How will we pay?

The Government just announced its new water infrastructure model for Auckland’s Watercare, which signals how Hawke’s Bay and the rest of NZ will be treated when it comes to managing and paying for our drinking water, wastewater and stormwater systems.

In a nutshell, Watercare’s finances and borrowings will be separated from Auckland Council, achieving the balance sheet separation on which the original Labour Government’s reforms were predicated.

Such separation enables Auckland Council – and presumably HB’s four territorial authorities when our turn comes to make the same arrangement – to go on its merry way in terms of borrowing for other purposes, taking the costs, loans and associated rate increases that would be required for water projects off council’s books.

In Auckland’s case, this takes what had been a projected 25.8% increase in water rates down to 7.2%, chiefly by allowing Watercare to borrow over a longer term. There’s no central government funding relief in this scheme.

Of course some other entity needs to be in place to undertake the necessary water infrastructure operations and future investment … and borrow and rate for it.

In Auckland’s case that entity exists – Watercare.

Standard & Poor Global Ratings will assess and rate the credit-worthiness of Auckland Council and Watercare separately.

In Hawke’s Bay, such a water entity will need to be created – rumour has it that the HB Regional Recovery Agency might be drafted and outfitted for this role.

To us water users in HB, none of this actually changes the significant amounts of money that must be raised and spent to provide safe, reliable and modern water systems. We still need to pay for it … it’s just a question of who send us the bill and how much is off-loaded to future generations to pay.

The Government says detail on how local councils can implement their respective deals will be forthcoming in a few months. That suggests our councils will need to keep their expensive water infrastructure spends in their new 3 Year Plans to be adopted by 30 June.


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