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Auckland City councillors are budgeting to take $63.7 million in payments from Metrowater over five years, a practice condemned by Mayor John Banks as "water price gouging".
Instead of putting an immediate end to the controversial policy of taking "charitable payments" from the council-owned water company for general council spending, the Citizens & Ratepayers-controlled council wants to phase out the policy.
Ratepayers will be consulted in this year's budget round on an immediate end to the water policy, but without the backing of C&R.
The right-wing ticket has decided to keep taking payments from Metrowater, albeit at a lower level set by the previous council.
The Herald understands at least one C&R councillor wanted the party to push for the policy to be "gone by lunchtime", which is in line with the ticket's election policy of keeping water bills "as low as possible".
The water policy came in for severe criticism after being devised by the previous council. Critics accused the council of using Metrowater as a "cash cow" to disguise rates rises.
A parliamentary select committee inquiry into the policy accused the council of "misleading" ratepayers, "abusing" its powers providing for charitable payments and strongly advised the council to reconsider it.
The political fallout included City Vision leader Dr Bruce Hucker losing his job.
Under the C&R proposal to be considered at a budget meeting on Wednesday, water and general rates will increase by 5.1 per cent this year, the council's rate of inflation.
The previous council budgeted for a 10.2 per cent rates increase and a 9.3 per cent increase in water bills.
The council plans to keep water bill increases at the rate of inflation until the level of charitable payments reaches zero in five years. After that, water bills will rise according to the cost of Metrowater's operation.
Under the option to immediately abolish charitable payments, water bills would fall 11.9 per cent from July but rates would go up 6 per cent.
Council officers have looked at cheaper options involving borrowing to cover the lost income from Metrowater but C&R is not keen on the idea.
Last night, Mr Banks said he might have to do a flip-flop on water after telling voters the practice of "water price gouging" was unethical and had to stop. He said he was aware people were hurting and was reluctant to increase rates by 6 per cent to stop charitable payments.
The council could not find enough savings to halve rates and stop charitable payments of $24 million this year.
Deputy Mayor and C&R leader David Hay said raising rates and water bills at the level of council inflation made it simple for people to know where they were heading.
Last year, Mr Hay said the policy of using Metrowater as a cash cow "stinks".
