Mayoral hopeful John Tamihere's announcement to 'part-privatise' Watercare stuns Phil Goff

Auckland Mayoral hopeful John Tamihere has announced bold plans to sell off 49 per cent of Auckland's Watercare.

In what appeared to shock current Mayor Phil Goff, Tamihere told the crowd at a public meeting this morning that proceeds of the partial sale of the water company could instead be diverted to infrastructure.

Tamihere's plan was revealed in the first head-to-head debate with Goff at a business breakfast at the North Harbour Club on the North Shore.

It's the second part-privatisation plan so far throughout his campaign, after announcing in May that, if elected in October, he'd sell off Ports of Auckland but retain its land for future re-development.

However, Goff slammed the proposal, stating it would cause water rates to rise "substantially and burden lower-income families with high costs".

"Privatising Watercare, whose assets are valued at around $10 billion, would force up the cost of water rates with any investor seeking a 7–10 per cent return on their investment," Goff said.

But Tamihere told the Herald that Goff was "driving up rates anyway".

However, he said his plan would lift the burden being inflicted on "the majority of Aucklanders earning less than $80,000".

"To do that you have to open your eyes to where you've got possibilities to release a significant capital that is presently tied up and not providing any proper return on investment. And Watercare's assets are so large that it's not."

He said to release that capital you would look for a partner to take over 49 per cent of that interest.

"The Accident Compensation Commission Investment Fund ... has put an offer on the table for that. Phil has rejected that."

He said the money from the partial sale could then be put towards rapidly improving infrastructure to enhance the city's beaches so it was safe to swim again.

Goff said Watercare was currently required by legislation not to pay a dividend and to provide water at the lowest reasonable price.

Mayor of Auckland Phil Goff was surprised by John Tamihere's plan announced this morning. Photo / File

"Pushing up water rates would hurt families that use more water and place a heavy burden on those on low incomes. Water rates are in effect a flat tax, which means those on lower incomes pay a much higher proportion of their incomes," Goff said.

"Privatising a monopoly does not make sense when an essential service is effectively a monopoly. Taking it out of the public sector where there is more public accountability is the wrong way to go."

Goff said the announcement contradicted Tamihere's previous statements that CCOs should be under closer control by the council. Privatisation did the opposite, he said.

"Watercare is a well-run organisation which provides an essential commodity efficiently and at a relatively low cost. It is regarded by Government as the most effective water provider organisation in the country. It doesn't make sense to mess with its ownership and structure which could put this at risk and cause big rises in water rates."