Government water reforms open the door to privatisation – Phil Goff

The Labour Government is opening the door to the privatisation of $10 billion of water assets in Auckland, says the party’s former leader and Auckland Mayor Phil Goff.

He is concerned the Government’s “Three Waters Reforms” will remove water assets from council control and allow a subsequent government to privatise them.

In a statement, Local Government Minister Nanaia Mahuta said continued public ownership of three waters assets and services is a bottom line for the Government, and as many protections as possible to safeguard this will be built into any new arrangements.

Goff also believes the water reforms could lead to higher water bills in the Super City by Aucklanders having to subsidise the costs of upgrading poor quality water and infrastructure in other regions.

The mayor has outlined his concerns in a letter to Mahuta, who is overseeing plans to strip councils of managing water and hand control to a small number of publicly-owned entities.

The exact ownership structures are still being worked on to address what a Cabinet paper says is a massive funding deficit for water infrastructure by councils, many of which cannot afford to bring their drinking water and networks up to modern standards.

Mahuta said she had been talking with local government on water reform for the last three and a half years following concerns aired for many years over the state of water infrastructure and services.

Last year the Government confirmed its intention to address the concerns, particularly the huge funding challenges to renew and upgrade existing infrastructure while catering for growth, supporting economic development and building resilience to seismic events and climate change.

Mahuta said early analysis found the sector faced costs of $120 billion to $185b over the next 30 to 40 years, but councils were only investing about $1.5b a year, or $45b over the next 30 years.

“The Government’s preferred position is the establishment of a small number of publicly-owned water entities that will have the scale, operational efficiency, capacity and funding tools to manage these investment requirements over time. These entities will not be constrained by the debt limits that many councils face, particularly in high growth areas,” she said.

Goff said Auckland Council understood the reasons and supported the intent of the Government’s objective to tackle the long-standing problem of inadequate investment in water infrastructure by councils.

But he said councillors are unconvinced the reforms would deliver benefits to Auckland where water and wastewater are managed by a council-controlled organisation, Watercare, and stormwater is managed in-house by the council.

The $10b of assets invested in Watercare had been paid for by the people of Auckland and belonged to them, he said.

“Should that asset be transferred to another body which a subsequent government could then decide to privatise, Auckland ratepayers would lose an asset they have built up without a guarantee of compensation,” he said.

With talk of Auckland swallowing up the water assets of Northland, currently managed by the Kaipara, Whangarei and Far North councils, Goff said Auckland could offer the benefit of Watercare’s professional skills to retain ownership of their assets.

A similar partnership with Waikato District Council was working well for both parties, he said.

But Goff said a proposed new water authority for Auckland and other regions would lead to higher costs for Aucklanders and detract from upgrading the city’s infrastructure and preventing wastewater overflows into the harbours.

Aucklanders are already facing a doubling of water bills over the next decade after the board of Watercare approved increases to tackle rising costs and improve its borrowing capacity.

Households are facing the prospect of water bills rising 7 per cent over the next two years followed by 9.5 per cent over the following six years and 3.5 per cent in the remaining two years of the new 10-year budget.

Over 10 years the average household annual water bill will go up from $1069 to $2261.

Goff stopped the board of unelected directors imposing double-digit price increases.

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