Leaks could be the death-knell for Wellington

Friday, 1 December 2023

Wellington will “die” as a city if it does not fix its broken water infrastructure.

That’s the blunt message from economist Andrew Schoultz, in response to Wellington Water earlier this week saying the region needed to spend $1 billion a year, fixing infrastructure, for the next 30 years.

Wellington Water chair Nick Leggett told regional leaders that ignoring the need to invest heavily in Three Waters would leave the region without safe and reliable drinking water and place the region’s economy at risk.

It could also create a situation where councils would stop new-builds, which Schoultz said would result in house prices increasingly dramatically.

“If we ever get to the position where the city cannot build new houses, the city would die,” he said.

Leggett told regional leaders that Wellington Water needed a budget of $7.6b over the next 10 years but councils had only $1.9b in their current long-term plans.

Schoultz, who works for consultancy firm Sense Partners, which specialises in urban economics and infrastructure, said restrictions on new-builds would be hugely detrimental to the region and Wellington City in particular.

House prices would rise dramatically, creating a situation where only highly paid bureaucrats could afford to live in the city.

“If they (councils) are unable to provide the infrastructure needed for housing, that is a terrible outcome for the city.”

The flow-on effect would more people on to the street and living in cars. An increase in house prices would result in bureaucrats demanding higher salaries, which would have to be paid for by an increase in tax.

A meeting on Tuesday of Hutt City Council’s risk and audit committee highlighted the challenge facing councils.

Chief financial officer Jenny Livschitz said the change of government had created uncertainty over the future of water reform. Standard & Poor’s was reducing the credit rating of councils nationwide, including Hutt City.

The key issue it had highlighted was the future financial impact on councils, if the reforms stalled or did not go ahead. She quoted from Standard & Poor’s “Bridge Over Troubled Waters” report on the risk facing councils.

“The repeal of Affordable Water Reform legislation will be politically popular but financially detrimental for many New Zealand local councils.”

A lower credit rating would make it harder and more expensive for Lower Hutt to borrow money and do the work required to upgrade water infrastructure, she said.

Leggett said the implications of not investing in infrastructure would be far ranging.

Lower Hutt mayor Campbell Barry, who chairs the regional Water Committee, is calling for urgent action from the new government.

Barry said Wellington Water had told councils they could “deliver” work totalling $7.6b over the next decade.

That was “completely unaffordable” for councils and Barry said it was also impossible for councils to come up with $30b over the next 30 years.

Schoultz said Wellington Water had been right to highlight the risk to the economy.

If Wellington wanted to be a modern city that attracted young people and new businesses, it must fix its infrastructure. People would not want to move to a city, where there was no affordable housing, he warned.

Infrastructure Minister Chris Bishop referred a request for comment to Local Government Minister Simeon Brown, who said National had campaigned on the need to put water services on to a sustainable financial footing.

He was committed to repealing Labour’s reforms and said he was taking advice on how that could be done.