A damning report accusing the Auckland City Council of misleading the public over its water policy has drawn denials from Mayor Dick Hubbard and chief executive David Rankin.
The council's description of price rises from its water company, Metrowater, as "modest" and "small" during public consultation was misleading, said the local government and environment select committee.
The report, tabled in Parliament yesterday, said the council "abused" its power by putting up water bills to take $324 million in charitable payments from Metrowater over 10 years.
While the council and Metrowater acted within the terms of Metrowater's constitution and the letter of the law, "it was unwise for a public body to stretch the charitable payments provisions so far, and this undermined the public's trust in this local authority".
The committee also said the council could have kept the public better informed, "strongly advised" the council to reconsider the policy and urged other councils not to adopt the use of charitable payments in this way.
The report drew an angry response from Mr Hubbard, who said it was full of errors and believed its release on the eve of local body voting papers going out was politically motivated.
Mr Hubbard and Mr Rankin said the key document was an attached report from the Office of the Auditor-General, which was the proper body responsible for monitoring the council's compliance with the law.
Assistant Auditor-General Bruce Robertson said the council's process was consistent with good practice. The disclosure of information was "not unreasonable, although greater clarity around what constituted 'modest' increases could have been given".
Mr Rankin said there was "not the slightest skerrick of evidence" to suggest the council misled the public.
Committee chairwoman and Labour MP Steve Chadwick said the council could not "duck under saying 'the Auditor-General has said we have done nothing wrong'."
Ms Chadwick said the council acted within the letter of the law but to call the increases "modest" and "small" was misleading. "They sort of stretched the way you can use the charitable payment provision and they lost the public trust, and that's sad and really the guts of it," she said.
Water Pressure Group spokesman Penny Bright, whose petition to Parliament sparked the investigation, last night called for Mr Rankin and finance general manager Andrew McKenzie to be sacked.
She was disappointed the committee did not support her call for a full inquiry to uncover the "rort and fraud" imposed by user charges on water, a necessity of life.
Green councillor Neil Abel, who has campaigned against the policy since it was formulated last year, said the report raised serious questions about Mr Rankin and Mr McKenzie. He believed they had misled councillors with advice they had given.
At the final council meeting of this term, councillors asked officers to include the report's findings into a review of the water policy in November.
Mr Hubbard is the only politician left supporting the policy. His mayoral rivals and main political tickets, City Vision and Citizens & Ratepayers, are promising to abolish the policy.
What the council knew
March 23, 2006: Metrowater warns city council finance general manager Andrew McKenzie of "significant" price increases.
March 28, 2006: Metrowater warns city council finance committee chairman Vern Walsh of "significant" price increases.
April 27, 2006: Metrowater warns McKenzie of price increases greater than inflation.
What it told ratepayers
April, 2006: Public consultation documents say price increases will be "small" and "modest".
July 2006: Metrowater announces a 9.6 per cent increase.
May 2007: Metrowater announces a 9.1 per cent increase.