KEY POINTS:
Auckland City leaders came under fire yesterday at a parliamentary hearing in Wellington for "hoodwinking" the public over water bills.
National MP Nick Smith zeroed in on the council using its water company, Metrowater, as a cash cow but dressing up $280 million in dividends over 10 years
as "charitable payments".
If the council had been upfront and honest about wanting to make a buck out of Metrowater to pay for stormwater it would not be in a political pickle, Dr Smith said at a hearing into Auckland City water prices by the local government and environment select committee.
It came on the same day the council abandoned the idea of taking similar large dividends from the region's monopoly water wholesaler, Watercare, for stormwater.
The hearing was sparked by a petition from the Water Pressure Group, whose spokeswoman Penny Bright called for legislation to stop the council using a "Clayton's distribution" from Metrowater to subsidise rates.
She said ratepayers were not consulted in a clear, open and transparent manner last year when the council introduced a new policy of higher dividends from Metrowater.
Dr Smith was surprised at the lack of analysis by the council about the fairness of using water charges to fund stormwater when common sense said stormwater was related to land size and had nothing to do with water consumption. He asked if the real reason was to "try to hoodwink the public about the size of your rate increases?"
Mayor Dick Hubbard said there was no evidence to show the public had been hoodwinked. He insisted the council had been open and transparent.
At the time, the council said the rise in water bills to pay for higher dividends would be "small in the first 10 years". Water bills have gone up 9.6 per cent and 9.1 per cent in the first two years and are forecast to rise 115 per cent over the next decade.
Mr Hubbard said the question of pricing had been a "moveable feast" with new information and rebudgeting translating into water prices.
After the 9.1 per cent price increase, the average household bill in Auckland would be 1.5 per cent of household income from July, well below a 3 per cent international affordability indicator.
Metrowater chief executive Jim Bentley said the council's call for bigger dividends had been the main factor behind the first two water bill increases but, in future, the main factor would be higher prices from Watercare.
Council chief executive David Rankin said using water charges to fund stormwater was a matter of judgment and the last two councils had done so since 2003. Numerous legal opinions supported this.
Dr Smith was astonished to hear payments from Metrowater referred to as charitable payments, which meant the "dispensing of help or assistance to needy people provided by way of voluntary contributions".
Ms Bright asked: "Since when was stormwater a charity? It's hardly the SPCA."
But Mr Hubbard said Metrowater was not allowed to pay dividends under the law. The word "charitable payment" was defined by Parliament.
After the hearing, Mr Rankin said the council was no longer pursuing the idea of taking dividends from Watercare.
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