Everything You Need to Know About Sydney Water’s Infrastructure Contributions

On Friday 28 April, Sydney Water opened its public exhibition for the reintroduction of infrastructure contributions for drinking water, wastewater and stormwater services to help recover the cost of providing infrastructure to new developments.

The project page for the infrastructure contributions explains:
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“As the population grows, Sydney Water’s area of operations continues to expand as development spreads into new areas. This requires us to build and operate new water, wastewater and stormwater infrastructure. We will also incur additional costs as we augment the existing network to cope with increased density in established areas. In Western Sydney, an improved infrastructure contributions framework will better support us to provide integrated water services to meet the NSW government's objectives of a cool, green, sustainable parkland city.”

Realistically, there are only two ways to fund new infrastructure – Sydney Water funding or Developer contributions.

Sydney Water are proposing the reintroduction of developer infrastructure contributions, as they explain this will ensure:

• Existing customers do not face higher costs as a result of new developments,
• Transparency about the different infrastructure and servicing costs associated with higher cost regions,
• The potential for competition in the provision of water and wastewater services to new developments is enhanced.

As these changes have been through various stages of community engagement, Sydney Water have already received valuable feedback. They have identified there are improvements developers require to meet their expectations of the services offered.

As a result, Sydney Water have proposed:

• Certainty of timeframes for developer applications including receipts, screenings, analysis and review processes as well as completion and finalisation processes.
• Certainty of timeframes for the delivery of growth servicing infrastructure.

As a developer, now is the time to write a submission to join the discussion on water infrastructure contributions. This is a two way conversation, and your submission can help Sydney Water better understand the full implications of making this change.

Background

Infrastructure contributions were previously in place until 2010, when they were removed by the Independent Pricing and Regulatory Tribunal (IPART). However, Sydney Water is now seeking to reintroduce this mechanism to ensure that new developments contribute to the cost of essential infrastructure.

The infrastructure contributions for SydneyWater were removed by IPART in 2010 as a result of a review that found that the charges were no longer necessary. The review found that the charges were contributing to an overall increase in the cost of housing, which was not beneficial for the community.

In addition, the review found that the charges were not transparent and were not being used effectively to fund infrastructure projects. As a result, IPART decided to remove the infrastructure contributions and instead focus on alternative funding mechanisms that were more transparent and effective.

However, with the increasing demand for essential infrastructure to support new developments, Sydney Water is now seeking to reintroduce the infrastructure contributions as a sustainable funding model for future infrastructure projects.

The reintroduction of infrastructure contributions by Sydney Water has been somewhat controversial. While some developers and industry groups have welcomed the initiative as a way to fund essential infrastructure, others have expressed concern about the potential impact on the cost of housing and the overall affordability of living in Sydney.

Some smaller developers have expressed concern that the contributions may affect their ability to undertake new developments.

Overall, the reintroduction of infrastructure contributions by Sydney Water is a complex issue that has generated a range of opinions and viewpoints from different stakeholders.

Timeline

Nov 2009 - IPART make the decision to remove water infrastructure contributions (contributions)

July 2010 - Removal of the contributions take effect

Sep 2020 - Sydney Water's initial submission for the reintroduction of infrastructure contributions for water services

Nov 2020 - NSW Productivity Commission’s Final Report released

Dec 2020 - IPART approved SydneyWater's proposal for the reintroduction of infrastructure contributions for water services

Mar 2021 - NSW Government accepted all 29 recommendations

Jul 2021 - The Environmental Planning and Assessment Amendment (Infrastructure Contributions) Bill was presented to Parliament and accepted

Oct 2022 - Proposed development servicing plans and proposed contributions on public exhibition

Apr 2023 - Proposed development servicing plans exhibited prior to lodging to the Independent Pricing and Regulatory Tribunal

Late 2023 - IPART will make a final decision on reintroducing contributions

2024-2025 - Proposed contributions to be capped at 25% of full charge

2025-2026 - Proposed contributions to be capped at 50% of full charge

1 Jul 2026 - Proposed contributions at full charge

Important Documents

• Sydney Water’s infrastructure contribution’s page has information about the public exhibition, a timeline for reintroducing the contributions, contact information, frequently asked questions,Draft Development Servicing Plans, calculations and maps.
  It also contains a dashboard with the formula used to calculate each servicing plans contribution rates.
  https://www.sydneywatertalk.com.au/infrastructure-contributions 
• NSW Productivity Commission’sInfrastructure Contributions Review which were adopted by the NSW Government.
  https://www.productivity.nsw.gov.au/infrastructure-contributions-review‍
• Hunter Water is also working towards the reintroduction of developer contributions for water and wastewater services to help recover the cost of providing infrastructure to new developments. There is a link to that information below if this affects your development.
  https://www.hunterwater.com.au/building-and-developing/developers-and-designers/developer-charges

What does this mean for you?

Land developers who are planning new developments in Sydney will need to factor in the cost of infrastructure contributions when preparing their budgets.

Generally speaking, existing developments that are already connected to the Sydney Water network will not be affected by the reintroduction of infrastructure contributions. However, if an existing development is undergoing significant expansion or modification, or if it is not yet connected to the Sydney Water network, it may be subject to the infrastructure contributions.

The specific requirements and circumstances for each development will be different, and developers should seek guidance from Sydney Water to ensure that they are fully compliant with all relevant regulations and requirements.

Sydney Water's reintroduction of infrastructure contributions will have a significant impact on land developers in Sydney. It is important that developers familiarize themselves with the proposed development servicing plans and relevant documents to ensure they are prepared for any changes that may occur.

If you would like to talk to a water expert on our team please contact Florian Jaehne on 0498 493 479 or at f.jaehne@theoriongroup.au

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