$1bn water connection cost for new homes triggers SA Water bill warning

Plunging the state hundreds of millions of dollars further into debt is being considered to ease water bill hikes funding connections to major new housing developments.

Softening an expected water bill hike by deepening the state’s $38.2bn debt is being flagged by Treasurer Stephen Mullighan to fund urgently needed connections to major outer suburban housing developments.

It is understood a debt-funded state budget raid of hundreds of millions dollars is being considered to fund water and sewerage to tens of thousands of homes at record-size land releases designed to ease the housing crisis.

The Advertiser on Tuesday revealed industry groups have raised the alarm about a $1bn cost to install water and sewerage infrastructure to housing developments, including four parcels of at least 23,700 homes announced by Premier Peter Malinauskas in February last year.

In an interview with The Advertiser, Mr Mullighan said the government was considering pumping more money into SA Water in the June 6 state budget to ease a quarterly bill rise of about $17.80 expected from June.

“There might be an increase to water bills, but we try and reduce that increase by borrowing money off the state budget balance sheet and giving that to SA Water to try and reduce how impactful that would be on water bills,” he said.

Treasurer Stephen Mullighan and Premier Peter Malinauskas with the 2023 budget papers last June. Picture: NCA NewsWire / Emma Brasier.

State net debt is forecast to reach $38.2bn by mid-2027, according to last December’s Mid-Year Budget Review, and SA Water is forecast to be a net cost to the budget of about $40m this financial year.

Mr Mullighan repeated his pre-election vow not to introduce new taxes, saying the government did not want to worsen housing affordability by slugging developers with charges and levies to fund infrastructure, as Victoria does.

A $365m Northern Metropolitan Growth infrastructure fund has already been set aside to help fund water and sewerage connections but Mr Mullighan said a working group, comprising SA Water and treasury and planning departments, was working out the statewide cost.
Opposition Leader David Speirs, the water minister in the previous Liberal government, on Monday called for government funds to be redirected from Labor’s “vanity projects” to expand SA Water’s network, rather than “gouging taxpayers at a time when household costs are soaring”.

Water bill increases are being considered to help fund more than $1bn needed for mains and sewerage connections to record-size land releases, where tens of thousands of homes are planned to ease the housing crisis.

It is understood a delegation of several major industry groups raised the alarm with the state government in mid-December about infrastructure costs, warning of a more than $1bn total bill to deliver water and sewerage connections to all the housing developments announced for the state.

This includes the largest single release of residential land in the state’s history, announced by Premier Peter Malinauskas in February last year, of at least 23,700 extra homes for more than 50,000 people in four land parcels.

Premier Peter Malinauskas in February last year announced the largest single release of residential land in the state’s history. Picture: NCA NewsWire / Morgan Sette

The land release comprises parcels for 10,000 homes each at Dry Creek and Concordia (on Gawler’s northeastern fringe), at least 2000 homes at Hackham and 1700 at Sellicks Beach.

It is understood the government was warned about a lack of water and sewerage connections to this land, almost all held by private owners, by a delegation of the Civil Contractors Federation SA, Master Builders SA, Property Council and Housing Industry Association.

The two new land releases south of Adelaide.

The two new land releases north of Adelaide.

Mr Malinauskas accused the former Marshall Liberal government of a “catastrophic failure” to plan and deliver water infrastructure, saying this had left “a cost to be borne by future water users”.

Opposition Leader David Speirs, the Marshall government’s water minister, warned the government appeared to considering “a catastrophic hike” in water bills in the coming financial year.

SA Water has asked to increase a typical residential customer’s quarterly bill by between $10.20 and $17.80 in a submission to the Essential Services Commission, a regulator which will make a final decision by June 26.

Mr Malinauskas told The Advertiser health and housing were priorities for his government.

“We are working to provide clarity and certainty to the development industry to enable additional housing, while being acutely conscious of minimising any increase to the cost of water. But, know this – if we don’t start making decisions to prioritise this infrastructure, our children won’t have homes to live in,” he said.

Opposition Leader David Speirs, who is warning of “a catastrophic hike” in water bills. Picture: Matt Turner.

Mr Speirs called for government funds to be redirected to expand SA Water’s network, rather than “gouging taxpayers at a time when household costs are soaring”.

“Governing is all about priorities and there is plenty of money being wasted on Labor’s vanity projects. When I was water minister, I was able to significantly reduce water bills for the first time in decades and the idea that Labor would reverse these reductions will be met with horror by many hardworking South Australians trying to get through a cost-of-living crisis,” he said.

Mr Malinauskas on February 23 lashed SA Water for holding up new home construction because of insufficient water supply, singling out an Angle Vale development that had stalled because of a lack of water infrastructure.

He said $365m had been allocated for trunk water infrastructure, saying this eventually flowed through to water bills and presented a “difficult balancing act” for his government – seeking both to build homes and lower water charges.