Auckland councillors will consider a confidential paper tomorrow containing options to prevent water bills from rising by 25 per cent in July.

The Government’s move to scrap Labour’s ‘Three Waters’ reforms and replace them with its own ‘Local Water Done Well’ plan has costly implications.

As things stand, National’s water reforms will cost the average Auckland household about $220 a year, eating into the tax cuts Finance Minister Nicola Willis will unveil on May 30.

Labour’s reforms would have allowed Watercare to keep prices closer to its existing price path of 9.5 per cent next year, but National’s reforms have led the council organisation to flag a price increase of 25.8 per cent for water and wastewater charges.

This would take the average household water bill from $1340 to $1688 over the next financial year, of which about $220 is attributed to Government policy.

National’s policy leaves Watercare’s debt on the council’s books with insufficient headroom to fund its $13.9 billion capital investment programme over the next decade without big price hikes or reducing its work programme.

Labour’s reforms would have taken Watercare’s debt off the council’s books and allowed it to borrow more money to fund capital investment.

Water prices are set to rise in Auckland. Photo / Watercare

Auckland Mayor Wayne Brown said the projected price path for water bills is unacceptable, and he is working hard with the Government and Watercare on options to resolve the issue.

The options will be considered at tomorrow’s governing body meeting in the confidential section.

A paper on the issue, ‘Local Water Done Well’ - Auckland solution’ is being withheld for commercial reasons.

“In particular, the report contains financial information and options for water reform in Auckland which is subject to negotiation with the Crown,” says a note on the meeting agenda.

Said Brown: “I am confident a solution will be found.”

The mayor has previously said one option under consideration is cutting or deferring funding to Watercare’s capital programme.

Local Government Minister Simeon Brown said the Government is working with Auckland Council as it develops options for the financial sustainability of Watercare’s investment programme. This will ensure affordable water charges for Aucklanders, he said.

“The Cabinet has agreed on a path which will enable any required legislative changes for a financially sustainable model for Watercare to be included in the Transitional Provisions Bill. This Bill will be passed through Parliament in the middle of this year,” Brown said.

Meanwhile, the finance minister has knocked back a request from Wayne Brown for a return of GST on rates, often referred to as a tax on top of a tax.

In letters between the two senior politicians, released on the governing body agenda, Brown said Aucklanders are being shortchanged by central government, adding finance staff estimate the GST paid to the Government this financial year is $415 million.

Finance Minister Nicola Willis. Photo / Mark Mitchell

“In size and scope, Auckland Council is more akin to a State Government in Australia. Australian states receive 45 per cent of their revenue through transfers from central government; Auckland Council receives a paltry 12 per cent,” he said.

In a response two days ago, Willis said returning GST on rates is not under active consideration.

She said as part of the coalition agreement with Act, the Government is considering sharing a portion of GST collected on new house builds, and there are reforms to unlock new funding tools for councils such as time-of-use charging, value capture and public-private partnerships.

Willis also rejected a request from Brown to pay rates on Crown properties, such as schools, hospitals and the conservation estate. Some Crown properties, including Kainga Ora housing, courts and fire services, pay rates, and all Crown properties pay water and rubbish collection charges, the minister said.

Bernard Orsman is an award-winning reporter who has been covering Auckland’s local politics and transport since 1998. Before that, he worked in the parliamentary press gallery for six years.

This article was originally published on the NZ Herald here.