Chair, members, thank you for the opportunity to appear before the Committee today. 

The Housing Industry Association represents the builders, contractors, suppliers, planners, building surveyors, designers and other residential industry professionals that make up our membership.

Most are small and family businesses in communities right across the state. They see the consequences of TasWater's decisions every day. 

Every new home needs a water and sewerage connection before anyone can live in it. You can have the land, the planning approval, the builder and the buyer. But if the infrastructure isn’t there, or the treatment plant has no capacity, the home doesn't get built.  

The Committee has asked whether TasWater's settings are balanced against the State's housing priorities under the National Housing Accord. That’s exactly the right question. 

The long-term evidence on land in Tasmania is confronting.  

Since March 2001, the median price of a residential lot in Greater Hobart has risen from around $35,000 to almost $300,000, an increase of nearly 750 per cent. Outside Hobart it has been faster still: over 800 per cent across the regions, and almost 1,300 per cent in the Southeast. No part of Tasmania has been spared. 

Land, and the essential infrastructure that services it, is the number one long-term constraint on housing supply here. The question for every public authority is whether its decisions ease that constraint or make it worse. 
 
TasWater is a monopoly. It doesn't compete for customers and it doesn't compete on price. 

A household, business or developer unhappy with its service, its timeframes or its charges can't walk away. There is no alternative supplier.  

In a well-governed public monopoly, the owner is meant to provide the discipline the market can't. Here, the owners are 29 councils who receive annual dividends from the business, and many of whom are also the planning authorities deciding where and when housing proceeds. When the owners' budget interest competes with the network's long-term needs, the owners' interest will win every time. 

The Productivity Commission's interim report this year found infrastructure is often the main constraint on new housing, and recommended that regulated infrastructure providers be given an explicit goal of facilitating housing supply. It is my understanding that TasWater has no such goal. 

TasWater pays its owners around $24 million a year. That's $120 million over the past five years, and on current plans, more than $200 million by 2030 – paid to local government.  

At the same time, TasWater sought $1.7 billion in capital investment and a substantial price increase to fund it. The Regulator approved $1.2 billion. 

We have a utility saying it urgently requires more money for essential infrastructure, customers paying more every year, and owners still taking tens of millions of dollars out of the business. And, within TasWater’s proposed pricing plan, an effort to significantly increase these dividend payments.  

When the State became an owner, it chose not to take a dividend. The question is why the other owners haven't done the same, while TasWater defers $500 million of works. 

HIA doesn't consider that a balanced arrangement. 

The Chair of TasWater said today that the business makes a profit, and that's how it pays its dividends. With respect, that is our point. A monopoly's profit comes from customers who have no choice. When bills are rising every year and owners are still taking tens of millions out, that's a choice about who comes first. And the loser is the Tasmanian consumer. 

It is also our strong view that the significant infrastructure challenges that TasWater is now facing, and seeking to manage and improve, are in significant part due to the failure of local government to adequately manage their infrastructure over the decades prior to the establishment of TasWater. We have heard this clearly in evidence from the Owner’s Representative earlier this afternoon. 

In effect, local government is being rewarded for decades of infrastructure failure, with consumers now being sent the bill. 

On 26 August, TasWater wrote to HIA advising that from 1 October it will end the 24-month remission on fixed charges for newly subdivided lots. That remission has been in place since 2012. From next week, every new block will attract around $900 a year from the day the title is created, before a house is built and before a tap is turned on. 

In plain terms, it's a tax on new homes. 

Independent modelling by the CIE for HIA found that around 37 per cent of the cost of a new house and land package in Hobart, about $257,000, is taxes, charges and regulatory costs. 

Around $88,000 of that is regulatory cost alone. 

These costs cascade, as a charge applied to land early in development doesn't stay the size it started. It's financed, a margin is priced over it, and then GST and stamp duty are applied on top at the point of sale. The CIE's modelling is also clear that because housing is a necessity, it's buyers who bear most of that cost. 

HIA asks the Committee to recommend: 

1. That dividends to owner councils end, so that TasWater's profits are reinvested in the infrastructure Tasmania needs. If that is unworkable in the short term, dividends should be reduced to zero over a defined period, no later than the end of the next price and service plan. In the meantime, every dollar paid to councils should be quarantined for housing-enabling infrastructure, above existing spending, and publicly reported by each council. 
2. The decision to end the vacant lot remission be abandoned; and 
3. The Government comprehensively review whether the current ownership and governance model can deliver the infrastructure Tasmania needs to meet its housing targets, and report back to the Committee.  

Chair, Tasmania cannot meet its housing targets without the infrastructure to support them. 

That infrastructure won't be delivered by a monopoly whose owners are paid to take money out of it, and whose answer to a funding shortfall is to send the bill to the next generation of homebuyers. 

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