‘Cash for access’ to connect water and power delaying housing developments

New housing developments and local projects are being squeezed for cash to access land and connect water and electricity, delaying their construction, with a local council urging the Victorian government to intervene.

Wyndham City Council, in Melbourne’s outer west, has written to Assistant Treasurer Danny Pearson calling for essential services authorities to be held more accountable for delays and issues on projects.

An outer-suburban council has raised concerns about excessive charges to connect water and electricity. Credit: Eddie Jim

The letter, seen by this masthead, says property owners had reported being squeezed for a “significant quantum of cash” to access neighbouring land and install key services such as water and sewerage that could enable the space to be developed.

Wyndham has requested the government ban the “cash for access” practice from landowners imposing excessive fees and put obligations in place for all essential services, such as Melbourne Water, to publicly report on their progress connecting and progressing design approvals.

They have also written to the Victorian Auditor-General’s Office asking them to investigate these issues.

Josh Gilligan, Wyndham’s deputy mayor, said Victorians were paying because state-owned authorities weren’t being held to account.

“We’re talking about instances where estates are being built with no sewerage and traffic lights taking many months to be turned on because the state refuses to hand over the power to hold them to account,” he said.

“The fact that the state has zero monitoring and performance targets shows it is high time to rip off the Band-Aid and get serious about delivering on housing targets and local infrastructure by doing the policy work.

“We’re asking for the auditor-general to investigate the cash-for-access [practice] in the development industry and secret cash dividends ripped out of these authorities are causing these authorities to buckle under the pressure of delivering the services they’re supposed to be funded to deliver.”

The Department of Treasury and Finance said it will aim to meet with council officers to discuss their concerns.

“Timely approvals are important for business and the community, which is why we’ve invested $30 million in regulatory reform – simplifying approvals processes and cutting down on paperwork,” a government spokesperson said.

In March 2023, the Essential Services Commission directed four electricity distributors to report on their performance connecting new housing developments to power.

These reports are provided every six months and the government believes they have contributed to reduced delays in negotiating electricity connections by making the process more transparent.

Tom Trevaskis, Victorian president of the Urban Development Institute, said that as the state tried to increase density, there had been challenges around the management of undeveloped parcels of land nestled between already developed blocks.

He said one of the biggest challenges facing developments was ensuring the timing of approvals and construction work was sequenced to avoid delays.

“There’s been a lot of work around water infrastructure and out of sequence development and how you can push authorities to make sure connections occur through paddocks that are not within developers’ control,” Trevaskis said.

“Fragmentation, infill and densification are the sort of challenges that are going to be facing the city as we push to try and maximise housing potential in infill areas and growth areas.

“Even to look at what powers authorities have to potentially gain access to land to get connections of services through paddocks, I think, would be a useful thing.”

Trevaskis said electricity connections had emerged as a major issue six years ago while the current problem the industry was trying to resolve was ensuring drainage on projects was resolved without delays.

In August, The Age revealed the construction of thousands of new homes in Melbourne’s growing western suburbs was being held up by up to two years because Melbourne Water was not approving stormwater drainage plans in time.

Correspondence seen by this masthead showed Melbourne Water had a nine-to-12-month backlog of plans waiting approval, partly because of limited resources to address the queue of housing projects waiting to be signed off.

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