A new growth charging approach proposed by IAWAI would help protect existing households across Hamilton and the Waikato district from rising water costs as the region grows.
The new water services company formed last year by Hamilton City Council and Waikato District Council is proposing the new charge to ensure more of the costs of new water and wastewater infrastructure fall on those driving the need for new growth-related investment.
IAWAI is proposing new water supply and wastewater growth charges of $500 per year for 25 years on all new residential builds. Commercial developments would also pay the charges based on the floor area of the development.
The approach is designed to ease the burden on existing households and limit rising water charges. Over 10 years, the charges would generate $46.3 million – money existing households won’t have to find.
The proposals are outlined in a draft 10-year water services strategy to be considered by IAWAI’s board on Friday (27 February) before it goes out for public comment in early March. Executive Chair Kevin Lavery said the Board is clear the cost of new infrastructure needed to service new buildings must sit with those creating the demand.
“We are being very explicit – existing households in Hamilton and Waikato district should not be subsidising all the costs of growth. That’s simply not fair,” he said.
That statement is also supported by government legislation with a draft bill currently being prepared to address growth funding.
“Of the $3 billion we plan to invest in core infrastructure over the next decade, around $2 billion – two thirds – is needed purely to support new homes and businesses. IAWAI will support growth, but the majority of the financial burden must sit where the demand is created.”
Without the new charges, IAWAI would need to fund growth projects in a different way, he said. It would likely mean higher water charges for local households and business plus a significant increase in development contributions, the fees paid by property developers.
“Collecting a growth charge on new builds will allow us to keep core water charges lower. That’s important in terms of affordability.”
Under IAWAI’s draft strategy, the proposed median residential annual charge for Hamilton has dropped from $265 to $174 per year – a decrease of $91 from that originally indicated.
For Waikato District customers, proposed increases in water and wastewater fixed charges fall from $364 to $142 per year. This combined with volumetric charges (based on an average water use of 210m3 per annum) brings the previously forecast increase in charges for Waikato District customers down to $174.
“We are acutely conscious of financial pressures on households and businesses and we need new, fair revenue sources to buffer rising costs. Proposed increases over the next two years are well below those originally indicated in our Water Services Delivery Plan and are far lower than if councils had continued delivering water services,” Lavery said.
“IAWAI is just getting started. As we become fully operational from July, we are focused on driving efficiencies while tackling the infrastructure challenges ahead. We are crystal clear; we must keep water charges as low as possible, while ensuring our water systems are fit-for-purpose.”
The draft strategy highlights key issues including ageing infrastructure, removing barriers to development, maintaining public health and protecting the Waikato River. It puts a strong focus on maintaining and extending the life of existing infrastructure to reduce failures, avoid emergency repairs and deliver better value over time.
Public feedback on the draft strategy opens on 3 March and closes on 6 April at Hamilton.govt.nz/IAWAI.
