two part tariff

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Two part Water Tariffs


The operation of Chapter 10 of the Local Government Act 1 (“LGA”) was considered by the Supreme Court of Queensland in the recent case of Hume Doors an Timber (Qld) Pty Ltd v Logan City Council (“Hume Doors”).


Chapter 10 of the LGA was introduced in 17 to give effect to the COAG water resource policy regarding the urban water services of the 17 largest local governments in Queensland.


The regime established by Chapter 10 requires local governments


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· To assess the cost-effectiveness of introducing two part water tariffs for water services;


· To decide whether two part tariffs are to be applied for water services;


· If it is decided to apply a two part tariffs - to implement that decision;


· To ensure that charges for water services are based upon consumption.


Implementing a two part tariff


Logan City Council sought to apply a two part water tariff for the 18/1 financial year in accordance with Chapter 10 of the LGA. In doing so, the water tariff adopted by the council provided for


· A differential access charge, based upon meter size;


· A differential consumption charge based upon volume consumed.


Hume Doors found that the water charges for its Logan premises increased significantly under the new tariff and subsequently sought declarations in the Supreme Court of Queensland that the tariff was unlawful on the basis that the Council had failed to comply with the requirements of Chapter 10 of the LGA.


Water charges held invalid


The Supreme Court found that the water access charges contained in the Logan City Councils 18/1 budget were invalid for failing to comply with Chapter 10 of the LGA.


Significantly, a primary reason for the result was the finding that the Councils water access charges did not answer the statutory description of a two part tariff for the purposes of chapter 10 of the LGA.


The LGA provides that a two part tariff is a basis for a utility charge for water services consisting of access and consumption components. Although chapter 10 of the LGA, at sections 76 and 78 requires consumption to be the basis for utility charges for water services, the local government finance standard provides that a utility charge for water may include an access amount.


The reasons for judgment in the Hume Doors case indicate that the Court found difficulty reconciling the requirement that consumption be the basis of water charges with the provision of a separate access component in the tariff.


A two part tariff, as contemplated by chapter 10 of the LGA, was said to be a single basis for charging for water services with two components referable to


· Access to the supply network;


· The amount of water consumed.


According to the reasons for judgment, the only manner of satisfying this requirement would be for water charges to provide for a differential rate per unit of water based upon the size of the pipe through which the water was supplied. That is to say, a two part tariff requires that a kilolitre of water consumed through a larger pipe be charged at a different, presumably more expensive, rate than a kilolitre supplied through a smaller pipe.


Chapter 10 of the LGA was introduced to achieve efficiency and sustainability in the use of water and to promote full-cost pricing for urban water services.





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