Mega Wellington water entity promises lower rates rises

Monday, 6 May 2024

Wellington Mayor Tory Whanau speaks outside Parliament after meeting with Local Government Minister Simeon Brown about the city's water crisis.

A mega-water entity with boosted borrowing capability, meaning pared-back rates increases, is on the cards for the lower North Island leaving Wellington Water on the verge of being sent down the drain.

Yesterday it was announced that Auckland’s water utility Watercare would be able to borrow more over a longer period, bringing some relief from planned large rates rises.

Wellington Water chairperson Campbell Barry and former Wellington Mayor Dame Kerry Prendergast, who is chairing the oversight advisory group for the new entity, both on Sunday confirmed a similar deal was on the cards in Wellington.

Barry, also Hutt City Mayor, said it would mean the dissolving of Wellington Water and replacing it with a new entity covering Horowhenua, Wairarapa, and Wellington.

Wellington Water chairperson Campbell Barry says the new entity will lessen the rates burden but not this year.

Councils across the country, with Wellington at the unenviable vanguard of almost facing water cuts this summer, are struggling with how to deal with years of underinvestment in pipes. While the last Labour Government aimed to tackle the problem with three waters reforms, those were repealed by the National-led government.

That left councils having few options other than rates increases to fund the fix but the new government is working on its own reforms and the Auckland deal is a sign of what is to come, with the lower North Island close behind.

The deal would mean the new entity would, like Auckland, be able to borrow more over a longer period at good rates. It would have “balance sheet separation” from councils – meaning its finances were not tied to councils and visa-versa.

Former Wellington Mayor Kerry Prendergast is chairing the oversight advisory group for the new entity.

It would not be in place to stop this years’s proposed rates increases – 16.9% in Hutt City and 16.4% in Wellington City (or 18% including a sludge levy) – but would mean future rates increases could be lessened because pipe fixes could be paid back over a longer period.

Roughly half of the rates increases were due to the need to fix ailing water infrastructure.

The plan was to have a new entity in place by July 1, 2025.

Prendergast said a memorandum of understanding between councils was being signed this week about “working together collaboratively”. The new entity would be dealing with government water regulations which were right now a “moving feast”.

Wellington Water staff work on a water leak at the corner of Jervois Quay and Hunter Street in April.

Wellington Mayor Tory Whanau said details of the Auckland deal remained unclear but it sounded positive.

“We know our current model isn’t sustainable, over half the increase in rates we’re consulting on is due to water infrastructure costs,” she said. “We are working with other regional councils towards a new model for Wellington to achieve a similar outcome for our residents.”

Councils were already in talks with Local Government Minister Simeon Brown about what legislation changes were needed. She was this week meeting with Brown and Prime Minister Christopher Luxon with the situation on the agenda.

In a statement on Sunday, Brown said the previous Labour government “wasted $1.2 billion over several years to deliver a water reform plan that was wasteful, took away local control, and was divisive”.

Labour local government spokesperson Kieran McAnulty said the Auckland deal would cost Auckland ratepayers 7% more, while the Labour government’s reforms, repealed by the new government, would have seen a 2% increase.