Wellington isn’t the only municipality facing water price issues

Campbell Barry.
Photo: RNZ/Reece Baker

The mayor of Lower Hutt says most city councils will soon face the same challenge as Wellington when it comes to funding water infrastructure.

Local Government Minister Simeon Brown has appointed a Crown observer to Wellington City Council after he reversed his decision to sell airport shares, creating a big budget hole in his long-term plan.

Brown also criticized the council for paying for water infrastructure through rates rather than debt.

The mayor of Lower Hutt, Campbell Barry, spoke about this. Morning report on Wednesday Wellington could not pay it out of its debts, and neither could its council.

“I would say that most city councils across the country would be in the same position because we, currently implementing our long-term plan several months ago, were required to stick to the margin, to stay within the balance options that we had. .

“And what the government put forward in the Wellington case was that they should have done it, but they couldn’t do it, which seems very unusual.”

He wanted the minister to clarify what he meant.

“Councils like mine, and many others across the country, are essentially going through really difficult times with the change of government and various reforms, and don’t actually have the tools available to us in our long-term planning to do what we think – Wellington City apparently should have done it. do, so this is a serious concern. And, of course, some clarification would be useful.”

Barry said central government intervention should require a “very high bar”.

“This government talked a lot about localism before they were elected and about local decision-making and they need to make sure they allow councils to make their own decisions and serve their own communities.

“So I have little concern about any type of government intervention and some of the rhetoric from ministers I don’t think has been helpful to local government in general.”

Simeon Brown.
Photo: RNZ / RICE BAKER

Wellington City Councilor Tony Randle backed the motion not to sell shares in the airport, although he was initially in favor of it, but welcomed the appointment of a monitor.

“I think the board has had a hard time making some decisions, key decisions regarding its financial sustainability, and I think the overseer will provide us with that type of outside attention to help us really focus on some very difficult decisions,” he said. Morning report.

“I think the council has not developed a plan that is financially sustainable. We have a reserve fund in terms of borrowing capacity, which is being spent according to the current plan, and now we have to rebuild it.”

Brown said the council’s move would “result in overcharging Wellington City residents by more than $700 million over 10 years”. Randle said this was “news to me.”

“I don’t quite understand where he’s coming from and so I’m afraid I can’t help you with the judgment contained in his press release.”

“We finance the water supply – as far as I understand – through debt, but we don’t find enough. And the problem is that water is the number one priority, but we are still trying to move forward with projects like the Zero Waste Program and the Golden Mile, and this is where these difficult decisions need to be reconsidered and reconsidered.”

According to him, “everything” should be on the table except water. Projects such as the Golden Mile may be undervalued and cycle lanes may be scrapped. However, he said it would cost more to demolish the town hall than to finish it.

“It is clear that the minister warned us. He gave us… “nanny”, which I think is the appropriate term. We have to do it right, and I think we can do it because there are many solutions. , we’ve already made a lot of difficult decisions… So, we can do it, but this time we’ll have to do it.”

A water pipe burst in Wellington, October 2024.
Photo: RNZ / RICE BAKER

Council member Nureddin Abdurahman was the initiator of stopping the sale of shares in the city airport. He said there were mixed feelings around the council table about the monitor’s appointment.

“Obviously the minister has spoken now and for us it’s just about working constructively with the appointed monitor and determining how our city can move forward and obviously there’s a bit of an issue with the way this council is functioning. and I think that now for some of the board members it’s also a kind of self-realization.”

He said it wasn’t even clear how much exactly the council needed to save, and that taking on more debt was still an option – although it likely wouldn’t be enough to cover the water infrastructure shortfall.

“We will spend $1.8 billion on water infrastructure over the next 10 years. I know it’s not enough, but that’s how much we spend. If we increase the debt ratio to 280, which is the maximum we can go to, I think we’re at about $400 or $500 million, I don’t think that’s a lot of money to put into water infrastructure.

“Our local government funding model is broken. Frankly, the central government should come up with some kind of strategy to solve some of the infrastructure problems we have.”

“Deeply concerned”

Dean Knight, deputy director of the New Zealand Center for Public Law, said there was little justification for Brown’s interference in council decision-making.

“I do think it’s a terrible precedent and I’m deeply concerned about it because if you start throwing it back, the issue being used to justify intervention here will be based on what appears to be an ideological disagreement on two policy issues,” He said Morning report.

“You know how the costs of water infrastructure will be allocated – not the costs themselves, but the belief that they should be financed more by debt than by rates.

“And secondly, the shape of the investment portfolio and interest in the airport as a strategic asset, as well as a belief in the sale of assets and the development of a broader investment portfolio as a special way of self-insurance against risks.

“And the key point is that this is a debate that reasonable people can disagree on, and it is a choice that is open to local authorities who can decide together with the community. “I’ve had experts tell me Wellington’s approach is smart, and Campbell Barry told me this morning that the way they, Wellington City, allocate water costs is quite common among city councils.”

While Brown did have the right to intervene under the law, Knight said that from what he saw, it was doubtful that what was happening reached that level.

“I think talking about supposed poor decision-making is a red herring. Because, you know, democratic discussion of sensitive controversial issues inevitably generates sparks. This is local government, especially because these issues are decided at the council table. – an open committee, not behind closed cabinet doors…

“I think people shouldn’t be quick to clutch their pearls when you know our local elected members are trying to solve some complex and pressing issues.”

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