Local government Minister Simeon Brown, Prime Minister Christopher Luxon and Auckland Mayor Wayne Brown at today's announcement. Photo: Supplied / Watercare / Simon Runting
The government claims Aucklanders will avoid a projected 25.8 percent water rates increase with the coalition's Local Water Done Well plan.
Local government Minister Simeon Brown and Auckland Mayor Wayne Brown said on Sunday the financially sustainable model would also retain local control of water assets.
They say the previous government wasted $1.2 billion over several years to deliver a water reform plan that was wasteful, took away local control and was rejected by voters.
"Some said that Local Water Done Well could not be done," Simeon Brown said. "But within the space of just six months, the coalition government has worked with Auckland Council on designing a new model for Watercare."
The new plan, with a water rates increase of 7.2 percent, was unanimously endorsed by Auckland Council's governing body.
"This outcome is exactly what we've been looking to achieve," the mayor said. "The new government asked us to come up with a preferred model, and they've agreed to implement it, which is good."
They said the new model meant Auckland's water company, Watercare, would be able to borrow more money for long-term investment in water infrastructure.
The government and mayor said the borrowing would be spread over a longer period - up to $1.9 billion over 10 years - rather than front-loading the cost onto current ratepayers.
"I have long said that this was a balance sheet issue and needed to be treated like one," the mayor said.
"Councils should have more say about how we manage and deliver our water systems. The government have taken this feedback seriously and worked closely with me to come up with this solution which will put water rates on a much more sustainable footing for the infrastructure we need."
Simeon Brown said avoiding a water rates hike would help Aucklanders deal with the rising cost of living.
The council would retain ownership and control over Watercare, but Watercare's borrowing would be considered separate to Auckland Council's for credit rating purposes they said, citing agency S&P Global Ratings.
"Today's announcement means we can deliver a smoother price path for Aucklanders, while still investing in vital projects to maintain and build resilient water and wastewater networks," Watercare board chair Margaret Devlin said.
"We have been talking with Auckland Council for many years about achieving financial independence, to uncouple Watercare from council's borrowing. As a result of today's announcement, we can avoid a price rise of 25.8 percent on 1 July. Instead, water and wastewater services will only increase by 7.2 percent annually for the next three years, without cutting much-needed projects and maintenance. Infrastructure growth charges will increase by 14.4 percent annually for the next three years.
"As a result of this change, the average water bill will only go up by $97 in the next financial year - equivalent to $8.08 a month. This is a great outcome for Auckland."
A bill to introduce the necessary changes in legislation will be introduced later this month.
Labour said under its plan, the increase would have been kept to just 2 percent.
"This is because the Auckland/Northland entity would have had a credit rating of AA, while Watercare will be a BBB at best so the cost of borrowing will be higher," local government spokesperson Keiran McAnulty said.
McAnulty said what worked for Auckland would not for the rest of the country.
"Every time a ratepayer opens their rates bill and sees an increase, they can lay that at the feet of this government."