Hawke’s Bay councils face lower water rates after PwC calculation error

PwC New Zealand’s error in water rates calculations could reduce Hawke’s Bay residents’ bills by over $1000. Photo / NZME

By Alexa Cook of RNZ

Fixing an error with all of the water rates calculations in Hawke’s Bay could reduce residents’ bills by over a thousand dollars.

The mistake was made by PwC New Zealand, which carried out the water rates modelling for Napier City Council, Hastings District Council, Central Hawke’s Bay District Council and Wairoa District Council.

• Central Hawke’s Bay ratepayers were facing a water rates increase of $7000 a household over the next 10 years.
• However, PwC has now revised that figure back to $5800.
• PwC has apologised for its mistake, saying it was a human error in a formula.
• The error has impacted all councils in the Hawke’s Bay region, and PwC won’t say whether errors were made with other regions’ water rate calculations.
• RNZ understands the mistake was only discovered when Central Hawke’s Bay District Council decided to reduce some of its water infrastructure spending, and went back to PwC to re-calculate its projected rates rises.
• Central Hawke’s Bay District Council (CHBDC) is now predicting a water rates increase of $4660 on average by 2034, after cutting back on its capital works programme.

CHBDC chief executive Doug Tate told RNZ the PwC mistake was a “notable error”.

“It caused what was really the extreme $7000 number. I certainly acknowledge that PwC have apologised for that error and we’ll be working with them across the region to get some resolution for that.

“I feel for those who we’ve had to discuss the extreme level of rates with,” he said.

PwC New Zealand told RNZ it has owned up to its mistake.

“As noted in the statements, corrections were made to the PwC New Zealand modelling following our identification of a human error in a formula. We acknowledge the error and have sincerely apologised to the councils impacted,” a spokesperson said.

Tate said errors were made in calculations for all four of Hawke’s Bay’s councils, and a review of the financial model had now been completed, resulting in lower than projected costs across the board.

CHBDC had also slashed some of its projected rates increase by pushing about $100 million of the capital works programme for water infrastructure further into the future.

“While we are halving the programme, we are not halving the bill. We’ve been able to move the rating impact by about $1000, but that’s nearly $100m of capital we’ve had to pull out ... it’s not substantially addressing the long term investment this community needs,” Tate said.

“It’s a real trade off and it comes with a caution – yes there are lower rates for a period of time, and they’re still unaffordable, but in the longer term we are still going to need to make more investment.”

He described it as a “less bad situation”, as water rates rises were still going to be unaffordable for many residents.

“Really now our big focus needs to move to our 30-year water service strategy,” he said.

Hastings District Council, Napier City Council, and Central Hawke’s Bay District Council were collaborating on a regional model for “Local Water Done Well”, which replaces the former Government’s Three Waters Reform.

The “Water Services Delivery Plan” is due to Government by September 3.

Wairoa District Council has decided to take its own approach and will not be included in the plan.

-RNZ