The state government has begun a shake-up of Sydney Water’s board and ordered it to “get with the program” on solving the housing crisis, amid escalating tension over the state-owned corporation’s approach to enabling infrastructure for new homes.
Water Minister Rose Jackson branded the company “a big problem” when it came to releasing land for greenfield development, accusing it and the previous government of hugely underinvesting in capital works, though that was now being remedied.
The state government has ordered Sydney Water to “get with the program”.Credit: SMH
“Obviously landowners are very frustrated and so is the government,” Jackson said. “They dragged the chain and they need to understand they are part of the government team that is delivering on our agenda for housing. They are understanding that better now.”
Sydney Water has rejected the criticism, pointing to its $34 billion capital works program over the next decade, of which 47 per cent is targeted directly at servicing growth.
“That is a huge amount of money,” said Paul Plowman, Sydney Water’s general manager for asset life cycle. “It’s about three times more than what we spent in the last 10 years. That says it all about our priorities as a business.”
If you want to rezone land or build new homes you need Sydney Water to connect the pipes. And if you want to increase density in a particular area you need Sydney Water to agree it can serve those extra residents. Not everyone is happy with what they’re being told.
In the race to build 377,000 new homes in NSW over the next five years, Sydney Water is sometimes cast as the secret villain in the piece. Critics say it forms a roadblock to new housing; that it is slow, difficult to deal with and uses its monopoly on water and sewerage infrastructure to dictate what can be done and where.
“Landowners are very frustrated and so is the government”: NSW Housing and Water Minister Rose Jackson.Credit: Rhett Wyman
Those frustrations have well and truly boiled over into the public domain. It is nearly impossible to attend a property industry event without hearing a questioner or a speaker complain about Sydney Water. At a luncheon in May, Planning Department secretary Kiersten Fishburn fielded a question from Adrian Miller, leader of the NSW planning and advisory team at Colliers.
“You talk about government entities being held to account,” Miller said. “I’d like to know: who’s holding Sydney Water to account?” The room broke into applause.
A few weeks later Savills director Stephanie Ballango told another industry event she had waited 12 months to get a feasibility letter from Sydney Water to confirm capacity in a precinct that had long been earmarked for housing.
Even Premier Chris Minns has referenced Sydney Water among other agencies, corporations and private partners from whom the government wants faster answers. Planning Minister Paul Scully is now chairing a subcommittee of cabinet “to just drive through these problems”, Minns said in May. “We know we’re on the hook for this.”
Occupying a table at the back at many of these industry lunches and summits are representatives of Sydney Water itself. They hear their organisation being portrayed as a villain in the housing crisis, and believe they are being scapegoated.
For them the problem arises when governments and developers seek to diverge from long-term land use plans, especially in undeveloped greenfield areas where connecting new pipes is expensive and time-consuming.
“Frustration’s probably too strong a word,” Plowman said. “It’s not a unique problem, co-ordinated land use planning – it’s the same with electricity and gas and every other service. You really do need to work together.”
This is especially evident in the Greater Macarthur Growth Area (GMAC), which stretches from Glenfield in outer suburban Sydney to Bargo, on the way to Bowral. It includes the south-west growth areas around Macarthur and Menangle, and rezoned land in Wilton, Appin and Gilead.
Mass housing requires water infrastructure.Credit: Wolter Peeters
By 2056 the region is expected to contain up to an additional 82,000 homes and 69,000 jobs – though this could be higher, given the government is still pushing through rezonings. The servicing area is about 40km long and 35km wide, crossing Campbelltown, Wollondilly and Camden council areas, with limited existing infrastructure.
Sydney Water won’t confirm the total cost of the GMAC project but its major projects pipeline shows it’s at least $3.5 billion from 2024 to 2027. For Plowman these figures demonstrated Sydney Water’s commitment to servicing growth. But for Jackson it’s evidence they’re playing catch-up.
“These kinds of organisations should plan for steady growth, year by year. It shouldn’t be, ‘Oh, crap, we’ve left it to the last minute’,” she said.
“In their defence, they were brought in late. Large swaths of land in those greenfield areas were rezoned for thousands and thousands of homes, and no one asked Sydney Water until the very end. It turns out the answer was no. They weren’t given enough notice but now it’s time to get with the program.”
Still, Jackson’s sympathy is limited. “You would have to be living under a rock to not know there was massive growth planned for south-west Sydney. They really dropped the ball on recognising this was obviously a high-growth area, and that capital investment to support that needed to be part of the pipeline. It just wasn’t. They were too slow.”
At Wilton, 77 kilometres south-west of Sydney’s CBD, households are having their wastewater trucked out because there’s no sewerage, a situation Jackson described as “unbelievable”.
Further north in Catherine Field, near Leppington, another stoush is imperilling development. Miller from Colliers, who asked the industry luncheon about holding Sydney Water to account, wants to advance a land rezoning on behalf of a client for about 3000 lots.
He said they have concurrence from all the required state government agencies except Sydney Water, which determined “there’s no water and sewer capacity”. Miller used to run Sydney Water’s urban growth program and he doesn’t buy the excuse.
“There’s always water and sewer capacity,” he said. “We acknowledged the whole precinct can’t be serviced at the one time. Sydney Water has just been pretty bloody-minded about it. There is a lack of acknowledgement that there are other ways of servicing areas that aren’t consistent with their thinking.”
Sydney Water’s head of system planning and land acquisition Kate Miles said the time frame for servicing Catherine Field is based on the growth plans of the Planning Department and Camden Council. “I understand there are developers there who would like things to move faster. But we’re not the planning authority of that area.”
Miller scoffed at that response. “I don’t think they understand that we are in a housing crisis and they are part of that cause.”
This cuts to the heart of the problem. Long-term land use planning is an unwieldy beast, involving the state government, councils and potentially the Commonwealth. Getting everyone on the same page at the same time can prove impossible.
Miller admitted that he is trying to bring forward the Catherine Field rezoning but thinks Sydney Water’s position, that rezoning shouldn’t occur before the water service begins in 2030, is unreasonable.
“If we don’t do anything, council won’t do anything and the department won’t do anything,” Miller said. “We’re in a market-led economy. We’re doing everything per planning guidelines. We just need Sydney Water to come on board.”
For Sydney Water this is a classic case of having to cop the blame when the goalposts are shifted. Plowman, the general manager, said governments, policies and developer demands change regularly, as does system capacity.
“We give advice to developers around capacity of the system at a point in time and we make it quite clear that it’s a point-in-time piece of advice,” he said. “People disappear for a couple of years after we’ve given that preliminary advice – they come back in and things have changed. Housing targets have changed, infill development has changed.”
He said if there’s one thing Sydney Water could do better it’s having a more “dynamic discussion” with industry about what’s happening.
Delivering this big-ticket infrastructure at exactly the right time is one of Sydney Water’s greatest challenges, and a thankless task. “If we deliver it too early, our existing customer base ends up paying for it,” Plowman said. “If you get it right, no one wants to talk about getting it right.”
The criticism comes as Sydney Water faces scrutiny over its failure to adequately test for cancer-linked forever chemicals in drinking water, and the shock closure of a Blue Mountains dam after elevated levels were detected.
Authorities belatedly tested water supplies for of per- and polyfluoroalkyl chemicals (PFAS) following pressure from a Herald investigation in June.
Culturally, Rose Jackson said, it has been challenging to wrangle Sydney Water into re-prioritising its work to tackle the housing crisis. One roadblock is it’s not a direct government agency: she can’t just order it to do something or install new personnel.
To that end the government has started making changes at the one level of Sydney Water it can directly control: the board. On August 20 it appointed former Nationals minister Niall Blair as a director and said it would make him chair when the current chairman Grant King’s term expires. Further shake-ups are expected.
“Under the previous government, my sense is they operated at very, very arm’s length. They put the ‘corporation’ in ‘state-owned corporation’,” Jackson said. “They found it difficult to adjust to a government that had different priorities.”
Tomorrow: Sydney Water and the big fight over user-pays.
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