Auckland Mayor Phil Goff says that while he strongly supports the government’s objectives for water reform, he does not believe the model proposed will benefit Aucklanders.
“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 per cent of the representation in the governance of the new entity. This is despite the fact that 92 per cent of the assets of the new entity would come from Auckland, and Auckland would have approximately 90 per cent of the population served by the new entity.
“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.
“Auckland 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 Safeguards put in place against this by the current government can be easily repealed by a future government.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 mayor says.
“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 per cent to 700 per cent. 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,” Phil Goff says.