KEY POINTS:
Water bills are set to soar from $717 to $1711 over 10 years for the average Auckland City household to offset rate rises and boost the region's water supply.
Councillors and officers have known about the 140 per cent rise for more than a year but done nothing to alert ratepayers of pending financial hardship.
What's more, councillors voted last week for even bigger water bills by supporting a proposal for the region's monopoly water supplier, Watercare, to pay councils a dividend.
Watercare sells water at "least cost" to six councils, who own it.
About one-third of the $1000 increase is to pay for new capital works by Watercare. The rest will go into Auckland City's coffers for spending on stormwater.
Money earmarked for stormwater will be spent on other areas, prompting some councillors and critics to label the increases a "rates rise in drag".
The effect of higher charges by Watercare on other councils is less clear because most part-fund water and wastewater services out of rates.
Auckland City operates user-pays for water and wastewater through its water company, Metrowater.
Confidential papers, obtained by the Herald under the Official Information Act, show the council forced Metrowater to increase its dividend over 10 years from $50 million to $280 million - even though it was aware higher water bills from Watercare were on the horizon.
In March last year, Metrowater chief financial officer Susan Putt warned council finance manager Andrew McKenzie that Watercare's plan would "affect Metrowater's ability to pay charitable payments" and it would need to change prices to "ensure financial viability".
Four weeks later, the council told ratepayers in the consultation document for its 10-year budget to expect "small" increases in water bills to pay for higher dividends.
A few weeks later, in June, councillors were sworn to secrecy about the "price increase implications" of the $280 million dividend at a workshop and in a "confidential" budget paper.
Mayor Dick Hubbard said there was no evidence to show the council had misled ratepayers about the level of water price increases.
The Auditor-General reviewed and approved the pricing signals given by the council.
Neither Mr Hubbard nor council chief executive David Rankin has provided evidence to show the council indicated to ratepayers last year that water prices would go up by 9.6 per cent and 9.1 per cent in the first two years.
The council received 12 submissions last year on the higher dividends, eight of which were opposed, claiming it was not a transparent source of revenue and effectively a "rate increase".
Officers said the proposal would improve the company's funding mix and send price signals to customers.
City Vision councillor Glenda Fryer said most people commented on the bigger issues in the 10-year budget and took "small to be small" in relation to water prices.
