Auckland Council is not convinced the reforms will lower water bills. Photo / File
Auckland Council is not convinced the reforms will lower water bills. Photo / File
The promise of cheaper water bills from the Government's Three Waters Reforms is doubtful and cannot be verified, says Auckland Council.
A Scottish report underpinning the controversial reforms says the average household water bill in Auckland will be $803 in 2051 as opposed to $2076 if the reforms don't goahead.
Auckland Council group treasurer John Bishop says the council has significant doubts and concerns about the assumptions used by the Water Industry Commission for Scotland(WICS) and the conclusions drawn from the modelling.
Auckland Council has strong reservations about the Government's Three Water Reforms. Photo / File
What's more, he said, the council was not able to test the $803 figure because WICS refused to share its specialised modelling software with the council and the New Zealand companies that peer reviewed its report - Beca and Farrierswier.
Local Government Minister Nanaia Mahuta is dangling the promise of cheaper water bills in the WICS' report as as key selling point for the Three Waters Reforms.
The reforms have met stiff resistance from several councils, leading the Government to effectively confiscate the drinking water, wastewater and stormwater assets of 67 councils and place them in four giant water entities.
Auckland Council supports the objectives of the reforms, but opposes the model that strips it of direct control and accountability over the city's $11 billion of water assets.
The reforms stem from Havelock North's outbreak of gastroenteritis in 2016 when four people died and 5000 became ill, the drought in Auckland and old pipes bursting in Wellington.
WICS, which tested thousands of combinations of scenarios and assumptions to come up with a likely outcome, found the average household water bill would be $800 to $1640 with reform and $1900 to $9000 without reform.
The modellers estimated the four entities will need to invest between $120 billion and $185b over the next three decades, but said the scale, expertise and 50 per cent efficiency savings of the companies will lead to lower water bills.
Auckland Council group treasurer John Bishop. Photo / Supplied
The promise of lower bills in Auckland comes as Watercare begins a 10-year programme to raise household bills by 111 per cent, from an average of $1069 to $2261.
Bishop said a benefit of the Three Waters Reforms is that Watercare will be able to borrow more money than under council ownership.
But even if it did borrow more money under the reforms, water bills would continue to rise by 5.9 per cent a year under a scenario Watercare modelled out to 2031 that provided for $800m of extra investment, Bishop said.
Infrastructure consultancy Farrierswier said it cannot say whether the forecasts and estimates generated by WICS's methodology and assumptions are reasonable, but the magnitude of benefits appear feasible.
"We do not make any statement in this report as to whether any forecasts or projections included in this report or the WICS Phase 2 methodology or modelling will be achieved, or whether the data underlying any prospective financial information are accurate, complete, or reasonable – we understand that this is being considered by other parties."
The consultancy said work on average household bills in 2051 is sensitive to changes in key inputs and assumptions, adding "forecasts almost always turn out to be incorrect, especially over a 30-year horizon".
Wellington has become the poster child for the country's water infrastructure crisis. Photo / Jack Crossland
The review of the WICS report by the engineering consultancy Beca focused on comparing Scotland and New Zealand's three water systems and found substantial differences between the two countries.
It did not address the modelling done by WICS on water bills, but said WICS may have under-estimated the cost of investment required and could be overly optimistic about the timeframes due to supply chain limitations in New Zealand.
Mahuta said she is confident WICS' work gives "reasonable estimates" in terms of the direction and order of magnitude of the benefits from reform.
"WICS' work including its assumptions have been independently reviewed by expert consultancies Farrierswier and Beca. WICS' work has also stood up to criticism since its release," she said.
Mahuta said this shows "clear and credible evidence that the Government's Three Waters reforms offers Aucklanders clear benefits compared with the status quo".
She also highlighted Auckland Council's debt position for holding back Watercare from improving services, including overflows of sewage onto beaches during wet weather.
Local Government Minister Nanaia Mahuta. Photo / Mark Mitchell
The Department of Internal Affairs, which is overseeing the reform process, said WICS was commissioned to assess how the proposed reforms could affect customers rather than conduct a detailed pricing review.
A spokesman said WICS sought to estimate the investment required over the next 30 years, the likely impact on costs for consumers under the status quo compared to scenarios offering better access to debt funding, efficiency gains, good management and strong economic regulation.
"In virtually all cases, well implemented reform would have substantial benefits for consumers in terms of lower costs versus the 'no reform' scenario," the spokesman said.
He was unable to say when consumers would start to see lower water bills, saying pricing issues will be made next year following more detailed analysis of current charges and decisions on economic regulation.
Nanaia Mahuta says Watercare is being held by back Auckland's Council's debt position from improving water quality at the city's beaches. Photo / File
The Treasury has not tested the modelling in the WICS report, a spokesman said.
However, he said, Treasury has advised ministers on issues such as financing, regulation, governance, system design and infrastructure for the reforms.
