Sharp rates rise could be on cards for Upper Hutt to fix water infrastructure

Monday, 4 December 2023

Upper Hutt politician Matt Carey says rates could increase by as much as 20%. The city has to invest more money into infrastructure, he warns.

Like other cities across the region struggling to fund Three Waters, Upper Hutt could be facing a significant increase in rates.

Last year, Upper Hutt used money held in reserve for Three Waters, to keep rates at 6%, after initially looking at an increase of 21%. This year, one councillor, Matt Carey, is predicting an increase of 20%.

Upper Hutt has experienced a housing boom in recent years. All the new housing has, however, placed its Three Waters infrastructure under increasing pressure.

Documents relating to Wellington Water released under the Official Information Act show the magnitude of the problem facing Upper Hutt after years of chronic underinvestment in its pipes and booming housing growth.

In August, the documents show councillors were told they needed to budget at least $274 million, to cover Upper Hutt’s share of upgrades to the Seaview Wastewater Treatment Plant.

A Wellington Water report to councillors in October, noted Upper Hutt had $75.4m budgeted over the next 10 years for capital projects. Wellington Water said the cost of programmes it wanted to deliver was $442m.

The council was budgeting $9.5m, over 10 years, to deal with the growth in residential populations. Wellington Water said $182m would fund the work required.

Potentially the biggest financial challenge facing Upper Hutt is the cost of renewing its pipe network.

The city has 269 km of pipes needing replacing within the next 30 years. It is currently replacing pipes at 1.65km per year. To get on top of the leaks, that figure should be 9km.

Near neighbour Hutt City, which is also struggling with the cost of renewing pipes, estimates the cost at $2m per km. Using that figure, it would cost Upper Hutt more than $500m. At the recent Water Summit, it was revealed that Upper Hutt is the leakiest city in the region, losing 52% of its drinking water to leaks.

Across the region, councils are grappling with rate increases as high as 20% to upgrade leaky pipes, cover the rising cost of interest and huge increases in construction costs.

Wellington Water told the Upper Hutt council that its assets are ageing at a concerning rate.

Upper Hutt Mayor Wayne Guppy is promising to scrutinise funding for Wellington Water carefully. He accepts that Upper Hutt ratepayers face a big increase in rates.

“Historic underinvestment had resulted in aged infrastructure increasingly prone to failure.“ Urban growth had also put their infrastructure under pressure and “significant” investment in Three Waters was needed.

Upper Hutt needed new reservoir storage, upgrades to the Silverstream wastewater overflow storage tank and wastewater pipes, as well as dealing with “legacy” flooding issues, Wellington Water said.

Carey said councillors had not been provided with a draft figure for the likely rate increase. It was clear, however, that the city needed to invest heavily both in roading and water infrastructure.

“I would hate to put a number on it at the moment. Personally, I think we need to have something in the region of 20%, which might have to be spread over two years.”

The council, he said, had to find new ways to fund the cost of renewing pipes.

One option was funding deprecation and he also favours developers contributing more via development levies.

He predicted a large rate increase would be unpopular but said the council had little alternative.

“We understand it is difficult for people but we do need to keep the council running and people need to understand we need to make some hard decisions.”

Upper Hutt council has largely kept out of the debate on how to meet the massive cost of Three Waters reform.

But Mayor Wayne Guppy agreed a significant rate increase was likely but would not be drawn on a figure.

He remains cynical about requests from Wellington Water for more money. He accuses Wellington Water of always presenting “gold-plated” options and said he would examine all requests for funding carefully.

Last month Guppy wrote to the Minister of Local Government, hoping to delay their 10-year plan until the future of Three Waters reform became clearer.

In November, Porirua councillors were warned that despite a $100m reduction in capital spending and a three year halt to new projects, rates could increase by 18%. Wellington politicians were told that rates might need to rise by as much as 20%, despite rises being set at between 5% and 8% for the next 10 years. A house in Wellington City that pays $4229 would pay $5074.

Earlier this month, Hutt City politicians agreed to a draft increase of 16.5%, which included $72 million for residential water meters. Wellington Water has said it needs $30b over the next 30 years to fix the current water crisis.