35-year contracts to sell city water

A bill allowing private companies to run the water services of councils for up to 35 years is not privatisation, says Local Government Minister Rodney Hide.

The bill, due back in Parliament today, extends the 15-year limit on water service contracts to 35 years and allows private companies to build, own and run new water and wastewater treatment plants during the contract period.

Mr Hide yesterday rejected criticism that the 35-year limit amounted to privatisation during an address to a local government asset management conference in Auckland.

On Monday, Labour leader Phil Goff said a contract that ran for 35 years was not a partnership, "it is privatisation".

The Local Government Amendment Bill repeals a provision that gives councils control over the management of private contracts of water services.

The bill retains councils' power over water pricing and development of water policy.

Mr Hide told the conference that the Government had no plans to privatise water services through the bill or any of Auckland's assets through the Super City reform process.

"Under the Local Government Act 2002, councils are not permitted to privatise water-related assets.

"This legal provision will remain under Auckland's new structure. What the proposed amendments do is provide councils with greater overall flexibility in selecting service delivery modes that best meet local needs," he said.

Mr Hide later told the Herald that as leader of Act he favoured, where appropriate, the privatisation of council services.

"But I was speaking today as a Government minister and John Key as Prime Minister and my boss has ruled out privatisation," Mr Hide said.

Dr Laura McElhone, who has worked in the private water industry in the United Kingdom and now works in water planning for Dunedin City Council, said the changes to the private provision of water services were similar to what occurred in Sweden.

There were great difficulties for four to five years while the public sector came up to speed with contract management and performance skills, she said

Dr McElhone questioned whether New Zealand councils had the contract management skills to sit on the other side of the negotiating table with private companies.

The Local Government Amendment Bill - which affects all councils and is separate to the Super City reform process - also requires councils to "open the books" before elections in the same way as the Government does, and provide "plain-English" financial reporting.