Developers oppose headworks changes

Property developers in Western Australia are likely to face higher costs for water connections to projects in regional areas if changes to developer contributions, put to the state government by the Economic Regulation Authority, are adopted.

A report from the ERA, tabled in parliament last week, recommended a new system of headworks be applied, with charges differing between towns depending on the cost of development.

But, property developers believe the proposed headworks system would dramatically increase costs.

A similar scheme was introduced by Western Power, with charges varying across regions depending on the distance between a subdivision and the nearest power substation.

It resulted in costs per residential lot of up to $10,000 plus GST in areas such as Ravensthorpe, which is 270 kilometres from a substation, after a government rebate of nearly the same amount.

Areas like Walpole and Bremer Bay, where the nearest substation is more than 120 kilometres away, face charges of more than $6,800 per residential lot.

Commercial projects are charged at a higher rate, of $25,000 per lot in Ravensthorpe and more than $20,000 for both Walpole and Bremer Bay.

Urban Development Institute of Australia WA executive director Debra Goostrey said changes to the power headworks scheme had begun to cripple development in regional areas on the edge of the electricity grid.

In a submission to the ERA, Ms Goostrey said the impact of the Western Power headworks scheme had been to raise costs in regional areas, despite government subsidies for developers, resulting in reduced affordability and a sharp decline in new lot subdivisions.

Ms Goostrey said the benefit to regional areas in having a uniform pricing model was huge and came at little relative cost to metropolitan users.

The UDIA has also opposed using the new developer contributions scheme as a price signal for development in regional areas, arguing that the cost of water transmission should not be a driver for urban development.

It has argued for a state infrastructure policy to determine future growth.

Meanwhile, the ERA has also handed down its report into competition in the water and wastewater services sector.

The report recommended an independent entity be charged with source identification and water management.