Selloff fears remain despite Govt about-face

Rodney Hide. Photo / Mark Mitchell

The Cabinet opened the door last month for the privatisation of $5 billion worth of Auckland water assets - only to slam it shut seven days later.

On October 19, the Cabinet agreed with a proposal from Local Government Minister and Act leader Rodney Hide to allow the Super Auckland Council to sell water assets from 2015.

The following week, it overturned the decision when Mr Hide presented another paper on wider water changes.

Last night, Mr Hide denied running a messy process through the Cabinet setting up the Super City and making changes to the Local Government Act 2002 affecting all councils, saying he had had to present a lot of papers on both issues.

Mr Hide, whose party believes local government should progressively shed ownership of its commercial activities and piped water should be supplied on a fully commercial basis, was keen to allow the Auckland Council to privatise water assets after 2015.

But he acknowledged that changes to the Local Government Act 2002 would not allow for privatisation. Changes would only extend the 15-year limit on private water service contracts to 35 years and allow companies to build, own and operate new water and wastewater treatment plans during the contract period.

Labour MP Phil Twyford said that for the Cabinet to take two entirely inconsistent decisions within a week indicated a shambles.

"In spite of the fact they have apparently overturned the decision, this nevertheless demonstrates a clear political intent and is evidence of a privatisation agenda that this Government has been denying black and blue all year," he said.

The Government plans to set up a single company in Auckland for all drinking water and wastewater services by transferring the retail assets of the councils to the region's bulk water and wastewater company Watercare. The new company will have assets worth $5 billion.

Cabinet papers, released by Mr Hide, show he also wanted to lift the ban on Watercare paying a dividend to provide a return on ratepayers' investment, but lost the argument.

Watercare wanted to keep the prohibition to avoid having pressure placed on it to pay a dividend. The papers pointed out the criticism Auckland City Council copped for taking "charitable payments" from its water company to avoid increasing rates.

Auckland water campaigner Penny Bright said Mr Hide and National Cabinet ministers were setting up a framework to make it easier to privatise water assets.

She said there was no evidence that privatised or corporatised water models produced more efficient or effective services for most ratepayers.

The Government is also planning to overturn the requirement for councils to consult the public before contracting out council services to council-owned businesses, private contractors or not-for-profit organisations.

"This section [of the Local Government Act 2002] is biased against the use of the private sector to deliver council services," the Cabinet papers said.

WHAT RODNEY HIDE REALLY THINKS

* Local government should progressively shed ownership of its commercial activities.
* Piped water should be supplied on a fully commercial basis.- Act local government policy