Icon Water is proposing to introduce a new and fairer way of determining funding arrangements for water and sewerage infrastructure upgrades that are triggered by development projects in brownfield sites. Currently there is a potential inequity in the way development triggered asset augmentation costs are recovered. If a developer triggers an upgrade they will be asked to pay for the full cost of new water and sewerage infrastructure. This rule applies no matter the development size. Developers who build before or after an upgrade do not pay any contribution.
The proposed arrangements are intended to address costs associated with asset upgrades required to service suburbs where brownfield developments occur. It is our intent to share these costs in a clear and equitable manner, making it easier to determine the full cost of a project up front. For more information, download our Water and Sewerage Capital Contributions - Information Paper.
The new arrangements would be introduced as a Utility Code - Water and Sewerage Capital Contributions Code (Draft for consultation) - in the Australian Capital Territory (ACT) under the Utilities Act 2000. In the ACT these codes require the review and approval of the Independent Competition and Regulatory Commission (ICRC).
We would appreciate feedback from those likely to be affected, and the broader Canberra community prior to progressing this initiative.
All feedback and comments received will be collated following the end of consultation, which has been extended until 17 March 2017. Icon Water will report back to the community with a consultation report that will be made available on this page by 23 March 2017.
Where a specific question is asked or response requested, we will provide direct response to the email address provided within 10 working days
Have your say on the Capital Contributions funding arrangement.
Why is this an issue now?
As Canberra grows, we will be required, more and more, to upgrade the capacity of our existing water and sewerage network.
We are now in a situation where brownfield development is more prevalent and our infrastructure is nearing capacity in many areas.
A new funding model guided by a clear set of principles will provide fairness and clarity for the industry and Icon Water.
How do the charges compare to other states?
Most other cities in Australia have a code in place to manage these types of upgrades. Each scheme works across different network class, and recovers different types of costs. This makes them difficult to compare.
Despite these differences, we believe that our scheme is comparable to other cities and regional councils when comparing similar developments. Our analysis indicates that this charge will cost less than approximately 0.3-0.8% of a typical development’s revenue in the ACT. Across Australia similar schemes have an average cost of 0.2-1.0% depending on jurisdiction.
Isn’t this just another charge on developers?
These changes are about increasing clarity and fairness. Right now, a developer may be left as the last person standing and have to foot a bill for an entire suburb. If we can implement a fairer code then everyone will contribute a smaller amount – and know what this amount is up-front.
We propose that Icon Water and developers each fund 50% of costs relating to medium sized shared infrastructure. This means that costs are no longer borne solely by the developer that triggers augmentation, but all parties who develop properties within a precinct.
The introduction of the Code will also bring the ACT into line with other jurisdictions.
Will these charges be regulated?
Yes, the final price structure will be approved and independently regulated by the ICRC.
Are the proposed charges GST exempt?
The proposed capital contributions developer charges are exempt from GST (per section 81-5 of the GST Act), as these charges are levied under the Utilities Act 2000.