KEY POINTS:
Last year there was no pretence. Metrowater said quite frankly that the Auckland City Council's hunger for bigger dividends was to blame for a 9.6 per cent rise in water bills. This year, as local-body elections nudge ever closer, there is more circumspection. A 9.1 per cent lift in the water company's charges fingers the council only at the bottom of a list of reasons for the increase. Metrowater should not have bothered with such artifice. For householders, the outcome is the same. This second big increase in their water bill in consecutive years is nothing more than another rates rise in disguise, a highly unpleasant addendum to a planned 33 per cent lift in household rates in the first term of Mayor Dick Hubbard and his City Vision/Labour-controlled council.
It is easy enough to see the council's motivation. Stung by criticism of double-digit rates increases in its first two years, it is looking at new funding sources, such as increased dividends and loans, to keep rates down this year. The efficient Metrowater operation is an obvious target and, again, it has been leaned on. Never mind that in doing so the council is effectively invalidating the very reason for the company's existence.
One of Metrowater's main goals is to "minimise costs to customers through our user-pays philosophy, increased efficiencies and long-term planning". As such, the amount it charges should reflect what it costs to supply water and maintain Auckland City's waste-water system. Its mandate is not to make profits to be spent on other council activities, nor should it be a cash cow for such activities. Yet that is precisely what is happening as a result of negotiations carried on behind closed doors and without a smidgen of public input. This year Metrowater appears to have been asked to make an $18 million payout to the council. An as-yet-unexplained profit slump has left it about $5 million short of this and, consequently, householders face a substantial increase in their water bills.
Metrowater's position may be compared with that of state-owned enterprises. They are not in the business of answering Government calls whenever funding is required to disguise something embarrassing. Indeed, the Crown Company Monitoring Advisory Unit, a branch of the Treasury, would be expected to quickly point out the perils of that course in performance and governance terms if it occurred. Exactly the same principle should apply to Metrowater. If it does not, there seems no good reason for its existence as a stand-alone entity. It might just as well be brought back under city council management.
Metrowater's record is the clearest indicator that such a course would not benefit householders. Until the council became covetous, it had been able to hold prices, all the while offering a 10 per cent discount for prompt payment. Indeed, its success in cutting costs and initiating efficiencies supplied evidence of just how effective this model could be. The comparison with the ongoing fumbling of the city council is only too obvious.
Now that council is again intent on tapping Metrowater's strength to compensate for the palpable shortcomings in its own use of resources. As much as the latest 9.1 per cent increase may owe something to increased capital works and operating costs, the payout to the council is, by the water company's own belated admission, the single biggest factor. Householders will not be fooled. This is an increase in the rate take by another name.
Its method of imposition mocks both them and Metrowater's best efforts to fulfil its potential.
