Rating for Water – Need to Get Back on Track

Water and waste water services should be delivered to our community at the lowest price possible to ensure reasonable access for all. The corporatisation of our water services across the Auckland region has not and will not serve the public interest. So why are we continuing down this route?

In 2005 I warned Manukau City Councillors prior to their decision to set up a corporatised structure for water (CCO), that the council should not be too distant from pricing structures and that they should be very wary of the notion of user charges in waste water.

In 2005 Manukau Water under direct council control had an operating surplus of $7.694m. There was no increase in water charges and a small increase in the waste water levy within the rates from $310 to $317. The council believed that corporatisaton would deliver savings in the water business of 9 per cent annually. It looked attractive on the surface but it was wrong. This year the CCO has sought and received an increase for water services of 4.99 per cent and waste water of 9.48 per cent.

Having set up separate waste water charges and billed each household a charge of $320 Manukau City is now embroiled in a debate about user charges. Clearly those small users of water on fixed incomes, mainly the elderly, have been the most effected by the change. Some now want their account based on water used. If volumetrix applied as a user charge, 35 per cent of the Manukau community would receive a decrease and 65 per cent an increase, some by as much as 100-150 per cent.

If Manukau’s experience is that corporatising costs money rather than saves it, I believe a further round of rationalizing our region’s assets into one water body, will make things worse and shoot residents’ water and wastewater costs through the roof.

Having created Watercare it we need to leave it alone to get on with its business. That means no vertical integration of the regions water assets as most recently suggested by Brian Rudman. It doesn’t mean allowing it to seek full recovery of depreciation costs as the basis for huge increases in the years ahead. If we did that, 2008 would start at double figures for water and wastewater and the Region’s proposal to issue dividends is straight profiteering and a nonsense.

Each city deals with it stormwater and wastewater up-grades and maintenance and rightly so. Manukau ratepayers make a huge investment each year to ensure the sustainability of our infrastructure. Auckland needs to do the same without forcing the rest of our region’s cities into shortsighted dividend arrangements with Watercare.

If we are looking for models for how to manage public utilities well we need to remember Bruce Jesson’s inspired leadership of ARST and how he was instrumental in preserving these assets that we have today in the region. His philosophy of holding our main utilities in public ownership and managing them for long term retention and our general benefit, could do with a general re-visiting.

Recent events concerning Mercury Energy are a timely reminder of the importance of balancing commercial principles and the public good in the administration of our main public utilities.

In Manukau, as we realise that the much touted benefits of corporatisation have failed to materialize, we are now observing those strong adherents to the philosophy of user charges and corporatisation scrambling to explain where the “savings” have gone. Clearly this is mission impossible and in order to save face, they are ramping up the user charge issue as some political lifeline without acknowledging their actions in creating the problem in the first place.

Later this year Manukau is going to go through a full review of our water CCO. In that review we will find a balance, much closer to the public good. Manukau has a proud history of preserving its public assets, of low water pricing, well maintained infrastructure and very little energy to promote the unfairness of user charges. I see every reason for us to re-assert the tried and true principles of holding our main utilities in public ownership and managing them for long term retention for the benefit of all our people, now and into the future.

Len Brown, Mayoral Candidate 2007
Manukau City

ENDS

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