Council Water Prices "through The Roof" And Unjustified

Given that all Auckland's councils buy water at a cost of $0.45 a cubic metre, the huge mark up and variation in price that water is on-sold to consumers across the region suggests that some hard questions need asking.

Watercare's wholesale price is 0.4476 cents a cubic metre for water sold to Auckland's local councils who on sell to customers at hugely marked up prices, as follows:

-- Metro Water (Auckland City) - $1.29 a cubic metre, or 287% mark up
-- North Shore City Council - $1.15 a cubic metre, or 256% mark up
-- Waitakere City Council - $1.32 a cubic metre, or 293% mark up
-- Manukau City Council - $1.02 a cubic metre, or 227% mark up.

All prices are excluding GST.

Michael Barnett, chief executive of the Auckland Chamber of Commerce, said the marked up price of water in Auckland is "clearly excessive."

He reacted strongly to suggestions that Manukau City wants to charge $1.99 a cubic metre to cover shrinking revenue because local businesses are using less water to save costs, and Auckland City wants to increase the price by nearly 10% in order to extract a $280 million dividend over 10 years.

"How can these price rises be justified when it is already very obvious that Metrowater and other Council water retailers are already charging prices that look excessive against the core price of water in Auckland," said Mr Barnett.

"I note that Watercare has legislation requiring it to be a minimum price provider while maintaining the asset. Perhaps the council-owned retail organisations need a similar restraint."

He noted that previous reviews of Auckland's water industry dating from the 1980s all showed that marked up price of water sold by councils was more than 200%, and had recommended the industry be rationalised to reduce the cost to consumers.

However, all the councils have voted against rationalisation, "and with marked up prices well above 200% it is easy to see why they would be opposed to such a reform."

Mr Barnett said the rising price of water is counter-productive to the region's best interests if it wants a thriving economy and to attract businesses here. "It is the workings of a monopoly – and stupid – that businesses should be facing a price hike for water as a 'reward' for reducing water usage and making savings to the businesses bottom line."

He strongly urged Manukau and Auckland cities and the other councils to re-consider their proposals to lift water prices for any reason other than maintaining the asset.

ENDS

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