Editorial: Upgrade water system or give us the cash back

From a purely businesslike perspective Metrowater's balance sheet must be judged an impressive document with its accumulation of $62 million in spare cash. No wonder the company, wholly owned by the Auckland City Council, has won praise for operating as an efficient business.

But what to do with all that money?

One suggestion was that it - with the windfall profits from the council's shareholding in Auckland Airport - should go into a strategic fund for capital projects. Another was that it should be handed back to customers, each of whom would get about $350.

The fate of the money will be under discussion at a council workshop due to meet this month to review Metrowater and its pricing structures. Finance committee chairman Vern Walsh says the workshop will discuss whether the council will take $50 million of the $62 million in what has been termed a "charitable payment".

The temptation to fall on such abundant charity will be great. Councils always have pressing projects on their agendas and, in this case, the money could go a long way towards covering the $73 million estimated cost of fixing the Civic Carpark's leaky roof.

From a purely businesslike perspective, using the Metrowater profits in this way may seem like the right decision but there is another important consideration here which must be taken into account. Although it is a company, Metrowater also performs the function of a public utility, therefore other standards also apply. The amount it charges for its services should not be a means of raising money for purposes other than the supply of potable water and the maintenance of the city's waste-water system.

Metrowater states that one of its primary goals is to "minimise costs to customers through our user-pays philosophy, increased efficiencies and long-term planning". This seems to exclude the notion of making profits to be spent elsewhere on other services.

That the company is efficient there seems to be no doubt. Some years ago it was told to reduce the amount of profit it was making yet, despite its efforts - which included a 10 per cent discount for prompt payment - its coffers have continued to swell rapidly.

Such efficiency is commendable in any organisation but Mr Walsh was surely right when he said that the accumulation of extra cash should not be allowed to continue at such a rate. In the meantime the council should resist the temptation to take advantage of the windfall to tackle unforeseen difficulties such as the car park. To siphon off the money for such a purpose would be akin to central government levying a petrol tax ostensibly to spend on roads and then using it for something else.

The money was collected to provide water services. If it is not used for that end it should be returned to the people who paid it. Otherwise there is a risk the ever-efficient Metrowater will become a mechanism to bolster the rate take by another name.

The only acceptable reason not to return the money to those who paid it is to use it to upgrade the infrastructure of the water supply, whether reticulation or the stormwater system. If this is under consideration the company should make a case to its customers.

A good case and the money could well go to improving and extending the water system. Otherwise it should go back to where it belongs.