While water businesses are adamant vulnerable customers won’t cop the added fees, the move has been labeled as a low blow and a step in the wrong direction.
St Vincent de Paul Society manager of policy and research Gavin Dufty said the move threatened to punish customers already doing it tough.
“People want to pay their bills. Water is an essential service. We should be providing ways to support people to do that, not just garnishing what meager assets they have.”
However concession card holders and people in financial hardship will be exempt from having to pay the late fee interest and a similar concept is already in place in regional areas of Victoria.
In the bush providers can charge interest on unrecovered money and can also stake a claim if customers sell their house.
The Essential Services Commission has recommended allowing metropolitan providers to do the same from July, 2013.
Under current laws, City West Water, South East Water and Yarra Valley Water are banned from charging penalty interest.
If the recommendations are approved, they will be able to charge interest up to a maximum compounding interest rate set each year. It is currently set at 6.7 per cent.
Essential Services Commission chief executive officer David Heeps said the process is aimed at people who won’t pay as opposed to people who can’t pay.
“Those people who choose not to pay – as distinct from can’t pay – have probably been given a free kick in the past and that cost has been borne by all consumers,” Mr Heeps said.
This move is designed to give water providers another tool to get ‘won’t payers’ to pay up.
A final decision is due in December.