IPART proposes cuts in water charges on new homes

18 July 2008

The NSW Independent and Pricing Regulatory Tribunal has today proposed a 20 per cent cut in charges on new homes levied by Sydney Water and a 7 per cent cut in the wastewater charges imposed on new homes by Hunter Water.

The Urban Taskforces chief executive, Aaron Gadiel, said that the Tribunal had accepted some industry criticism about the way developer charges are calculated.


The Tribunals proposal will be welcome relief for homebuyers, Mr Gadiel said.


Excessive infrastructure charges have made it almost impossible to build homes in vast swathes of Western Sydney, Mr Gadiel said.


High charges in the Hunter have threatened the supply of new homes in the region.


Boosting the supply of new homes is crucial if were to get relief from the current rental squeeze.


The Tribunals proposal means that 36 different charges imposed by Sydney Water would decrease, 12 would increase. On average Sydney Water charges on new homes would fall by 20 per cent.


Some charges would be cut back by several thousand dollars, Mr Gadiel said.


This will make some developers take another look at areas that have proved too expensive.


The Tribunals proposal also involved a cut to 18 different wastewater charges imposed by Hunter Water, although 12 would increase. The average reduction in Hunter Waters wastewater charges on new homes is 7 per cent.


The cost of building new homes had to be cut if Hunter families are to escape the rental trap, Mr Gadiel said. A reduction in costs on new Hunter homes will be good for the local industry and for local home buyers.


The reductions recognise that charges have been too high for some time.


The Tribunal has accepted that assets built as long ago as 1970 should not have to be funded by home buyers in 2008.


We welcome the proposal to price water assets based on their actual cost, rather than their replacement value.


Sydney Water in particular has been recovering far more than it needed to from charges on new homes.


Mr Gadiel said that he did have concerns with some parts of the Tribunals proposal.


We dont think new home buyers should be singled out to subside major infrastructure investments like the Sydney desalination plant and Hunters Tillegra Dam, he said.


Some of the proposed increases will unfairly burden home buyers in certain areas, such as Narrabeen ($2,551 in extra charges) and Gerringong ($1,549 in extra charges).


These charges should be reconsidered.


The Tribunals proposal to remove a cap on charges for Wyong Council will increase the cost of new homes in the area between 2009 and 2012.


The Urban Taskforce is a property development industry group, representing Australias most prominent property developers and equity financiers.



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