IPART held two information webinars on 24 August 2021 and 26 August 2021 on our water price review process for our 2021-22 Central Coast Council water price review.
On Friday 6 August 2021, IPART released an Information Paper on its water price review process for the upcoming Central Coast Council water price review.
On Tuesday 24 and Thursday 26 August 2021, IPART held information webinars for the community and for Central Coast local members of parliament to provide an overview of the water price review process. The information webinar provided an opportunity for those to have their say and to ask questions about our water price review process.
The information webinars included a brief presentation by IPART on its water review process followed by a question and answer session. The presentation explained the public consultation process, how the community can have its say and the difference between IPART’s water price review process and our local government special variations process.
The presentation slides, links to the video recordings and transcripts can be accessed as follows:
Information Webinar 24 August 2021
Information Webinar 26 August 2021
We have listened to the community’s views and will consider all feedback we have received during these information webinars.
Your questions, our answers
During these information webinars, we were asked a number of questions from the audience. We have summarised your questions and have provided our answers below.
Are applicable conflicts of interests published?
IPART members declare all conflicts of interest. Tribunal members have a pecuniary interest register on our website.
Should the council operate water services?
Most regional and rural councils in NSW operate their own water and wastewater businesses. However, Central Coast Council is the only council in NSW that is also a Water Supply Authority and for which IPART sets maximum prices.
When we are assessing what costs Central Coast Council should incur to deliver its water, wastewater and stormwater services, we may consider its overall structure and business model, including how other models might affect costs and the quality of services delivered.
How does IPART consider the views of different types of stakeholders?
Stakeholder views are a crucial aspect of our price review process. Everyone has the same opportunity to be heard in our public consultation process. Whether you are a large water using business or small household in Gosford, Wyong or elsewhere on the Central Coast, we will carefully consider your feedback.
Does IPART determine how the council’s prices are structured?
The council proposes its price structure in its written pricing proposal, i.e. fixed charges for service or usage charges. We make the final decision of what prices are and the structure of prices.
Does IPART look at water quality and its relationship to the price we pay?
We consider the levels of service being delivered by the council, and whether or not they meet customers’ expectations and its own commitments. Drinking water quality is one issue that we will consider and will seek feedback on from the community. We will assess what the council is doing to deliver its services to meet expectations, what the costs should be and what prices should be set. We will also seek to ensure that council is accountable to the community for the services it delivers.
How does IPART assess the council’s costs? How does IPART consider whether the council will deliver good services now and into the future and if it will spend efficiently?
We review the council’s proposed costs, including its day to day activities, and the investments it plans to make in infrastructure to deliver its services. We consider whether what the council proposes to spend is sufficient to ensure the council’s water business can deliver its services at the quality the community expects, and at no higher cost than is necessary.
We will carefully review the council’s strategic business plan and also asset management system and procurement policy. While we consider what the council proposes (e.g. what it proposes to build), we do understand that circumstances may change over time so we may allow some scope for priorities to change.
In making our decisions on the efficient costs that customers should pay for, we consider what the council’s costs should be. We consider whether council proposes to address infrastructure needs such as building new assets, replacing aging infrastructure and how much it should cost to do maintenance and provide other service needs. This typically includes productivity improvements council should be able to make, including the relevance and evidence of productivity growth in the wider economy.
We will also look at the types of outcomes that the council delivers. We consider what is best practice at the moment, how the council is improving the way it does things, if it uses effective and efficient processes and how it looks to get better at what it does.
We set prices based on what we consider the council is required to earn to cover its costs. We may cut the council’s allowed costs which may result in lower prices or allow council to increase its cost which may result in higher prices.
We will also look at the types of outputs that the council delivers. We consider what is best practice at the moment, how the council is improving the way it does things, if they carry out proper processes and how they are seeking to get better at what they do. When looking at what the costs should be, we consider productivity growth and compare it against productivity growth of the wider economy.
Who selects the consultants that IPART uses to review costs?
When IPART hires a consultant, we go through a rigorous procurement process based on the type of information and the type of advice we seek. We issue a scope of works, and we ask consultants to submit proposals to us. We then consider each proposal received, how well it meets our needs and the value for money it represents.
Developer charges for water, wastewater and stormwater
Who pays for the infrastructure needed to service a growing population?
Like other councils and water utilities in NSW, Central Coast Council can levy developer charges on new developments. These capital contributions are set to recover up front the costs of infrastructure used to service a new development. This helps ensure that new customers pay their fair share of the infrastructure that delivers their water, wastewater and stormwater services. When we set prices, we make sure that revenue raised by council through these developer charges is subtracted from its capital costs. This can ensure that existing customers do not contribute to the costs of assets that service a new development.
Does IPART consider affordability and income inequality?
We carefully consider affordability as part of all of our water price reviews. Under section 15 of the IPART Act 1992, we are required to consider the social impact of our determinations and recommendations. The Tribunal places a great deal of consideration on customers’ ability to pay and affordability. We are conscious about what prices mean for customer bills and will consider whether the community is in a position to bear the costs. When setting prices, we consider how they flow through to customer bills and will consider the impact on the community. We consider a community’s capacity to pay, areas of potential socio-economic disadvantage and any hardship provisions the council has in place to help customers who are finding it difficult to pay their bills.
How does the council fund its stormwater services?
Stormwater services collect rainfall runoff from residential, non-residential and public land and transport, treat and dispose of it into rivers, lakes or the ocean. There is a range of infrastructure that needs to be constructed and maintained to carry out this function. This might include pipes, channels, storages and some treatment facilities.
Central Coast Council, like other councils in NSW, can collect revenue from ratepayers to spend on stormwater services. This can be done through the Local Government Act 1993, and would normally include either a:
stormwater management services charge, which is currently capped at $25 each year for residential land (or $12.50 for each lot in a residential strata scheme), or
a special rate or levy.
Councils can also levy developer charges for new developments, which cover some of the cost of the infrastructure needed to serve that new development. This reduces the charges on existing ratepayers, who don’t have to contribute to all of the stormwater assets a new development needs.
Unlike the other councils in NSW however, Central Coast Council is also a Water Supply Authority. We set the maximum prices that it can charge residents and businesses as a Water Supply Authority. This includes water supply, wastewater and stormwater drainage services. In setting these prices we look closely at what the council’s costs should be, how much residents and businesses would each need to pay to meet those costs, and whether those bills are affordable.
By way of comparison, a ratepayer living in Sydney may pay a stormwater management services charge to their local council and a separate stormwater services charge to Sydney Water.