Local water done well or regional water done badly?
Thursday, 17 April 2025
Tim Brown is a Wellington City Councillor. He is an elected member on the Motukairangi/ Eastern Ward, but will not stand in this year’s local government elections.
OPINION: Why did you run for council? A common question I answer by saying I was so disgusted by my children not being able to afford a house in Wellington without parental support that I thought I’d try to do something about it.
The follow up? Let’s say success at reducing construction costs has been elusive. My modest successes have been at reducing costs for those who can afford to live in Wellington by chipping away at unnecessary council expenditure and hence rates.
In this regard, two items loom large in council’s current plan which is open for public consultation until Monday: what happens with council’s social housing and what happens with the restructure of council’s water system.
Mismanagement of Wellington City’s drinking water, sewage and stormwater hangs over council like a bad smell. Over the last decade the average annual cost per ratepayer has risen from $1200 to over $2500 (plus GST) while over the same period Wellington Water Limited claims that the city’s water network losses have risen to 28% from 8%.
A lack of accountability and reliable information allowed the failure to rumble on with the public bombarded by claims with much mud slung.
The problems are not unique to Wellington and Government has stepped in with legislation requiring that councils change the way they manage their drinking water and sewege, while allowing more local discretion with stormwater.
The current model for managing Wellington City’s Three Waters (drinking water, wastewater and stormwater) involves council owning all the assets and raising all the revenue as rates, levies and charges and then paying operating company Wellington Water Limited (WWL) to maintain, upgrade and operate the networks and facilities.
This model is a debacle. When WWL was originally set up its board of directors comprised water engineers and individuals with finance, legal, and regulatory experience. This quickly changed and the board became a home for retired local authority executives and politicians, and friends of the family.
Oversight of the WWL board was delegated to a panel of mayors and iwi representatives, who were more interested in their own interests than the efficient operation of WWL.
Success always starts with the “top two inches”. When leadership is deficient, don’t expect the corporate body to do the right thing. This truism means that any restructure of Wellington City’s Three Waters must start at the top, ensuring the water enterprise is led by suitably qualified directors who are accountable to the people who rely on (and will pay for) the three waters.
The first step to achieving this would be to learn from the current failures. Yet this is almost the exact opposite of what has happened. The council’s “preferred” water restructure plan entails the establishment of a regional Three Waters enterprise to be overseen by a panel of mayors who will appoint directors. Seriously, was no one paying attention?
Not surprisingly, of the 10 councils invited to participate in the new repeat of the old failures five have pulled out. Wellington City Council hasn’t, yet. But it is not too late as council’s final decision is yet to be made.
Four things are required to ensure Wellington City really fixes its pipes and does so at the least cost and social harm to Wellington residents.
Firstly, stormwater should stay with council paid for from rates. Sector experts are almost unanimous in wanting stormwater to not be lumped in with the commercialisation of drinking water and wastewater.
Preventing floods, coastal protection, minimising damage from deluges, efficiently absorbing rainwater through green spaces, restricting the use of flood-prone land are all public goods. They are things everyone benefits from, which should be paid for with taxes or rates.
Water charges are justified because the use of water and sewerage are services with private benefit. A water company with income from water charges is simply not going to prioritise stormwater. Furthermore, the Commerce Commission isn’t intending to regulate stormwater, because it doesn’t know how to.
Secondly, the corporatised water utility looking after the other two waters - drinking and waste - should be subject to oversight by a formally constituted local consumer oversight group, replacing the deficient “mayoral panel”. It would have contracted rights to oblige the water company to provide information to help consumers understand where their money was being spent and rights to scrutinise the company’s investment and pricing plans.
Wellington City should corporatise its drinking water and sewerage assets, liabilities, and operations. It should not amalgamate them with those of other councils. Wellington City’s water assets are valued at over $8 billion and the associated income is over $200 million a year. It’s easily a big enough business to sustain high calibre direction and management. Most critically, absolutely no case has been put forward to explain how Wellington could be better off from amalgamating. The loss of accountability and Wellington residents paying for more than just what their drinking and wastewater systems cost are inevitable.
And lastly, social harm minimisation should be a primary goal of the reforms. The shift from rates-funded to user-pays means winners and losers. Landlords and owners of high value homes will pay less.
Renters and owners of lower value will pay more. Any new water companymust impose efficient and sufficient water charges, and social harm must be minimised. This needs to be built into the reforms.
Ten years of leaks, rising costs, and finger pointing have left Wellingtonians feeling that anything will be better than what we have now. Unfortunately, that hope isn’t certain of fulfilment.