Only 120,000 homes can be connected to water without bill hike claims Sydney Water

Sydney Water has warned it will only be able to provide water connections to 120,000 new homes over the next five years if it is not allowed to significantly increase water bills, endangering the state’s ability to meet its housing targets.

Sydney Water has warned it will only be able to provide water connections to 120,000 new homes over the next five years if it is not allowed to significantly increase water bills, endangering the Minns government’s ability to meet its housing targets.

In communications to multiple stakeholders, seen by The Daily Telegraph, the state-owned water corporation said under current recommendations from the pricing regulator, Sydney Water would only have enough money to build supporting infrastructure for just 120,000 new homes over the next five years.

This is despite the NSW government’s National Housing Accord commitments to build 377,000 homes by 2029, of which more than 265,000 will need to be serviced by Sydney Water.

The Minns government has rejected this claim, however, saying the majority of new homes will be built in areas where new water infrastructure is not required.

Sydney Water has warned it will only be able to provide water connections to 120,000 new homes over the next five years. Picture: NewsWire / Flavio Brancaleone

It comes after the Independent Pricing and Regulatory Tribunal’s (IPART) rejected a submission by Sydney Water requesting to increase household water bills by up to 50 per cent over five years to 2030, citing concerns around major bill increases during a cost of living crisis. The regulator sets Sydney Waters pricing over five-year terms.

Sydney Water’s submission estimated its capital expenditure outlay would be $16.6 billion over the next five years, predominantly to build infrastructure in Western Sydney.

Instead, in a draft determination released last month IPART recommended a bill increase of 23 per cent over five years. It also cuts Sydney Water’s proposed infrastructure spend by 35 per cent or $5.9 billion over the five-year-period.

Sydney Water’s original proposal included more than $9.475 billion to support housing growth, with IPART’s draft report reducing that figure to $6.7 billion.

It is this reduction in capital expenditure Sydney Water believes will hamper its ability to support new homes.

“These reductions contribute to minimising upward pressure on tariffs, but they come with risks which includes timely delivery of infrastructure needed for housing, water supply, reliability and environmental performance,” Sydney Water said in a letter to stakeholders.

“IPART has allowed for only about 120,000 (homes) on the basis Sydney Water customers should not accept growth risk.”

Housing developers are also worried IPARTs decision will slow the provision of new housing.

UDIA NSW CEO Stuart Ayres said Sydney Water needed to be able to fund critical water connections. Picture: NewsWire / Nikki Short

Urban Development Institute of Australia NSW chief executive Stuart Ayres said should Sydney Water be unable to afford to connect new houses to water, the Minns government would need to use taxpayer dollars to fund the infrastructure or else risk a gap of 145,000 homes.

“If Sydney Water is restricted from investing in new pipes and connections then the state budget has to fill the gap or we will fall further behind our housing targets,” he said.

The Minns government has disagreed with Sydney Water’s estimation of how much new enabling infrastructure it can provide. A spokesperson for Infrastructure NSW said Sydney Water would be expected to “confirm how it will deliver the housing targets” within IPARTs determination.

“Infrastructure NSW has worked with Sydney Water for some time to understand water infrastructure requirements,” the spokesperson said.

“Sydney Water should be able to service housing over the next 5 years with modest investments in infrastructure.”

A NSW government spokesperson said that many of the new homes under the housing accord would be built “in areas that have existing water infrastructure and do not require major new water infrastructure”.

Originally published as Only 120,000 homes can be connected to water without bill hike claims Sydney Water