Wellington City Council’s Crown observer was waiting in the wings in January - A Capital Letter

THREE KEY FACTS

• Local Government Minister Simeon Brown is appointing a Crown observer at Wellington City Council.
• One of his concerns is that rates are being used heavily to pay for water infrastructure rather than debt.
• Last summer, 44% of drinking water was lost through leaks as the region faced a severe water shortage.

Senior journalist Georgina Campbell’s A Capital Letter column takes a deeper look at issues in Wellington, where she is based. She has a particular interest in local government, transport, and seismic issues. She joined the Herald in 2019 after working as a broadcast journalist.

ANALYSIS

Water infrastructure is the inescapable backdrop to Wellington’s problems, to the extent that even the slippery slope to a Crown observer being appointed started and ended with broken pipes.

Local Government Minister Simeon Brown announced this week he intended to intervene at Wellington City Council by way of an observer.

But it’s not the first time Brown has used powers available under the Local Government Act to intervene in Wellington.

He also stepped in during Wellington’s water shortage crisis in January.

Last summer, residents queued for emergency water tanks, which sold out within hours, authorities wanted to draw more water from Hutt River and severe restrictions threatened to materialise while about 44% of treated drinking water was being lost through leaks.

Brown wrote to Wellington Mayor Tory Whanau and her counterpart in Upper Hutt to formally request further information about what their councils were doing to address leaks and the looming shortage. This was after both councils failed to respond to an earlier request for more details.

The part of the Act that outlines these powers to request information is also the part that provides details on the appointment of a Crown observer and commissioners.

A message for Wellington City Council next to a water leak on Ngaio Gorge Road last summer. Photo / Mark Mitchell

This request for information is the lowest level of intervention Brown can make.

It caused excitement in some Wellington circles that it was the first step to appointing a Crown observer.

A few days later Brown said it was not his “focus” to appoint one.

“My focus is on ensuring that at this stage Wellington City Council and Upper Hutt City Council are taking their responsibilities around water service delivery seriously.

“There is significant leakage from their pipes and I want to have assurances that everything is being done to avoid a water emergency here in Wellington,” he said.

It was more a sign of him throwing his weight around than any immediate intention to appoint an observer.

But it was a clear signal Brown would not hesitate to intervene when required.

As it turned out, it was a sign of things to come.

In August, Wellington’s erupting pipes once again delivered the perfect backdrop for the Government’s increasing frustration at councils.

Prime Minister Christopher Luxon delivered a blistering speech to the Local Government New Zealand conference held in Wellington’s new convention centre Tākina.

Prime Minister Christopher Luxon during his hard-hitting speech to the Local Government New Zealand conference in August. Photo / Mark Mitchell

Luxon criticised the $180 million building as wasteful spending and told council leaders ratepayers did not expect to pay for the “laundry list of distractions and experiments that are plaguing council balance sheets across the country”.

He urged councils to get back to basics like picking up rubbish, fixing pipes and filling potholes.

It just so happened that a burst water main had flooded the road between Vivian St and Buckle St in the capital that morning.

Just two months after that speech, Brown announced he was appointing a Crown observer at Wellington City Council.

Wellington’s pipes again played ball and on the same day that Whanau and Brown met to discuss her council’s “shambles”, a cast iron main burst in the central city and flooded State Highway 1 with muddy water.

Recent talk of possible Government intervention was mainly centred around Whanau’s failed bid to sell the council’s stake in the airport – upending the Long Term Plan (LTP) and potentially triggering hundreds of millions of dollars worth of budget cuts.

But Brown focused heavily on problems with water infrastructure funding when outlining his reasons for an observer. That was perhaps not so surprising given how the year has unfolded.

Advice from the Department of Internal Affairs (DIA) highlighted that the council was not utilising its balance sheet appropriately to maintain critical infrastructure like water, Brown said.

A cast iron main burst in the central city and flooded State Highway 1 with muddy water earlier this month. Photo / Mark Mitchell

He accused the council of funding its water infrastructure inefficiently and expensively by front-loading costs on ratepayers rather than using debt.

According to Brown, DIA’s advice found the council’s net borrowings for water infrastructure over the next 10 years of the LTP would be 94% funded by rates and just 6% funded by debt.

Whanau does not accept there has been financial mismanagement at the council and she has said that water investment was funded the same way as other councils.

Wellington City Council staff have said it would be inappropriate for them to comment on statements made by the minister but they are keen to discuss the advice with DIA officials.

The DIA has since confirmed to the Herald Wellington’s figures differed sharply from other councils. For councils with completed LTPs, DIA said 34% of water capital investment was proposed to be debt-funded over the 10-year plan period, nearly six times the rate of Wellington.

On top of this, 13% is planned to be funded by capital revenues and 53% of water services capital investment is proposed to be funded by operating revenues such as rates, a little more than half the proportion Wellington had proposed.

Whanau’s record $1.8 billion investment in water infrastructure, something she is most proud of and plans to maintain, is unravelling at a time when the city needs it most.

With summer around the corner, the city again faces running out of water.

As governments come and go, water reform policy changes and the council in-fighting continues, Wellingtonians would not be blamed for wondering whether the city is any closer to fixing one of its biggest problems.