KEY POINTS:
Most Aucklanders know the story of how Mayor Robbie fought the proposal to pump Auckland's sewage through a sewerage scheme at Browns Island into the Waitemata Harbour. What is overlooked, however, is the fact that Aucklanders were persuaded to pay for the more expensive option of a brand new sewerage works at Mangere.
Who would argue today that the cheaper Waitemata option was the correct one?
That was 50 years ago. What is different in our city today?
Obviously, the answer is a lot and not a lot. Our population has more than doubled. We are more environmentally aware. Our standards are higher. Our tolerance for failure is lower.
More and more we demand that Auckland be not only an attractive city on the outside but also an attractive city on the inside.
Against this context we have just had the Great Water Debate. As with the debates of 50 years ago, there have been some misrepresentations of the facts, some misleading debates and a lot of emotion - some justified and some not justified. Politics has raised its, sometimes ugly, head.
The most damaging and hurtful charge of all has been that Auckland City Council is putting "profits before the environment". That is blatantly untrue. Auckland City Council is spending a huge amount on the environment - more than any other council ever before and more than any other council in the country.
However, we do have major problems. In some areas of the city our storm water and sewerage systems are connected - sometimes by design, sometimes by accident. During Auckland's heavy rainstorms the inevitable overflows occur.
The council is now spending in excess of $40 million a year on storm water upgrades and maintenance alone, an amount considerably more than the $24 million charitable payment from Metrowater and this expenditure is projected to increase.
With all environmental clean-up work there will always be an argument over priorities and priorities will change over time. However, it is wrong to suggest that stopping sewage overflows into the harbour is not a priority.
Another allegation made is that we misled the public over expected price rises from Metrowater. Again, this is incorrect. All of our projections including the preparation of our draft annual plans and the preparation of our budgets go to the Auditor General. He looks carefully at the consultation processes we follow. He gave us a clean bill of health.
Why then, the bigger than expected water price increase? Between 2006- 2007 it became apparent some of the cost increase projections from Metrowater were understated. As this information has come to hand projections have been revised and then incorporated into the proposed price rises.
Not to fully acknowledge these price increases, as unexpected as they were, would be financially irresponsible.
I have also seen the words "price gouging" used several times. Again, the facts do not back this up. Metrowater has nearly a billion dollars of assets on its books, most of it underground in the form of pipes.
This money, tied up in these assets, like all money, has a cost. This cost of capital does have to be recognised and not to do so would mean that water is not charged correctly.
If water is not priced correctly higher users such as those who have big swimming pools or those who waste water would end up being subsidised. That is clearly not fair or appropriate.
There have also been some wild projections about the price of water. The facts are that over the next year the price of water for the average user will go up by $2 per week or $100 for the whole year. The $400 figure quoted in the Herald last week only applies to the top 1.8 per cent of water users, whose water use is equivalent to a household over nine people or more.
There is always room to debate the long-term pricing policy of water and we have signalled we will review our statement of intent with Metrowater (that controls the charitable payment to the council) when we start the annual plan process in November.
The only appropriate time to do this is at the start of the annual plan process. To revisit the water pricing policy three weeks before the 2007-2008 annual plan is signed off would be knee-jerk and irresponsible.
It should be noted, those who have proposed a lower or nil increase in the price of water have not shown any indication of where the lost income would be made up from.
To balance the books there are only two options. The first is to increase household rates to cover the loss in revenue. This would amount to an approximately additional 5 per cent surcharge on rates per year.
The second option is to cut expenditure to compensate the shortfall and this would amount to approximately $220 million over eight years.
Any combination of the two options is possible. However, these would be very hard decisions given the huge challenges we face as a public body to provide for the future.
Running any big business requires balance. Compromises have to be made, financial responsibility has to be maintained, the books have to be balanced. A sense of vision has to be maintained.
Knee-jerk reactions to water pricing, made on misleading information are not part of the responsible management equation.
* Dick Hubbard is Mayor of Auckland City.
