Sewer Repair Bill Could blow out to $50 million as Government Refuses to Help

The lengthy sewer repair disaster is punching an ever bigger hole in the Hawkesbury City Council’s (HCC) finances after the NSW State government knocked back a request to assist with the $32.5 million loan it was forced to take out in December, 2022.

The loan represents about 20 percent of the HCC annual budget and has cost ratepayers $1,166,986.33 since it was drawn down, less than 12 months ago. If council fails to gain any support from the state government in the future, the loan cost would blow out to over $50 million over 20 years at current interest rates.

Part of the cost blowout, according to court documents seen by the Hawkesbury Post, was a bungled contract that led to alleged overcharging of HCC by The Civil Experts (trading as TCE), a contractor on the repair project. The disputed amount was $4.9 million. The council eventually lost a court battle in August and was forced to pay the contractor $3.3 million, plus its court costs. The HCC had engaged a senior barrister and two city law firms to run the case. 

A long slow fix for Windsor sewer with estimates it could cost as much as $42 million.

Yet earlier this year, HCC General Manager, Elizabeth Richardson blamed the cost blowout on a range of other things. These included “the scarcity of required materials, which has forced design changes, the impact of Covid early in 2022, delays and additional impacts caused by four further floods since March 2021 and the enduring wet weather both here and across NSW from the third consecutive La Nina.” She did not mention the contract dispute.

As part of its annual report the HCC said it would seek an additional $7 million loan for construction works.

In July HCC hiked waste management rates by 9.95 percent, outstripping inflation and adding to the burden of families and local businesses struggling with the rising cost of living and a series of interest rate hikes by the Reserve Bank of Australia. There may be more rate hikes to come in the next  year by both council

The full scale of the sewer disaster has become apparent at a time where the state government is closely auditing councils with a clear eye on mismanagement. 

Long time critic of the sewer repair, Councillor Eddie Dogramaci, has claimed that the massive bill could have been avoided and that it was largely due to council’s mismanagement of the process – both at a management and council level – from the beginning. He had warned council management  that what appeared to be a standard repair job would blow out. He also said he was denied access to contracts for the repair and sewerage hauling, which was costing $100,000 per week. 

Will Barton, HCC Infrastructure Services Director said there was a precedent for funding.

“With respect to the state government, Council requested funding for the repair works under the Disaster Recovery Funding Arrangements and specifically for an exemption from the eligibility criteria that excludes public water utilities, as has been granted to the Northern Rivers. The advice received from the NSW Government last month (Oct 2023) was that Council’s request was not supported. Council has since written to the relevant Ministers requesting that this be reviewed and funding be provided, as it had been for the Northern Rivers,” Barton told the Hawkesbury Post.

The original damage to the sewer – a fairly simple flange that had fractured between two pipe sections – was put down to flood damage. The cost for repair of the main pressure sewer line was originally tendered for  $2.7 million, but quickly ballooned to $18.5 million and astonishingly beyond $30 million. The sewer line crosses South Creek to the east of Hawkesbury Hospital, and behind Windsor Toyota, and is connected to 4000 residents’ homes. 

Hawkesbury is the only council in the Sydney basin providing some sewer services, as most of Greater Sydney relies on Sydney Water for sewerage services. Newer areas in the LGA have smaller sewerage systems, and some residents off the main grid use septic tanks that need regular pumping.

Last December, a $32.5 million loan was drawn down. The loan is with the Commonwealth Bank of Australia with a fixed rate for 2 years at 4.79 percent, repayments are based on a 20-year schedule. The interest paid since the loan was taken out in December 2022 is $1,166,986.33. 

“Once the fixed term expires in December 2024, Council will refinance the loan under appropriate procurement processes to ensure the best rate. The balance of the new loan is subject to any assistance funding received from the government to recompense Council,” HCC Chief Financial Officer Vanessa Browning said.