The Advertiser People’s Cabinet: South Australian Productivity Commission chairman Adrian Tembel warns of water bill hike

Households will face future water bill rises to cover connections for a home-building surge, top-level forecasts reveal.

Households and businesses will face water bill rises to cover connection costs for an extraordinary construction surge needed to ease Adelaide’s housing crisis, according to unreleased top-level forecasts.

South Australian Productivity Commission chairman Adrian Tembel says his group has examined SA Water budgets and questions whether enough has been set aside for water infrastructure to supply thousands more new homes annually.

Speaking to The Advertiser People’s Cabinet, Mr Tembel says this means either water bills likely will have to rise or SA Water’s return to government would be cut, thus fuelling debt.

Premier Peter Malinauskas in June last year revealed average water bills would rise by $85 annually, to fund a $1.5bn water and sewer infrastructure surge to unlock 40,000 home allotments within four years. Water prices are set for four-year periods – the latest until mid-2028.

Mr Tembel said the Productivity Commission had looked at the amount of money needed for SA Water to catch up with water and sewer infrastructure and had forecast more would be required “to actually get it ahead of the curve” to meet growing demand.

“We believe it’s more likely than not that there are going to be increasing financial needs of SA Water to catch up with our infrastructure needs,” Mr Tembel said.

“It’s either going to have consequences on either our water bills or the value of their dividend to the government and, therefore, their contribution to a deficit.”

South Australian Productivity Commission chairman Adrian Tembel. Picture: Matt Loxton

Mr Tembel, the People’s Cabinet Treasurer, said construction of new homes had averaged about 10,000 annually for the past 20 years, but SA had an annual supply target of 16,000 homes.

“When we put that together with the deficit of water infrastructure we’ve got to catch up with, then we’ve got population growth planned ahead as well, so that’s more infrastructure needs,” he said.

“We question whether those increased investment needs have yet been factored in, and if they haven’t been, then that’s more charges, either on their water bills or more deficit spending by the state government.”

Property Council state executive director Bruce Djite. Picture: Tom Huntley

Property Council state executive director and People’s Cabinet Housing Minister Bruce Djite

highlighted research showing government taxes, fees and charges now comprised 30 per cent of the cost of new homes.

“Our number one recommendation on the back of our research … is for the government to commission the SA Productivity Commission to do a body of research into those costs, if removed, how many more houses would be able to be supplied at a more affordable rate,” he said.

Former federal Liberal leader Alexander Downer said political parties were “offering all sorts of incentives” that would push up housing demand.

“So unless there’s a commensurate increase in supply, you’ll see an increase in the price of housing,” he said.

Originally published as The Advertiser People’s Cabinet: South Australian Productivity Commission chairman Adrian Tembel warns of water bill hike