Dick Quax: Auckland Council should sell some of Watercare to sovereign funds

Auckland Chamber of Commerce chief executive Michael Barnett. Photo / Supplied

Opinion

Funds for the Auckland Council to deal with our region's transport congestion and stormwater troubles can be made available at the stroke of a pen if the council is ready to take urgent action.

This is clear from a solution put forward by the chief executive of the Auckland Chamber of Commerce, Michael Barnett.

Barnett's solution is a comparatively simple one that involves taking our water and wastewater supplier, Watercare Services, out of council ownership and using the proceeds of a share sale to finance multi-billion dollar transport and stormwater solutions.

He does, in my opinion go a step too far, however, by advocating for private investors to come in and have the water company listed on the stock exchange.

There is, however, a solution I feel sure councillors who genuinely want to free up funds to finance Auckland's infrastructure could support.

That is the Kiwibank model of ownership. This would keep Watercare in public ownership while releasing the funds the council desperately needs to implement the big transport and stormwater projects required for our fast growing region.

The NZ Super Fund and ACC have both indicated a desire to invest in utility operators. Why not get them to come in? The council would keep a significant shareholding to give voice to Auckland's community interest.

All the evidence of the funds' stewardship of Kiwibank suggests their paramount interests are in a stable investment with a steady income stream and community wellbeing.

Barnett estimates a sell down of the shares could achieve some $3 billion to $5 billion.

That's investment on a scale the council needs if it is to make progress on transport and stormwater. It is within a range of expenditure both the Super Fund and ACC could handle, particularly given the gold-plated investor nature of the water company.

Both Government-owned entities seeking a return on their investments want a steady rather than spectacular stream of funds through good times and bad.

This would, in my mind, fit well with keeping water and wastewater charges at minimum levels consistent with inflation. In any event, the presence of council representatives on the board of the company and the establishment of a regulatory or transparent pricing regime could act as a brake on any attempt at price gouging.

Such an injection of funds would also get the council out of the bind it finds itself in, being currently unable to borrow for major projects because it is up against its debt ceiling.

The only alternative to a move of the type envisaged by Barnett is a lift in rates which would be unacceptable to ratepayers throughout the region.

It has to be remembered also that by selling an ownership stake in Watercare, the council would not lose any dividends, as it would if it were to sell either its shares in Auckland Airport or the business of the port company.

And it would establish a dividend stream for itself that it currently cannot get because Watercare is prohibited by legislation from paying a dividend.

In my view it is imperative that Mayor Goff and councillors immediately seek the Government's view on this Kiwibank model for the water company. The sooner we can get on with implementing such a concept the better.

The potential gains for Auckland are huge - much improved traffic flow, less pollution of our beaches, improved resilience to extreme weather events and an improvement in our economy.

The evidence that the council is reaching out for innovative ways of financing our region's infrastructure, using its own resources, might well unlock Government purse strings.

• Dick Quax is an Auckland Councillor.