The proposal is part of an infrastructure plan that would see major investment in two Hobart water and sewerage projects to allow for a $300 million MONA development and $1 billion of development at Macquarie Point.

Mr Green said the projects would be paid for by offering them to Australian industry superannuation funds through a tender process, taking away the capital costs from TasWater.

“We will, as a result of the policy that we are putting forward today, unlock billions of dollars worth of investment in Tasmania and we will create jobs for Tasmanians,” he said.

Mr Green said Labor would have TasWater’s ownership remain with councils, and that the party would work with federal Labor and Infrastructure Australia to get money for the corporation’s 10-year, $1.5 billion works program.

Launceston’s combined system causes raw sewage overflows into the Tamar River and is responsible for about 30 per cent of the estuary’s pollution.

TasWater last year conservatively estimated separation of the combined system could cost between $90 and $110 million. 

It is understood that for Launceston’s combined stormwater and sewerage system to be separated, each home connected to the system would need to have its plumbing rearranged.

Treasurer Peter Gutwein panned Labor’s plan, saying that it rested upon fake money and privatisation of public assets. 

“These super funds will need a return and the only way to achieve that is through higher prices for customers,” he said.

Local Government Association of Tasmania president Doug Chipman supported Labor’s proposal to look at different project equity and partnership models with TasWater.

“However, ambiguity about future ownership must be removed,” he said. 

“It is simply not in the best interests of Tasmania to revisit this issue every election cycle.”

Under Labor’s plan, ownership of TasWater would remain with councils.

Councils will discuss TasWater’s future at an LGAT general meeting on April 7.