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Auckland City councillors and senior bureaucrats forced the council-owned water company Metrowater to raise water bills to take some of the sting out of a double-digit household rates rises last year, official documents show.
Green Party councillor Neil Abel said the papers vindicated his claims that the council was using Metrowater as a cash cow to fund other projects in the city.
Papers obtained by the Herald under the Local Government Official Information and Meetings Act show that increased "charitable payments" from Metrowater were one of several options put forward to fund $3.7 billion of new capital works in a council 10-year plan.
Higher rates, selling airport shares, higher development contributions and loans were among other options.
In December 2005 the council signalled that higher water bills could reduce overall rates by 1.7 per cent last year and 0.5 per cent in each of the following years but later conducted talks with Metrowater behind closed doors. Ratepayers were not consulted on the 9.6 per cent rise in water bills last July.
Higher water bills were accompanied by a 13.4 per cent rates rise to households.
In a letter to Metrowater chairman Michael Stiassny on April 4 last year, council finance general manager Andrew McKenzie said "the charitable payments free up rates revenue to address priorities in other areas".
In another letter to Mr Stiassny in June, Mr McKenzie said the council would take responsibility with ratepayers and the media for the price increases.
When ratepayers were told in a press release of the increase, the finance committee chairman said the increased charitable payments would be spent on stormwater.
He did not mention that money already allocated for stormwater would be spent elsewhere.
Mr Abel said last year that the tactic was smoke and mirrors, a rort, and amounted to a hidden rate rise.
"The use of our water charges as a way to increase the local tax take is immoral."
