Thursday April 25 , 2019
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URGENT UPDATE - Ergon , Telstra & QLeave

SPA has been made aware of information regarding Ergon, Telstra and Qleave which impacts on all land developments.

ERGON UPDATE: Ergon have advised that their new Capital Contributions Policy is now in operation with the following impact on the development industry:

  • Most Ergon related works and associated Real Estate Developments are now determined as “Alternative Control Service” works and the effect is that Ergon will charge using either fixed fees (for applications) or on an estimate of cost basis using fees and rates agreed by the Australian Energy Regulator (AER).
  • All applications to Ergon for subdivisions or industrial commercial projects that previously would have cost $250.00 will now cost in the order of $980.00 per application.
  • Where Ergon have to carry out a planning study or a protection study for a project, they will now be charging. Indicative costs are likely to be above $1,450.00 for a protection study and over $2,300.00 for a planning study.
  • Where Ergon have to carry out works extra to that which is already in their planning window, the full cost of those works will have to be paid by the developer who requests the works. Ergon are looking at a reimbursement scheme so that subsequent developers who take advantage of the works within 5 years would pay an amount that would be reimbursed to the original developer.
  • A “Real Estate Development” includes a shopping centre or industrial subdivision, etc where extra load is required, e.g. a new building on a commercial lot for a new group of shops. Ergon will charge the full cost of these works and will not reduce the amounts considering the revenue that they will receive from the project.

You can view SPA's updated submission to the Australian Energy Regulator here.

TELSTRA UPDATE: Telstra have advised a new policy that as of 1 July 2015 in addition to developers having to design and construct pit and pipe they will now have to pay for Telstra to provide wiring and backhaul. The exact amounts are still being determined, but will vary depending upon the size and location of the project and where backhaul is required. Telstra will also be charging for this work.   This new policy also applies to all projects where the application was made between 1-3-2015 and 1-7-2015 and Telstra incur ‘significant costs servicing the project’ or where the pit and pipe is not made available before 1-3-2016. Where an application was made prior to 1-3-2015 and the pit and pipe was made available to Telstra prior to 1-3-2016, Telstra will not generally charge. The Telstra policy is available at   https://www.telstra.com.au/content/dam/tcom/external/telstra-smart-community/Telstra-New-Developments-Policy.pdf?test

 

Qleave UPDATE:   Over the last week we have received many letters from QLeave (Ms Miki Toohey
07 3212 6891 / 1800 803 481, This e-mail address is being protected from spambots. You need JavaScript enabled to view it ) advising for particular projects that they require payment of the QLeave levy. Most developers have not been paying the QLeave levy for the electrical works on their projects and QLeave audited Ergon Energy who have passed to QLeave information regarding contestable subdivisions and as a result QLeave is seeking payment of the QLeave levies for the electrical component of projects. If you have not paid the QLeave levy on the electrical component of your project, you can expect an email, letter or phone call requiring you to make payment to them within 14 days. Please feel free to contact Ms Miki Toohey directly to discuss any concerns that you may have.

   

Update to Proposed NBN Policy Changes

UPDATE ON DEPARTMENT OF COMMUNICATIONS PROPOSAL FOR CHARGES ASSOCIATED WITH NBNCo FOR GREENFIELDS
The following is the latest advice from the Department of Communication as well as our interpretation and commentary.

ADVICE FROM THE DEPARTMENT OF COMMUNICATIONS AS PER MEDIA RELEASE 27 FEBRUARY 2015
"Charges for in-estate infrastructure will continue to apply to new developments accepted by NBN Co from 1 March 2015 . However , because of notification requirements, these charges would only be connected from the second half of the year."

"In the light of feedback, charges for backhaul and end-user connection will come into effect from 1 July 2015 to provide the development and communications sectors with more time to adjust.  A number of other transitional arrangements in relation to backhaul will also be put in place."

WHAT IT MEANS TO OUR CLIENTS
*        Our understanding is that where a developer has a Master Developer Agreement (MDA) in place and applications for particular stages have been accepted by NBNCo before 1 March 2015, NBNCo will not be charging the developer the $600.00 per Single Dwelling Unit and $400.00 per Multiple Dwelling Unit (Duplex / Unit / Apartment).  Where there is no acceptance for the stage, NBNCo will be charging $600.00 per Single Dwelling Unit and $400.00 per Multiple Dwelling Unit (Duplex / Unit / Apartment).

*        There is still going to be some form of payment required for backhaul (bringing trunk cabling to site for the first stage where it is not already available).  The cost of backhaul can be very large and will depend upon the distance to the existing trunk services location and the number of lots in the project.  The current proposal is for the developer to pay 50 % of the cost of the works, up to a cost of $1000.00 per lot and then all of the cost where the cost exceeds $1000.00 per lot and there is no upper limit!  We suspect that the only changes likely to occur are that there may be some arrangements to accommodate the first developer to be recompensed should later developers use infrastructure provided by the first developer.

*        The implementation of backhaul costs and the implementation of end user charges (resident to pay $300.00 per residence) has been delayed until 1 July 2015.

SPA REVIEW AND COMMENTARY
We consider that the charges should rightly be called the "new home owners tax" as it does not apply to existing properties and will affect every new home and unit to be built.

There are also still issues that need to be resolve regarding this new tax:
*        Definition is still required regarding exactly how the backhaul costs will be attributed, i.e. for a 50 lot stage on a 500 lot project is the lot count based on 50 lots or 500 lots as that makes a large difference to the way costs are apportioned.

*        How "First Mover Disadvantage" is addressed with respect to backhaul as at present the first developer to carry out work in an area attracts all the cost, but subsequent developers can take advantage that trunk services already exist, this will give rise to developers delaying their project to avoid paying the full cost of backhaul.

*        Even if all elements identified in the policy proceed, the issue of developers funding the construction of a network and then having NBN Co charge residents on the basis that NBN Co built the network needs to be addressed as at present it is double dipping. NBNCo e regulated by a section of the ACCC that approves how much they are able to charge and this includes an amount based on the approved regulatory asset base multiplied by a percentage set by the ACCC.  The developer contributions (building pit and pipe, paying backhaul costs and paying $600 per lot costs) must be removed from the NBNCo regulatory asset base to avoid NBNCo receiving assets free of charge from the developer, receiving contributions from developers and then charging for use of their network on the assumption that NBNCo has to pay the full capital cost.

The Department of Communications have still to publish their final policy which means that you can still do something to prevent this damaging new cost/tax (whatever you would like to call it).

WHAT YOU CAN DO
Act now, act strongly and act politically.

This is a policy position, it is already covered in legislation that NBNCo are able to charge, but the government's policy expectation to NBNCo is that they won't charge, i.e this is just a policy change and you can still affect it.

*         Email Malcolm Turnbull directly, get his email address from the Australian Government Parliament House web site.  Make him aware of the impact.

*         Make an appointment with your local House of Representatives and warn them of the damage that will occur to the development industry at this  very fragile time.

*         Contact Queensland Senators and make them aware.
*         Make it personal, do not rely on Property Council and UDIAQ to do all the lobbying for you, after all it will affect you a lot more than it will affect them, so you have a vested interest to act.

*         DO IT NOW, the longer it takes to reverse this policy change, the harder it will be.

   

Submission to the Dept of Communications

On the 23rd of January 2015, SPA Consulting Engineers (QLD) Pty Ltd lodged a submission to the Department of Communications in response to the Government's policy paper on proposed reforms to telecommunications regulations and structure. You can view the policy paper on the Department of Communications website here.

SPA Consulting Engineers was proactive in making a submission to the Government to discuss the impacts to regional Queensland and the land development industry. Some of the features of SPA's submission are outlined as follows:

(A) The proposed policy focus is not relevant for regional Queensland

(B) Competitive neutrality is impossible as Australians have already funded NBN Co and Telstra network provisioning

(C) The policy further reduces housing affordability, reduces construction activity and has negative consequences for the wider community

(D) The proposal to apply backhaul costs to developers is unfairly biased against regional areas, and high backhaul costs could render a land development project unviable

(E) Land developers would receive no rebate for investing in a network in which they receive no continuing return for

(F) The proposal has no effective upper limit to the cost of a land development

You can view SPA Consulting Engineers submission to the Dept of Communications here

   

Submission to the Australian Energy Regulator

On the 30th of January 2015, SPA Consulting Engineers (QLD) Pty Ltd lodged a submission with the Australian Energy Regulator (AER) to raise issues that affect the land development industry and provide feedback and recommendations for the next five years of AER's regulation of Ergon Energy.

Some of the issues raised in the submission are as follows:

(A) The cost of retail electricity vs inflation and its affect on regional Queensland's economy

(B) The downturn in mining's effect on residential construction and the need to limit input costs

(C) The AER's light handed approach to regulation in recent years led to network over-capitalisation and high operating expenses

(D) The power inbalance between Ergon Energy and stakeholders / customers

You can view SPA Consulting Engineers submission to the the Australian Energy Regulator here.

   

Issues with the NBN Co Rollout

SPA principal, Simon Perkins, addressed the Cairns branch of the UDIA and explained that there are issues with the rollout of the National Broadband Network (NBN). He said that for greenfield sites, developers have a choice between installing NBN Co pit and pipe, or engaging Telstra to design and install pit and pipe. There are risks with either company and these risks have been identified in the SPA document Provision of Telecommunications to Developments.

   

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