Brian Rudman: Milking the Metrowater cash cow to fill coffers

The lemmings in charge at the Auckland City Council seem bent on being one-term wonders.

Talk about self-destructive. Just in case the $85,000 Grand Tour of Europe was not enough to rile voters already swooning from eye-watering rate increases, the City Vision-Labour coalition has revealed plans to bleed us dry via our water bills.

The extra cash will fund, among other things, a press statement says, a probe into illegal connections into the water pipe network. One wonders if Mayor Hubbard and his deputy, Dr Hucker, spotted the hidden irony in the press release before it went out. For if ever there was a shonky connection into the water system, it's this new 9.6 per cent tax on water use.

The extra charge has nothing to do with water. It's all to do with such things as the $320 million revamp of Eden Park and the replacement of 150-year-old Queen St kerbstones with imported, artificially aged lookalikes.

Disgruntled Neil Abel, chairman of the works and services committee and a City Visioner himself, says it is all "smoke and mirrors and amounts to a hidden rate rise". He adds: "It is dishonest, unfair and needs to be stopped now." He should know. Water is under his committee and he was there when the decision was made.

Auckland City Council-owned Metrowater was set up to supply fresh water, and take away wastewater, at a fair price. Charges are levied on a consumption basis. But councillors, eager for income for their expansionist activities, have latched on to Metrowater as a new cash cow.

The council has ordered Metrowater to provide a dividend of $280 million in the next 10 years. This has forced Metrowater to increase charges from September by 9.6 per cent.

Auckland City, in its press release, refers to the increase as "charitable payments". This implies voluntary giving. Metrowater is more honest, talking of Auckland City's instructions to "deliver to it an increased return on public investment".

Whatever the sophistry, it's nothing but an additional tax, based, for no obvious reason, on the amount of water we use. For a so-called left-wing council, it's a randomly assessed and indiscriminate new tax. At least with rates, there's an element of taxation according to one's wealth. But not here. Rich and poor have to pay the same. Unless, that is, you have a swimming pool to fill.

And there's no differential for the business community.

The politicians are trying to justify their actions by saying the extra income is for improvements to the stormwater infrastructure. But that's just words. Once the cash is in the city coffers, it could end up anywhere. And anyway, since when did repairs to stormwater pipes have anything to do with the price of the stuff we drink.

In recent times, Auckland City politicians have talked darkly of the risks of Watercare, the region's bulk water provider, and/or the Auckland Regional Council taking over Metrowater. We were warned that ratepayers would be the losers.

But not such big losers as we will be if the proposed rip-off goes ahead.

Indeed, now would be an excellent time to clamour for Watercare to come to the rescue of Auckland City ratepayers. Three reports in the past decade have revealed the savings that would result from the region's bulk and retail water services being integrated into one company. The 1995 LEK Consulting report talked of annual operating efficiencies of about $13 million. Another report in 1999 backed this up.

Four years ago, Manukau City contemplated integrating its retail water business with Watercare's bulk operation. It received an independent report claiming annual savings of $2.2 million to $4.8 million. But after each investigation, parochialism ruled supreme and the local politicians pulled the plug on change.

Now that Auckland City politicians have appropriated Metrowater as their new money faucet, we have a self-interested duty to remove this temptation from their control.

Watercare is owned by six territorial councils, so it's not totally free of money-hungry politicians. Indeed, in the past two years they've siphoned $25 million of "rebates" from Watercare into the various city coffers. So additional anti-stickyfinger legislation could be needed.

But at least Metrowater moving to Watercare would slow the Auckland City politicians down. And if the three reports are to be believed, such rationalisation would be a smart business move.