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Contradictory water privatisation decisions

9 November 2009
Media Statement

Key must explain contradictory water privatisation decisions

John Key must explain whether the Cabinet stands by its decision to allow the new Auckland Council to privatise the city’s water assets, says Labour's Auckland Issues spokesperson Phil Twyford.

“On October19 Cabinet agreed to allow Auckland City Council to privatise its water assets and then a week later refused to support a law change enabling this to occur nationwide.

“Not only does the Prime Minister need to clear up this confusion, but he needs to explain why his Cabinet decided to set Watercare up for privatisation in the face of opposition from key agencies such as the Ministry of Health, and opinion polls that show 85 per cent of Aucklanders oppose privatisation,” says Phil Twyford.

“How this shambles occurred beggars belief. It seems that Rodney Hide, the Minister in charge of the local government reforms, is not keeping on top of his portfolio – and that the Cabinet is not on top of it either.

“Most importantly however is the question of which decision stands in regard to Auckland’s water assets? The Prime Minister needs to give some immediate clarification, since Cabinet has approved two contradictory legislative changes,” Phil Twyford says.

“In October, Cabinet agreed that Watercare would continue to be a council-controlled-organisation (CCO) under the new Auckland Council from 2012.

“But it also agreed that from 2015, it would be up to the council to determine ‘the governance arrangements and asset ownership for the delivery of water services, rather than fixing Watercare’s form in legislation.’

“This would enable Watercare to be privatised - a decision taken despite the accompanying point noted by ministers in the same Cabinet minute that ‘the risks associated with Watercare’s potential abuse of its monopoly position will be limited by the CCO governance framework’.

“That’s contradictory in itself. Then a week later Cabinet rejected changes to the Local Government Act mooted by Rodney Hide to enable councils around the country to move to fully privatise water assets. This decision completely contradicted the Watercare decision,” says Phil Twyford.

“Cabinet instead opted for a less radical, but still significant, option which would enable private companies to own water infrastructure for 35 years. Current law prohibits ownership and limits contracting to 15 years.

“The Prime Minister needs to explain exactly what’s going on. Aucklanders need to know what the Government is up to,” Phil Twyford says.


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