Hamilton City Council voted last Thursday to adopt a draft agreement which outlined how a water and wastewater council-controlled organisation (CCO) for Hamilton City, Waikato District and Waipa District councils might be structured, governed and owned.
It followed Mayor Julie Hardaker and councillors Garry Mallet and Martin Gallagher joining six delegates from the other councils on a Waters Governance Group in December to iron out details.
Council executive director of special projects Blair Bowcott stressed the formal creation of a CCO would require that the agreement went before the new council after October's local body election and a public consultation.
Fear that movement to a CCO would be a step towards privatisation of water were voiced by councillors while others responded by citing current law which forbids the privatisation of water.
Councillor Garry Mallet called such concerns a "red herring".
Councillor Dave Macpherson, however, compared the situation to privatisation of electricity.
"We had a municipal electricity department, but that wasn't only corporatised but sold off. Now we have private power industry in this country created out of a public one. Yes, a law had to change, but it wasn't that hard for the governments of the day to do that, and it won't be that hard here," he said.
"If you start the steps down that road you have to be aware of the private consequences."
Cr Macpherson also criticised the method of public consultation for its failure to present alternatives to a CCO, like the advanced shared services model which had been investigated in previous meetings.
"If you're only given one item to consider you're not given the opportunity to fairly compare two proposals," he said.
"I believe that the CCO model delivers a loss of direct control of the operations of our water and waste water services."
Cr Macpherson put an amendment forward to include both options in the public consultation but it was voted down.
Both Waipa and Waikato District councils had agreed to the Record of Agreement before Thursday's meeting and both already have, or are in the process, of rolling out water meters, prompting a number of councillors to voice concerns over Hamilton being forced to also adopt water meters.
Cr Macpherson said it was clear "to blind Freddy" that the groundwork for introducing water meters was being prepared.
Councillor Andrew King listed some of the projected costs if they were to be introduced, including rollout costs, ongoing maintenance and monitoring.
Cr King also put forward an amendment which would have made any decision on water meters solely Hamilton City Council's. But according to the Record of Agreement installing meters would be a "significant" decision requiring 75 per cent of shareholder votes. This means Hamilton City as the biggest shareholder with 63 per cent of shares would have veto rights.
Councillor Ewan Wilson was in support of Cr King's amendment, claiming the purpose of the CCO move was to take the decision away from the public and "take all the emotion out of the debate".
Cr King's amendment was voted down.
Based on financial forecasts Hamilton would be financially marginally better off with a CCO. Under the agreement no council would be left with water-related debt from forming a CCO.
For Hamilton, its $131 million of water debt would passed to the CCO but because of accounting rules, the CCO's total debt would still show up in Hamilton's accounts . Hamilton would get a cash payout from the CCO of nearly $139 million, based on assets transferred.
Waipa's water debt of $31.5 million would be transferred to the CCO and it would receive $41 million in cash back.
Waikato District's water debt of $61.5 million would also go the CCO, with the same amount going back to the council.
Cr Mallett said the proposed CCO would be "significant beneficial movement" for Hamilton both monetarily and from an operational standpoint but said the agreement as it stood meant Hamilton benefited least out of the three councils.
Cr Mallett said there would be surprises for residents if the CCO went ahead and new tariff structures began to be introduced.
"They will probably be a lot more efficient but they are unlikely to be related to property value. There will be surprises for people - some good, some bad."
Mayor Julie Hardaker voiced her surprise during the closing comments of the meeting for the lack of focus on growth priorities, and the process of how infrastructure was positioned and developed after the CCO took over management.
"Determining that and the process of determining that is critical to us, and I can tell you that what we want is in the agreement," she said.
The draft agreement was voted for by Mayor Hardaker, councillors Gordon Chesterman, Philip Yeung, Rob Pascoe, Garry Mallett, Leo Tooman with councillors Martin Gallagher, Andrew King, Dave Macpherson and Ewan Wilson voting against.
Councillors Angela O'Leary, Margaret Forsyth, and Carina Green were all absent for the vote.
A copy of the Record of Agreement is at www.waterstudywaikato.org.nz