Wellington Water in crisis as councillors eye exits

Wellington's biggest councils are considering pulling out of the region's shared water services company after a 'summer of sewage' broke the confidence of councillors, Dileepa Fonseka reports from leaked emails

Sewerage failures are so bad in one part of Wellington city that trucks were called in to drive sewage “sludge” to its destination rather than pipe it. 

Brad Olsen, an economist at Infometrics, told Newsroom Wellington’s summer of sewage had been “the biggest wake up call the city has ever had” on water infrastructure. 

Stories of pipes leaking and sewage being pumped into waterways have dominated the capital city's headlines since December. 

Olsen linked failures on the network directly to a nationwide under-investment in water assets in the face of population growth. 

“If they don’t give enough to the organisation then that organisation doesn’t have the ability to fund more than it gets."

Emails leaked to Newsroom show Wellington City councillors have placed blame for the crisis squarely at the feet of the council controlled organisation (CCO), Wellington Water. Many have said the council could be better off bringing its water functions in-house. 

However, moving away from that CCO model would fly in the face of a major government push to encourage councils to band together and manage water as a regional asset. 

Where the buck stops

Olsen said the “buck stops with your local council” when it comes to spending on water even if that money was being spent by a CCO. 

“If they don’t give enough to the organisation then that organisation doesn’t have the ability to fund more than it gets,” Olsen said.

That applies even more so to Wellington Water because it does not own any of Wellington's water assets and does not have the ability to raise revenue through targeted rates like Auckland's CCO, Watercare.

Water NZ figures show Wellington has invested less in its water network per person than any other major city in the country. 

Since 2013 Wellington spent $464 annually per property on investment in water assets. Auckland-based Watercare spent nearly four times ($1769) as much per property during the same period.

And Infometrics figures provided by Olsen that track infrastructure spend show Auckland outspent Wellington on investment per person in water assets by 2:1 for most years since 2009. 

The spend has not consumed a large share of Wellington City Council’s capital budget historically. Since 2009 capital spending on water assets ranged between 4.7 percent and 14.2 percent of the council's capital spend according to Infometrics figures. For one year, 2018, that spending jumped to 36.8 percent. 

Infrastructure NZ Chief Executive Paul Blair said: "Not surprisingly it is much easier to get a politician to fund something that is above ground than below ground."

"Infrastructure is, as we know, the thing that people don't value until it fails," he said.

Wellington's streets are being dug up by contractors rushing to fix the failing wastewater system. Photo: Lynn Grieveson

CCOs to go?

Wellington city councillors are rethinking their relationship with Wellington Water, according to private emails leaked to Newsroom. 

WCC CEO Barbara McKerrow said in an email to councillors that she had launched an "internal" inquiry into the relationship of Wellington Water and WCC.

"The working relationship between us is not as good as it should be and has a negative impact on our management and delivery," McKerrow wrote.

"We want to put that right and so does WWL - this initiative has been welcomed by our staff and by WWL. We should not assume that all the fault is with WWL or its structure and delivery either. I expect we will find there will be matters we need to address ourselves," she wrote.

At the end of last week several councillors said the "arms length" relationship of Wellington Water with the council made it hard for them to get answers. 

Fleur Fitzsimons told Newsroom in an interview that some councillors questioned whether Wellington wouldn't be better off bringing its water management functions in-house. 

She said people on the street were alarmed at Wellington Water's hiring of contractors who did not have a "public service" mindset. 

And another councillor who expressed concerns about the CCO model, Tamatha Paul, said the lack of information coming out of Wellington Water had reflected badly on councillors who often had to front up to community meetings over the failures.

If Wellington councillors decide they should leave Wellington Water they may have company.

Greater Wellington Regional Council chairman Daran Ponter also said he had questions over whether GWRC should remain part of the CCO. 

Ponter questioned if remaining a shareholder of Wellington Water was a conflict for GWRC given it was also responsible for policing Wellington Water's impact on the natural environment.

Against a national trend

Moving away from a CCO model would buck a national trend that the Government is trying to encourage. A Cabinet paper showed the Government wanted to encourage smaller councils to investigate how they could combine their services. 

The Government allocated $1.5m to fund a business case for councils in the Hawkes Bay in January to look into how they could jointly fund service delivery of water. 

Some Government ministers are understood to be in favour of a "Scottish Water" model where a national water organisation manages the whole country's water supply.

However, it is understood several in Cabinet believe it would be impractical to go straight to a Scottish Water model, so are in favour of encouraging regions to combine their water organisations in the interim.

Infrastructure NZ's Paul Blair said Wellington Water was a "halfway house" CCO because, unlike Auckland's Watercare, it didn't have ownership of water assets or the ability to levy rates.

"When you're in a half-way house that's an uncomfortable place to be, they sort of haven't given up control but they have. For me it needs to be clear: we should have either status quo or full corporatisation," Blair said.

Blair said even if a council brought water management in-house there would be a separation between the councillors and staff. 

"All infrastructure is political, but the more that politics is out of infrastructure the better the outcomes," he said.

Fitzsimons doesn't share that view and said she had questions about CCO relationships across the board.

"If your question is should they be even more independent, I'd just be concerned that they'd be even further removed from the concerns of residents and even less accountable through democratically elected councillors. 

(Article corrected as shown above to show spending was since 2013, not 2003)

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