Council to consider water body

John Mackie
John Mackie
Establishing a new council-controlled organisation (CCO) to manage Dunedin's water infrastructure could save the city $20 million in a decade, the Dunedin City Council says.

The figure was contained in a report to be considered at next week's council 2011-12 pre-draft annual plan hearing.

The report, by council water and waste services manager John Mackie, recommended establishing a new water CCO as the preferred option for the future management of Dunedin's water assets over the next 50 years.

If approved, the move would affect about 100 of the council's 687 full-time equivalent staff, whose jobs would be transferred to the new CCO on existing terms and conditions, Mr Mackie said.

The new CCO was considered the most efficient of three options looked at, and would bring savings estimated at $20 million over a decade, he said.

Savings were from a variety of areas, including operating costs, other internal efficiencies and taxation benefits, he said.

"There's a whole range of things that, when you add them all up, [make] quite a compelling picture."

The new CCO would be a separate legal entity, governed by its own board of directors and management, but owned and reporting to the council.

If approved next week, a final proposal would be presented for public consultation either through the council's 2011-12 annual plan consultation or a separate special consultative procedure, he said.

The aim was to have any change confirmed in the first half of this year, in time to launch the new CCO by July 1 this year, he said.

Alternatively, the council could opt to delay the launch by a year, until July 1 next year, as there were financial benefits to both scenarios.

The council provided water and wastewater services to 47,000 homes and businesses, with an operating budget of $58 million in 2010-11, a capital budget of $31 million, and assets valued at $1.6 billion.

Two years ago, councillors asked council chief executive Jim Harland to investigate the best way to manage water infrastructure over the next 50 years, although privatisation was ruled out as an option.

Instead, staff considered three options - an enhanced status quo, a new CCTO or a council-controlled trading organisation.

The CCTO would be required to provide a return on capital, while a CCO would be "commercially disciplined" but funded from the same mix of rates and charges, Mr Mackie said.

Changes to the management of water infrastructure were a contentious issue for some, with a protest in the Octagon in June last year held to oppose what Cr Fliss Butcher called an "attempted corporate grab" of water infrastructure.

The protests were sparked by changes to the Local Government Act 2002, introduced by Local Government Minister Rodney Hide, allowing water services to be contracted out for up to 35 years.

Last month, Mr Mackie told the Otago Daily Times he was expecting more concerns to be raised as a result of the report's consideration, "because I think the concept of privatisation is largely misunderstood".

He stressed privatisation or outsourcing remained off the agenda in Dunedin, in line with an existing council policy dating back to the 1990s.



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