SA Water offers big savings – for developers
Land developers have been promised big savings on water and sewage connections from July 1.
The savings – up to $10,000 per allotment – were announced to developers in a letter from SA Water boss John Ringham this week.
What’s not clear, however, is what the cost will be to SA Water’s revenue, how it will recoup the money lost from the abolition of the standard capital contribution fee and whether the developers’ windfall will be passed onto new home owners.
“SA Water understands urban development is a critical part of the state’s economic strategy and has designed the revised charging model to support the South Australian Government and developers to facilitate growth across the industry,” the letter to developers says.
“SA Water intends to introduce the new framework by July 2014.”
Time, however, is running short for SA Water with the office of the Minister for Water insisting that any changes are yet to be finalised.
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When InDaily asked Water Minister Ian Hunter how the new charges would be applied and at what cost to revenue, the reply appeared to contradict SA Water’s more definitive letter.
“SA Water is working on a new model for developer charges to meet requirements of economic regulation,” the minister’s spokeswoman told InDaily in an e-mail.
“The new model has not been finalised.
“This is expected to occur in coming months, at which point we will be in a position to confirm details.”
Ringham’s letter, however, makes it clear that the new charging regime will have to start in the next six weeks.
“From 1 January 2013 SA Water moved to economic regulation as part of the reforms under the South Australian Government’s Water for Good Plan. Under regulation, SA Water needs to ensure it has a developer charging model that is compliant with ESCOSA and National Water Initiative (NWI) requirements by 1 July 2014,” it states.
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Ringham lists the changes that will occur “for all developers” as:
- The removal of the Standard Capital Contribution (SCC) charge; the connection charge will be payable
- A more consistent application of our existing co-contribution framework whereby SA Water will contribute 50 per cent of material costs for extensions that provide benefits to other customers.
“These changes provide a number of advantages for developers including minimal process changes to ensure less disruption to the industry, cost savings to developers and a simplification of the charging framework to ensure charges are transparent and consistent for all developers,” he says.
“A new developer contribution model will come into effect from 1 July 2014.”
Under the current charging regulations water and wastewater contributions apply to new allotments created by a land division
For each additional allotment created by land division that abuts an existing main, a standard capital contribution (SCC) applies.
The SCC fees for 2013-14 are $3,299 for water and $6,467 for wastewater.
One developer that InDaily spoke with said the proposal seemed one sided, with the benefit accruing to the developer with no indication of whether or how it would be passed on to the land purchaser.
“It is suggesting a saving for developers instead of saying a saving for purchasers,” he said.
“The only problem is that many developers will now hold off until the July inception rather than pay the current standard contribution for sewer and water for one additional allotment of $10,000.”
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