A Sydney Morning Herald’s Editorial asks about the true water costs behind the NSW’s Government housing densification reforms – including the Transport Oriented Development (TOD) State Environment Planning Policies (SEPPs).

Editorial, November 1, 2024

Water bills to cover price for not keeping up with Sydney development

Sydney Water’s sudden demand for a 50 per cent rise in water rates is a wake-up call to residents, of the hidden costs associated with constantly rising houses prices and demands for growth and who is going to pay them.

In a submission to the Independent Pricing and Regulatory Tribunal (IPART), Sydney Water is seeking an 18 per cent increase in water bills in the next financial year, followed by yearly rises of 6.8 per cent – plus inflation. The typical household bill would increase by $235 next year and then by $213 over the next four years, meaning an average bill of $1308 today will vault to $2037 by 2029-30.

Sydney residents are being dragooned into helping pay for the Labor government’s attempt to solve the housing crisis. Eleven months ago, Premier Chris Minns announced his signature housing plan to rezone land for increased density around dozens of railway stations across Sydney. Minns staked his political future on delivering desperately needed homes. His government needs to build 377,000 new homes across NSW – 70 per cent of them in Sydney – by 2029 to meet its obligations under the national housing accord.

But things seem to have stopped going to plan; developers complain about hold-ups over the provision of water and sewer capacity. Two months back Water Minister Rose Jackson found a whipping boy, publicly branding Sydney Water “a big problem” when it comes to releasing land for greenfield development, accusing it and the previous government of hugely underinvesting in capital works.

Sydney Water rejected the criticism, pointing to its $34 billion capital works program over the next decade, of which 47 per cent is targeted at servicing growth. Now, out of the blue, comes a demand for permission to charge Sydney residents 50 per cent more for water bills. If IPART agrees, the increases would take effect in June next year.

Twenty-four years ago, then NSW premier Bob Carr famously declared that Sydney was “full”. But it turned out not to be true. The idea, however, led his government not to invest enough (though it did invest large sums) in infrastructure – and NSW has never really made up the backlog. But more people came anyway. And they keep coming to the city, even though NSW regions offer affordability, job opportunities and, most importantly, existing adequate infrastructure.

Sydney has dramatically grown over the past decade and much of the water supply for new suburbs and high-density developments has come from existing infrastructure that has reached capacity.

The hard truth is that, even without the spur of political promises, Sydney Water has failed to keep up with projected demand and been caught flat-footed, failing to assess the investment needed to solve the housing crisis.

Sydney Water’s bald-faced request for a 50 per cent hike poses a big test for IPART to balance economic outcomes against social needs. If granted in full, however, it will be a huge hit on the shrinking budgets of most Sydney households, and too big an ask.