Local Government Magazine
Water services reform

Council’s unconvinced with water reform benefits

Auckland Mayor Phil Goff says that while supporting the government’s objectives for water reform, he doesn’t believe the model proposed will benefit his rohe.

“Aucklanders have invested heavily in building up Watercare’s more than $10 billion worth of assets, with a further $11 billion invested in water infrastructure in our current 10-year Budget,” he says.

“Control over those assets, and our ability to ensure that Aucklanders’ needs are put first, is undermined by the reform, which proposes that Auckland Council could have less than 40 percent of the representation in the governance of the new entity

 This is despite the fact that 92 percent of the assets of the new entity would come from Auckland, which will have about 90 percent of the population served by the new regional entity, he adds.

“The proposed governance structure lacks accountability, and therefore responsiveness to Aucklanders through their elected representatives. This risks the entity not responding to public concerns and its senior management paying itself inflated salaries,” says Phil.

“Council has taken steps to both improve accountability and reduce exceptionally high salary levels previously paid to executives.

“The new body will be more susceptible to privatisation as has occurred in the United Kingdom. Safeguards put in place against this by the current government can be easily repealed by a future government.

“According to the Water Industry Commission for Scotland (WICS) report—the review on which the government is basing its water reform proposals—Auckland is already by far the most efficient and effective water supplier in New Zealand. It has already achieved the scale and professionalism in water supply that the government is seeking for the country as a whole.

“The supposed benefit of cheaper water costs, projected to be half the costs of an unreformed sector by 2051—30 years out—simply cannot be relied upon as being real. And it ignores the measures Watercare is currently taking to improve efficiency, which will lower costs.

“The government’s own analysis by Farrierswier, the firm it paid to analyse the reliability of the WICS report, states explicitly that the claimed lower costs under the three waters reform should not be relied on.

“The basis of improving productivity appears to largely rely on a huge increase in borrowing, with a three-fold increase in debt.

“This means significant risk with debt to revenue ratios increasing from 340 percent to 700 percent. It is hard to imagine that this will not incur higher credit risks and cost of borrowing.

“We have put alternative proposals to the government, and I hope it remains open to listening to our concerns and the alternatives we have proposed,” he says.

Water reforms lack enough detail

 The Whangarei District Council (WDC) has provisionally rejected the Government’s three waters restructuring plan with its proposed new entity combining the three waters functions of WDC, Kaipara District Council (KDC), Far North District Council (FNDC) and Auckland Council’s Watercare.

WDC mayor Sheryl Mai says her council does not have enough information to make a wise decision and councillors at a formal meeting unanimously voted against Government plans to amalgamate its three waters provision into a single entity across at least Northland.

The council’s three waters infrastructure, and limited debt, places it in a strong position in comparison to other region, and Water Industry Commission of Scotland’s analysis showed WDC was in the upper 25 percent of top-performing three waters organisations. Generations of Whangarei residents have paid towards the district’s $634 million three waters infrastructure, which now has a $1.3 billion replacement value, says Mai.

“In the absence of information that shows our ratepayers will be better off by opting in, I do believe opting out is a better course of action.”

The WDC says it has repeatedly tried to get information from the department of internal affairs to help inform its decision ahead of June’s deadline, including an Official Information Act request, to no avail.

“The Department of Internal Affairs has refused an official information act request to provide WDC with specific information which shows that Whangarei ratepayers would be better off under the reform programme,” says the council’s chief executive Rob Forlong. The council even complained to the Ombudsman about not being able to get information.

Mai adds that her council is open to opting back in, but only if adequate information was provided for it to make an informed decision.

A French farce

WDC councillor Phil Halse says the Government’s handling the three waters restructuring was a sad indictment on its approach to local government, while Kaipara mayor Dr Jason Smith applauds WDC’s opt-out decision.

“We’re 100 per cent behind that,” says Smith. “The situation has now deteriorated into a French farce.”


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