SA WATER SERVICE CHARGES

The Hon. D.G.E. HOOD (14:48): I seek leave to make a brief explanation before asking the Minister for Water and the River Murray a question regarding the statewide infrastructure charges.

Leave granted.

The Hon. D.G.E. HOOD: SA Water has proposed a new framework for gaining revenue to support their extension to the mains network for water and sewerage. These so-called developer charges, which are in fact first home owners charges (an impost to them), include a statewide infrastructure charge applied to each new allotment connected to the SA Water network. The fee is $1,900 for water connection and $650 for sewer connection, a total of about $2,550 per allotment on average.

SA Water proposes to charge developers this so-called charge as a fee to service allotments in all new developments whether they be greenfield, greyfield or even brownfield across the state. In addition, where such developments do not fit within the SA Water capital plan, it seeks to charge developers an augment charge as a specific contribution to recover cost of upgrade to service that development area. ESCOSA and SA Water have advised the building industry in February 2013 that these changes are to be introduced effective 1 July 2013. My questions are:

1. Does the government approve of this proposed SA Water charging framework?

2. Is the minister aware of the opposition from the industry to any additional charge to the creation of a new block of land or revised allotment in infill areas for the purpose of building a house on it?

3. What additional revenue does the minister expect SA Water to achieve with this charging framework?

4. What would be the effect on government revenue from the distribution received from SA Water?

5. Has the minister calculated the additional impact these charges will have on the affordability of new homes for people in South Australia?

6. Is the charges framework proposed by SA Water consistent with the government's 30-Year Plan for Greater Adelaide?

7. What would be the effect of these new charges on the price of a new house in the fringe or greenfield growth areas, in infill areas and in community-titled, high-density developments?

8. Why has no formal public announcement of this plan been made?

The Hon. R.L. Brokenshire: Hiding, they are.

The Hon. I.K. HUNTER (Minister for Sustainability, Environment and Conservation, Minister for Water and the River Murray, Minister for Aboriginal Affairs and Reconciliation) (14:50): I thank the honourable member for his sensible question, which is not what you always get from that corner of the chamber; but, in this case, I cannot make that complaint.

Members interjecting:

The Hon. I.K. HUNTER: I can't, not in this case. Changes to SA Water's infrastructure charges are required as a result of the commencement of the Water Industry Act 2012 and the introduction of independent economic regulation of SA Water by the Essential Services Commission of South Australia.

Currently, the cost of infrastructure for new developments is funded by SA Water in a number of ways. A standard capital contribution is charged for connections to SA Water's infrastructure, as the honourable member has mentioned, and augmentation fees are charged to developers on a case-by-case basis. Currently, the cost of infrastructure is also able to be subsidised by water rates and charges. That is the current situation.

ESCOSA has advised, however, that augmentation charges and statewide infrastructure charges (otherwise known as SWIC) are excluded retail services and therefore can no longer be subsidised by water rates and charges. I understand that ESCOSA had previously indicated to SA Water that it required a new framework for developer charges to be implemented by 1 July this year for the commencement of the first regulatory period. Staff from my office as well as staff from SA Water have met with representatives of the Urban Development Institute of Australia and a number of developers in relation to this issue.

I understand that as a result of concerns raised by the UDIA and other developers, SA Water has successfully negotiated with ESCOSA an extension of the implementation date for changes to its infrastructure fees and charges. The implementation date has been extended from 1 July 2013 to 1 September 2013, I have been advised. The delay in implementation will allow SA Water to engage in a further round of consultation with the UDIA and others.

As part of this further consultation, SA Water will engage a suitably qualified consultant to take submissions from SA Water and the development industry regarding the new fees and charges framework. This review will require that the framework is consistent with national water pricing principles as well the guidelines set by ESCOSA. In addition, the review will reassure developers that SA Water is not seeking to recover additional revenue through the new framework but is merely replacing the subsidy it is no longer able to recover from water rates and charges. To finish I will just say this: think very logically of the premise behind your question. Who is going to pay into the future: the developer or SA Water customers? That is the choice.