Water and new homes in the Hunter

Life's Essentials examined Hunter Waters proposal to slug homebuyers with a new levy to raise $251 million to fund 60 per cent of the costs of building Tillegra Dam.

The report also says that Hunter Waters preferred model of paying for Tillehra dam will heavily penalise Hunter residents who choose to downsize their homes when they retire. The report - Lifes Essentials: Water and New Homes for the Hunter was commissioned by the Urban Taskforce and prepared by BIS Shrapnel.

The report explains that the State Government must intervene just as it did in relation to Sydneys desalination plant. The Federal Government is trying to stimulate new home construction with a $21,000 grant, but at the same time Hunter Water is aiming to slug homebuyers with a new levy to raise $251 million.

Using development levies to fund the Tillegra Dam would be the equivalent of having a road toll that only applies to new model cars. Hunter Waters claim that 60 per cent of the dam is necessary because of growth is incomprehensible. Their own modelling shows that the extra costs of supplying water for the planned population increase of 160,000 by 2031 are negligible.

Hunter Water says all these extra people will require just 20,000 mega litres of water each year this is only 17 per cent of the additional water that will be made available by the Tillegra Dam. This means that Tillegra Dam is really about drought security for all existing and new residents of the Hunter and Central Coast.

The report says that taxing new home construction was unfair, because population growth does not directly relate to new home construction. More than 100,000 established houses in the Hunter are currently occupied by just one or two people. As Hunter residents retire many will choose to downsize by selling their existing homes to younger people and moving into newly built medium and high density homes.

If a development levy is used to fund the dam, these retirees would be forced to pay for additional water infrastructure. These retirees arent to blame for population growth yet they will be forced to pay for Tillegra Dam twice. Theyll pay once through their regular water charges and then again through a levy on their new home.

Younger families moving into a retirees existing house would account for the new population, but would not pay any development levies. This is a heavy penalty for Hunters long-term residents to pay.

There is no way a development levy can be fair it involves singling out people who happen to buy newer housing and hitting them extra hard for the dams costs.

The report says there was already a shortfall in housing available in the Hunter. There arent enough homes available to meet the needs of Hunter home buyers and rents. In June2008r there was a shortfall of 2,800 homes in the Hunter putting further upward pressure on rents. By whacking a $251 million new tax on homes, the production of new housing is likely to be crippled.

Everyone who benefits from Tillegra Dam should contribute equally to the cost of its construction. All the water users in the Hunter and the Central Coast should pay and no-one should be forced to pay twice.

Thats the solution that was adopted for the Sydney desalination plant, where the NSW Government issued a direction to the pricing regulator. The same thing should happen here.

Download the report Free as a PDF ( 194 K)