The TasWater Board has today put a radical change to the way water and sewerage headworks charges are applied in Tasmania to its Council Owners.

TasWater Chairman Miles Hampton said that the Board has reviewed the current model for headworks and looked at what is most appropriate for Tasmania.

“We have proposed a new approach that is simple to understand and will enable development that makes best use of existing and planned infrastructure,” Mr Hampton said.

“The review recommended that headworks charges be aligned with strategic land use plans to incentivise development in planned growth areas and the Board supports this recommendation,” Mr Hampton said.

If endorsed by council owners, the current headworks charges regime will not return when the State Government’s two-year waiver expires.

Going forward developments in identified planned growth areas would no longer pay headworks charges.

“It is the Board’s view that this will provide a fair and equitable system while also supporting local and state government’s push to stimulate economic development.”

Mr Hampton said that the proposed changes could provide a long-term development incentive to build upon the State Government’s $10m commitment to waiving headworks charges over the next two years.

The headworks proposal will be presented to owners today for consideration at the TasWater General Meeting on 13 May, together with a range of other long-term strategic issues for the Corporation and its owners.

• Developer Charges are composed of three elements:

o Works internal
o works external; and
o Headworks

• The first two elements remain applicable to developments and will be assessed on a development by development basis.

• The State Government has announced a two-year headworks waiver that applies to projects from 1 April 2014. The State Government’s criteria for project eligibility can be found on the Economic Development Website www.development.tas.gov.au. If the new proposal is accepted by the Owners, the State Government’s policy will allow TasWater to transition to the new approach over the coming 2 years.

• It is proposed that developments in identified ‘growth areas’, and which align with TasWater’s asset management plans, will pay no headworks charges under the new system as they will be deemed to be “in-sequence”.

• The identified ‘growth areas’ will initially encompass any area serviced by TasWater at the time of a development application. This will later be refined to encompass areas targeted for growth in Regional Land Use Plans. TasWater would work with local government to ensure that system capacity is available for developments in planned growth areas.

• Projects to provide system capacity in planned growth areas would be funded through TasWater’s capital works budget rather than through headworks charges imposed on developers.

• Projects that require significant capital upgrades within existing serviced zones will be deemed “out of sequence” if they necessitate the bring forward of the capital expenditure in that zone. These capital requirements and timing will be determined through TasWater’s asset management plans that will be developed during the waiver period over the next two years. Developers will be required to meet the funding costs of bringing the project forward to meet their needs.

• Developments in areas not identified as planned growth areas and with no water or sewerage services at the time of a development application will need to contribute to the cost of connecting to water and sewerage through an ‘isolated service charge’.

• The new system would therefore provide a price signal to incentivise development that makes best use of existing infrastructure and encourage development that is in the best long term interests of the State.

• This proposal relates specifically to headworks charges and does not affect other connection costs for new developments.
TasWater Chairman Miles Hampton