller councils and water companies in Australia aren't able to tap in. So, your team ought to be able to get to the bottom of the problem, hopefully.
[00:10:34] Darren Cleary: Oh, that's right. And there's no doubt technically we can find a solution. The challenge is how do you do that in a way that fits within the other constraints we have and what community actually do truly value. Are they willing to pay for that solution?
[00:10:47] Darren Cleary: That's the real challenge for us as an organization.
[00:10:49] Piers Clark: Alright, let's talk about your style. Let's talk about what it's like to work in Darren Cleary's team. What would you like it to be like?
[00:10:58] Darren Cleary: What I would like it to be like is that it is a high trust environment that the people that are working with me feel empowered to make decisions and to solve problems and that we are curious and really value learning.
We are dealing with challenges that aren't simple, that aren't easy. So, we are open to how do we do this? How do we work our way through this? How do we learn from each other and learn from others outside? and do that in a way that's supportive of each other.
A no blame culture, a learning culture, and an open and transparent culture. That to me is one of the most important characteristics or most important values.
[00:11:35] Piers Clark: And that no blame thing it's so important 'cause it means that people can come clean when something's not working out. In a water utility, you don't want anyone burying bad news that then pops up being 10 times worse, six months later because it wasn't flagged early enough.
[00:11:50] Darren Cleary: Couldn't agree more. You know, water utility things go wrong all of the time. So what we want is an open culture that we acknowledge and we respond as quickly as we can in an empathetic way.
[00:12:02] Darren Cleary: No blame culture is really around when something doesn't go to plan, what can we learn from it? What does that tell us? What do we do differently next time?
[00:12:09] Piers Clark: Excellent. Darren, we are running out of time and we always like to finish with a reflective question. And it's a question of if you could go back 20, 30 years, before you joined Sydney Water as a graduate, what advice would you give a young Darren Cleary then?
[00:12:26] Darren Cleary: The advice I'd give is that the most important thing in being successful in your career is working with people who have the same values as you. And as you become a leader, the importance of having people who work with you and for you that are aligned with your values. So, absolutely culture is the most important thing.
[00:12:47] Darren Cleary: Of course, technical skills are essential but you'll find many people who have the technical requirements and technical skills that you need to solve the problems. What is the most important thing is how they go about doing that.
[00:12:59] Piers Clark: You have been listening to the Exec Exchange with me, Piers Clark, and my guest today has been Darren Cleary, the new Managing Director at Sydney Water.
[00:13:08] Piers Clark: Thank you to our sponsors, and until next time, keep asking questions, keep sharing, and keep safe.