KEY POINTS:
With one Government committee seeking ways to simplify Auckland's local government structure and another about to probe water price hikes, how about some lateral thinking?
Why not remove control of water from the sticky fingers of the various local councils and integrate production and delivery under one stand-alone, publicly owned, regional water company?
Into its charter would be written that its function was to provide water for the people of Auckland at the best possible price, fullstop.
Of course, such a proposition will have the mayors and hangers-on screaming like banshees, for water is to Auckland local government what fuel tax is to central government, a means of laundering money. Just as a proportion of fuel taxes goes into the general government coffers, so part of the money we pay to our various councils for water is being siphoned off to pay for roads and libraries and other non-related council business.
The local councils buy water from bulk supplier Watercare Services at 45c per 1000 litres, then pipe it on to you and me at more or less three times that price, depending on where you live.
Watercare was set up and run by regional government until 1992, when the National Government snatched it away. Eventually, it went back under political control but not to the regional council. Instead, it was handed over to the six territorial council customers.
The regional council has always felt aggrieved about this injustice and the new owners guiltily twitch that justice might one day prevail.
Why don't the local councils want this regional operation back where it rightly belongs? Well, one reason is that they enjoy milking it.
It was the height of hypocrisy this time last year for Auckland Deputy Mayor Bruce Hucker to oppose any transfer of ownership because the ARC had made it clear that it intends to use Watercare as a cash cow.
Talk about the pot calling the kettle black. He knew at the time that he and his other co-owners had by then rendered the poor old cow all but dry. Over the previous two years, they'd sucked $25 million in surpluses out of Watercare. By law, Watercare was not allowed to pay a dividend so the owners came up with euphemisms to get around it.
Now Watercare management warn it will have to double wholesale water charges over the next decade. Part of the reason must be put down to the activities of the voracious milkmaids.
Having got all it could out of the bulk supplier, Auckland City, for its part, turned its attention to its water retail company, Metrowater. A year ago, the council ordered Metrowater to provide a dividend of $280 million over the next 10 years. The council press release referred to the 9.6 per cent price rise in 2006 as charitable payments. Personally, I like to choose which charities I support - not have them dictated to me by local politicians.
Last week, Auckland City councillors voted to raise water prices another 9.1 per cent. The extra money is not to cover water costs, it's to disguise a budget shortfall that would otherwise appear as a rates blow-out in election year. In other words, we're being asked to pay a 10 or 20 per cent surcharge on our water bills to protect politicians from ballot-box embarrassment.
Back in 1995, LEK Consulting reported to the Auckland Regional Services Trust that the vertical integration of the industry, which meant the amalgamating of all the water and wastewater functions of the six territorial councils and Watercare, would achieve annual operational efficiencies of around $13 million, less new annual costs of around $1 million.
With water prices heading skywards, city politicians should explain why they continue to turn their backs on such potential cost savings. To me, the answer is pretty obvious. They're reluctant to relinquish control over the cash cow's teats.
If ever there was a service waiting to be regionalised, it's water. The production process already is. But customer delivery and billing systems are duplicated seven times over. Not only will one regional company be more efficient, it will also remove the service from the clutches of the city milkmaids.
