WESTERN Australia’s key economic watchdog has recommended the state government re-evaluate its approach to funding underground power in existing suburbs after finding that wealthy property owners have received a significant windfall gain.
The Economic Regulation Authority recommended responsibility for WA’s 15-year State Underground Power Program should be taken over by relevant local authorities.
The ERA said councils and ratepayers ought to bear more than half the cost because householders gained most of the benefits from underground power, especially those that owned property in Perth’s more salubrious suburbs, where the majority of the 74,000 homes with retrospective below-ground power are located.
A study commissioned by the ERA found houses worth $700,000 or more received a value boost of as much as $29,590 when their electricity cables were buried underground. Despite this benefit, ratepayers and councils were required to provide just 50 per cent of the $4,200 average cost of the procedure per home.
However, the ERA recognised that the benefit was skewed to high value homes, with properties valued between $300,000 and $499,000 receiving an average value lift of $4,800, little more than the cost of putting the power underground.
For the sake of equity, the ERA suggested that future state government contributions to the scheme could be directed to areas with lower value housing – where the benefits that accrued to the state, such as lower maintenance costs, were more balanced with those of the property owners.
