Background

Over recent years SA Water has under-invested in infrastructure necessary to support housing growth.

During this time, land development has also been occurring in locations that require significant new infrastructure investment to service the development.  These developments have been occurring in the absence of any truly cost-reflective market signal (augmentation charge) to flag the cost of infrastructure required to accommodate the growth based on zoning in the region.

The Housing Roadmap announced on 25 June 2024 announced that a comprehensive review would be undertaken to determine what changes could be made to regulatory arrangements and that the government would work with industry towards a longer-term approach to augmentation charging beyond 2028.

Scope

The Review is to be broad and consider all relevant legislation, planning and regulatory frameworks and practices that contribute to the planning and investment in growth infrastructure and the need for such infrastructure.

It should include but not be limited to:

• any relevant aspects of the Water Industry Act 2012, Essential Services Commission Act 2002, the Planning, Development and Infrastructure Act 2016 and planning and rezoning processes (in terms of how they might contemplate or facilitate infrastructure provision);
• SA Water's approach to establishing its medium to long-term growth infrastructure requirements and its augmentation charge process,and its application of the National Water Initiative Pricing Principles and Water Industry Rules, and the processes for the economic regulation of included and excluded retail services; and
• the interaction between the planning and regulatory frameworks and the 30-Year Plan for Greater Adelaide (GARP) to ensure the objectives of the GARP are supported.

This Review should also consider other State and international best practice for the planning and funding of growth infrastructure and how best to inform land owners and developers of those funding requirements.

The Review should make recommendations for improvements that could better ensure that growth infrastructure is in place when required (irrespective of the timing of regulatory periods), and that appropriate market signals exist to encourage the efficient provision of infrastructure to areas where it is of greatest value and to ensure that infrastructure can be funded equitably and sustainably.

Recommendations should include but not be limited to whether the above frameworks and processes:

1. could better consider and prioritise investment in infrastructure over the medium to long term
2. could better provide confidence to SA Water (and Government) to invest in infrastructure required to support growth
3. ensure the objectives of the GARP are supported.
4. ensure growth infrastructure is funded equitably and sustainably
5. ensure infrastructure is deployed efficiently and to areas where it is most valued
6. should be better aligned and/or whether there would be benefits in bringing aspects more formally under the economic regulation framework
7. are being applied/operationalised in a manner that achieves their intended benefit

Review and Governance

The Review will be undertaken by an independent consultant managed through a joint steering committee of the Department of Treasury and Finance and Department for Housing and Urban Development.

SA Water and ESCOSA will be required to provide information requested by the Review and will be consulted during the review.

Reports will be prepared as Cabinet in Confidence and will be considered by the Government Performance Cabinet Committee.

*These are proposed terms of reference and will be finalised following consultation.