Cr Bill Faulkner Faulkners Corner www.sunlive.co.nz

As a measure of the lack of news recently it was unsurprising that the Bay Times picked out of this year's draft annual plan a proposal to increase water charges.

I'm not claiming water charges won't go up, but there is a long way to go before actually proclaiming the increases.

Unless there is significant community support for the new charges I won't be voting for them. Instead I will be promoting a stepped tariff. More on that further on.

It's a two edged sword – reduce consumption and council still has to meet the costs of delivering water to your door – of which about 70 per cent are fixed costs incurred by the cost of infrastructure.

Water processing plants, intake pump stations, reservoirs, meters and backflow prevention, water main pipes to your home, fire hydrants etc.

Plus the water department share of allocated costs to run city hall.

The next 30 per cent is to actually process the water and deliver it to your household.

The other side of the sword is that if water consumption had been allowed to run-on in the previously uncontrolled mode, then council would have had to spend large sums building new water supply plants and systems.

And that is presupposing that you could get a resource consent that allowed this uncontrolled and unsustainable consumption.

The finances of water are relatively simple. Council has to collect $17.289 million to run the water system.

Contrary to popular urban myth, council does NOT take money out of its various operations to sure up other operations.

Money collected from water stays in the water account.

At the moment that's about $3million short (not $6m quoted in the Bay Times) due to the absolute success of a controlled consumption regime brought about by metering.

The present water pricing system works on a per cubic metre (1000 litres) charge of $1.58 per $1000 litres (residential). Plus a fixed charge of $26.

The $1.58 per 1000 litres is a flat rate regardless of how much you use.

Overseas it is common for there to be a stepped tariff that rewards reduced usage at the expense of those who wish to use more.

Media reports that the proposed new charges double the price of water are incorrect.

The annual fixed charge is proposed to go from $26 to $52 and the per cubic metre charge is proposed to go from $1.58 to $1.69.

This is to make up the $3 million shortfall.

Average household water consumption is 180sqm. That's $310.21 a year currently.

Proposed new charges would be $355.99. That's not double!

My solution, some form of stepped tariff, seems a fairer arrangement.

Step it for fairness

I have promoted a stepped tariff system for many years, but have failed to gain political support – principally I think because some elected members don't fully understand the rationale. The way it works could be like this: of your water consumption, only about two per cent is actually consumed. So there could be a ‘free allowance' for this in your fixed charge.

Next stage is basic consumption to run your household – showers, toilets, washing etc – sometimes referred to as a ‘grey water', about 50 per cent. So that would be at a base rate.

Next stage would be ‘discretionary' usage. Cleaning cars, swim pools, gardens etc can make up the balance.

The fourth stage is commercial usage where there is already separate charging methodology.

So a theoretical bill for a household might be – fixed charge includes two per cent of your usage.

Forty-eight per cent at a base rate and 50 per cent at an increased rate, say plus 50 per cent of the base rate.

This would then add incentives for households to recycle their grey water already produced, thus reducing demand on the water system.

It would incentivise household rainwater storage systems relieving some pressure on the stormwater system.

The final amount collected would be exactly the same dollar figure $17.289million, but those people who use less than others would be rewarded.

With the added benefit, albeit long term, of reduced capital works infrastructure on water, wastewater and stormwater.

On that subject, council will be revisiting volumetric charging on wastewater in the future.

Once again it's a vexed question just like the water metering. In broad terms it involves charging a percentage of your water consumption as your wastewater charge.

In Auckland your wastewater charge is 80 per cent of your water consumption.

Tauranga still has a fixed wastewater charge of $330 regardless of how much wastewater you tip down the system.

Like water, wastewater is a standalone account where the actual costs are all you pay with no cross subsidisation to or from any other council activity.

User pays move to first

It does seem that with central government moving to a much more business based mode that council should move along too. Pay for what you use.

Socialist tendencies die hard, but if emotion is removed you sometimes get to see that fixed charges don't always work the way people think.

A person living on their own with a large garden can easily eclipse the water consumption of a crammed household on a small section, just one example.

Fixing it fails

An across the board fixed charge can be very unfair as the introduction of water meters showed – at least for most.

So council should at least reconsider these charges now.

It is likely that in the event of the reorganisation of local government it will happen anyway.

It is not beyond the bounds of possibility that government may also make a grab for water. Like the tax grab on electricity.

The possibility for taxation are immense as the electricity grab has demonstrated. And here we are still delivering water and taking it away at cost.

No profit, no director's fees, no income or company tax, only GST.

What potential for central government plundering. And like Max Bradford's promises of the day with electricity ‘reforms' – all for our benefit. Yeah right!

Please take the time

So this year's draft annual plan requires serious consideration from everyone. Please take the time to make your views known.

Clarification on last week's item on possible local government reorganisation.

I said if it was to be, then a merger between the City and Western Bay is a consideration.

I am not promoting that. At the moment it's all working well. If it ain't broke, don't fix it!

This week's mindbender from anonymous –'Vegetarian is an old Indian word meaning ‘bad hunter'.”