The future of more than $10 billion of water assets in Auckland will be thrashed out today when Local Government Minister Nanaia Mahuta meets Auckland councillors.
Mahuta is proposing a single water company for Auckland and Northland with a promise to increase investment in infrastructure, improve services and save households from ballooning water bills.
The proposed merger is part of the Government's "Three Waters Reforms" to create a handful of water companies from more than 60 water suppliers in New Zealand - the biggest shake-up of local government since the Super City was formed in 2010.
The reforms stem from Havelock North's outbreak of gastroenteritis in 2016 that hospitalised 45 residents, the drought in Auckland and old pipes bursting in Wellington.
The plan in Auckland is to carve off Watercare and the council's stormwater arm to allow a new water company to borrow more money and increase its capital expenditure by about 50 per cent.
Watercare is tied to the council's balance sheet, which limits how much it can borrow, leading the council-controlled organisation (CCO) to implement a series of steep price rises over the next decade to pay for infrastructure it would otherwise fund by debt.
The price hikes will double the average household water bill from $1069 to $2261 by 2031.
Mahuta has said without reform some water bills in New Zealand would reach $13,900 by 2051, but with five or three companies they would be a maximum of $1800 or $1600 respectively.
The figures are based on a report by the Water Industry Commission for Scotland, although a review of this report by infrastructure consultants Farrierswier said "forecasts almost always turn out to be incorrect, especially over a 30-year horizon".
Writing in the Herald this week, Mahuta said the proposed changes in Auckland would benefit the city to the tune of $1 billion a year over the next 30 years, while also helping Northland.
She said even with Watercare's hikes in water bills, there will be delayed investment to renew pipes and other water assets, and to provide for housing growth and climate change.
"Delayed investment means increased risk of leaks, pipe ruptures and sewage overflows, with the associated roadworks, contamination of popular swimming beaches and general disruption," she said.
Mayor Phil Goff said the objectives of the Government's water reforms are "spot on" but has expressed concerns about opening the door to privatisation and higher water bills in Auckland to pay for poor quality water and infrastructure in other regions.
Goff told the Herald he was not attacking the Government but the model of a one-size-fits-all basis is wrong for Auckland, which is different and ready to be subject to water and economic regulation.
In a letter to Mahuta this week, Goff said Watercare was judged by the Scottish report to be far the best water supplier in New Zealand and already contains many of the features in the Government's proposed model.
Goff said the governance model being proposed is not clearly accountable to anyone and does not adequately allow councils to direct water companies to provide infrastructure.
He proposed an alternative model for Auckland whereby the Crown guarantees Watercare's debt and the Auckland/Northland company would continue to be owned by the councils with Crown representation.
"I believe that the alternative model proposed here could allow the benefits of Auckland's scale and capability to be shared with the rest of New Zealand," Goff said.
Deputy mayor Bill Cashmore supports the water reforms, saying the new water companies need to be large in scale and big in balance sheet to work.
"We need to support that sort of move. It will be good for Auckland in the long term and essential for New Zealand," he said.