Auckland City Council
Media release

5 March 2008

Water prices surface as key issue at budget meeting

Capping water price increases to a low level was a key consideration for the council as it considered the priorities for the city over the next year and budget options for how to fund them today.

“We made a commitment to review Metrowater's charges. We are doing that,” says Deputy Mayor David Hay.

“We know people are concerned about the rising price of water and we have looked at how we can ensure people have certainty that their water bills aren’t going to skyrocket over the next three years.”

The Combined Committees meeting today has proposed capping water price increases to the level of council’s inflation for the next three years.

The council’s rate of inflation is forecast at 5.1 per cent for the next financial year.

The level of return on the public investment the council gets from Metrowater in the form of charitable payments directly impacts people’s water bills.

Part of the money Metrowater receives is given to the council to pay for a large part of the $40 million the council invests each year to improve stormwater infrastructure.

If the council stops taking the payment, improvements would need to be funded from other sources, such as increasing rates or by deferring or stopping other projects.

The council has proposed three options for the future of the charitable payments (return on investment) it gets from Metrowater in its draft annual plan: continuing it, reducing it over time and cancelling the payments altogether.

“We are committed to removing charitable payments, but in a way that balances the burden on ratepayers and water users,” says Mr Hay.

“Removing the charitable payments in one fell swoop would have a negative impact on ratepayers. It would require an extra 6.6 per cent increase in overall rates for the 2009 to 2010 year.

“An 11.7 per cent increase is unlikely to meet with ratepayer support.

“It is also important to remember that water pricing enables the council to receive an annual payment from organisations that do not pay rates, so they still contribute to the running of the city via their water bills.”

“We anticipate that the way water is managed in the region will be a key issue that the Royal Commission on Regional Governance will address in its submission to the government and that we are likely to see a change in the current structure within the next three years,” says Mr Hay.

The future of Metrowater’s charitable payments will be consulted on as part of the council's draft annual plan including the option to remove charitable payments completely.

The council’s draft annual plan will be available for public feedback from 18 April to 20 May 2008.

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