Water Done Well: Simeon Brown v Kieran McAnulty on Auckland water reform

The Government this month announced the Water Done Well policy – a programme to address Auckland’s “water woes” after the Three Waters policy was scrapped. Below, Local Government Minister Simeon Brown argues in favour of the new scheme, while Labour’s Kieran McAnulty thinks Brown and Prime Minister Christopher Luxon have “buggered it up” and claims they were wrong to throw out the last government’s regime.

Simeon Brown - A fix for the city’s water woes

Local Government Minister Simeon Brown is championing the coalition's Local Water Done Well policy. Photo / Michael Craig

The old saying that councils should stick to roads, rates, and rubbish unfortunately overlooks one of the most important functions of local government: delivering safe and affordable water.

Just over a week ago, I joined Prime Minister Christopher Luxon and Auckland Mayor Wayne Brown at Watercare’s Central Interceptor construction site. Together, we announced that Auckland Council’s governing body had unanimously endorsed one of the coalition Government’s Local Water Done Well solutions.

Some said that Local Water Done Well could not be done. But within the space of just six months, the Government was able to work closely with Auckland Council to develop a local solution that repositions Watercare into a more efficient and sustainable model.

A combination of underinvestment, increased population growth, and high inflation under the previous government had left Aucklanders faced with the prospect of more than a 25 per cent increase in their water charges.

The changes we’ve announced will save the average Auckland household about $221 annually, which comes as a significant relief for many families in our city.

This is a much-needed reprieve for families struggling with high costs. But it’s not just about saving money now. By spreading the cost of improvements over time, we’re ensuring that future generations also benefit from clean water and better services.

Our Local Water Done Well solution has placed Auckland’s water services on a financially sustainable path.

This change will result in a lower 7.2 per cent increase in Aucklanders’ water bills, rather than the alarming 25.8 per cent increase that Watercare had previously warned about.

It also ensures that Aucklanders will retain local control over their water assets.

In recent years, New Zealand has come to the realisation that our water infrastructure is not up to scratch. Councils have not maintained what was built by previous generations, nor have they kept pace with a growing population. The reality of those decades of underinvestment has now come back to bite.

The previous government spent six years grappling with this issue. Their proposed solution was to remove local control of water assets and merge them into one of 10 bureaucratic, co-governed mega-entities. They spent a massive $1.2 billion on this project before voters rightly rejected the Three Waters proposals at the ballot box.

In just six months, the Government has fulfilled its promise to Aucklanders by delivering a financially sustainable Local Water Done Well solution in collaboration with Auckland Council.

Looking ahead, Watercare will operate as a regulated utility company, similar to lines companies. It will be subject to economic regulation, ensuring that the charges it passes on to households are reasonable and justifiable.

This new model means Watercare will be financially independent of Auckland Council and able to borrow over the long term to deliver the water infrastructure it needs.

Financial independence for Watercare – or balance sheet separation, as it’s commonly referred to – also benefits Auckland Council’s financial position. With Watercare’s borrowing no longer sitting on its balance sheet, the council will gain additional capacity to borrow and fund investment in other essential infrastructure, including projects that currently have constrained funding.

Freeing up Watercare to deliver the water infrastructure the supercity needs is part of this Government’s broader vision for Auckland.

Water infrastructure is a key component required for this city’s future growth and development. If we are to deliver more homes for Aucklanders, and those who would like to make this great city their home, then we need to have the policy settings in place to enable growth.

That takes hard work, but we are moving at pace to deliver.

Whether it is water infrastructure, housing, or critical transport projects, this Government is committed to unlocking Auckland’s potential and allowing it to truly thrive.

Local Water Done Well should not be seen as a policy in isolation. It is not simply a fix for the city’s water woes.

It is our first step in the Government’s ambitious infrastructure agenda for Auckland.

• Simeon Brown is the Minister of Local Government and Minister for Auckland.

Kieran McAnulty - Luxon and Brown ‘have buggered this up’

Kieran McAnulty is Labour’s spokesperson for local government and regional development. Photo / Warren Buckland

New Zealand faces a $185 billion problem. That’s how much it is going to cost to upgrade and maintain our water infrastructure over the next 30 years.

It’s not your current local council’s fault – they didn’t cause the problem. But they are going to have to put your rates up to pay for it.

That’s why the Affordable Water Reforms were put into law.

They were complicated and sometimes difficult to understand. But they were necessary.

It was expensive to set up, but it was going to work.

So when Christopher Luxon claims to have saved Auckland from a 26 per cent increase in water charges, what he is actually saying is he has saved Aucklanders from his own cock up. I’ll explain why.

Even after the Government’s deal with Auckland Council, ratepayers are set to pay more than they would have. The Auckland/Northland entity, which was due to be set up later this year, would have been in a position to increase water charges by only 2 per cent. That’s because the entity would have had a better credit rating than Watercare can achieve. It will now cost more to borrow and ratepayers will have to cover that.

The Affordable Water Reforms created entities to help with the borrowing New Zealand will need to pay for the new water infrastructure. They would have kept borrowing costs low and made it fair for everyone.

At the moment, the debt associated with water infrastructure sits on a councils’ balance sheet. And because councils are limited in their borrowing, there is only so much they can do.

The Affordable Water Reforms would have freed councils from servicing existing debt and from covering the cost of future works. Every ratepayer in the country would have paid less in water charges as a result – even in Auckland.

Instead, the Luxon Government scrapped it and threw all that work and money down the drain.

The result is there for all to see. Every council in the country has been forced to hike rates. Depending on your council, around 50 per cent of the increase is linked to the Government’s actions.

Nevertheless, the rest of the country won’t be so lucky. Auckland Council is unique in its set-up. So too is Watercare. They have the scale to make this work. This cannot be replicated elsewhere.

Local councils are full of people that care deeply about their communities. They will work hard to try to find a way forward with the Government.

But for many councils, scrapping the water reforms has tied one hand behind their backs. I’m particularly worried about regions such as Northland, Gisborne and the West Coast; and for small rural councils such as the Tararua District, South Wairarapa and Clutha.

There is only so much wriggle room available to them and wherever they land ratepayers will end up paying more than they would have done if the reforms were just allowed to be followed through.

Next time you open your rates bill and see an increase larger than you expected, don’t blame your local council. Blame Christopher Luxon and his Government. They’re the ones that have buggered this up.

• Kieran McAnulty is Labour’s spokesperson for local government and regional development.