Property Council is concerned with Watercare’s increase of its Infrastructure Growth Charges (IGC) and consequential impacts on development costs and housing affordability.
From July 1, Watercare will raise the IGC from $9,775.00 inc. GST per Household Unit Equivalent (HUE) to $12,075 for metropolitan customers, an increase of 23.5%.
The IGC increase is worrying as it is likely to directly impact on the cost of a new house by increasing development costs. This is analogous to the situation with development contributions where the Productivity Commission and Central Government have both acknowledged the implications of development contributions on increasing the cost of a new house.
Property Council considers the IGC is in effect a development contribution; i.e. a charge for infrastructure required by development, even though technically it may not be considered as such under the Local Government Act 2002.
Currently there is no uniform method of charging development contributions across the country.
This has resulted in instances where councils charge developers inappropriately. The Government has recently proposed changes to legislation to make development contribution charges more equitable and transparent. Similarly, Watercare must ensure its charges are fair and cost reflective.
Property Council Auckland President Miles Brown says the increase in IGC’s seem disproportionate.
“These charges must be realistic and not overinflated, otherwise the cost of housing will continue to increase and exacerbate the current housing crisis.”
Property Council would encourage Watercare to ensure its charges are properly cost-reflective to avoid the unintended consequence of dampening development.
Media release from Property Council