Tuesday, December 8, 2009

Watercare declares independence from Auckland

Watercare is the ONLY local government entity that will survive Auckland's draconian re-organisation unabolished, unscathed, and - in fact - considerably enlarged.

I've had a lot of interaction with Watercare over the years.

Between 1994 and 1998 I was occupied - some might say pre-occupied - with the Waikato Pipeline project (in its emergency guise and then as permanent supply, see elsewhere in this blog for info about the Manukau Agreement that arose). And then from 1998 to 2004 I was North Shore City Council's main man on the Watercare Shareholder Representative Group (each of Auckland's councils hold shares in Watercare, and these give them the right to govern Watercare through a Statement of Intent and through appointment of directors to Watercare's Board).

I have been on ARC since 2004, and note here that ARC's role in respect to Watercare is a environmental regulator. ARC does not hold shares in Watercare. I was ARC commissioner when Watercare sought extensions to its resource consents to operate its "Pond 2 Landfill", which is on the edge of the Manukau Harbour, and is where most of Auckland's sewage sludge is presently disposed of. On the periphery of this, I have also acted as Conmmissioner on other wastewater related consents - notably North Shore City Council's wastewater and stormwater network discharge consent hearings.

Under SuperCity legislation, all of the Auckland Region's wastewater and freshwater networks and systems will be integrated, and transferred to Watercare. I understand that Watercare will maintain its status as a "Council Controlled Organisation", and that Auckland Council will "govern" it through an Annual Statement of Intent and through the hiring and firing of Watercare Board Directors.

I have to say that this is a remarkably arms-length arrangement. It would be hard to name a single project or initiative that Watercare has been responsible for over the past decade that has been driven by the collective will of Auckland ratepayers and exercised through the governance arrangements that exist, and which serve to protect Watercare - shelter it - from the will of the people.

Before I get too carried away here, I will talk only about 3 things:

Puketutu. Watercare sought a designation and resource consents to dispose of biosolids (Auckland sewage) into Puketutu. Manukau City Council did not accept the designation, and ARC declined the resource consents. Among the reasons for the rejections were that there were significant Maori concerns over what Watercare intended, and also that commissioners did not accept watercare's contention that its activities would "rehabilitate" the quarry on Puketutu. There were other reasons. Watercare has appealed those decisions - as is its right. Unusually - even significantly - Watercare has gone public in NZ Herald and its own oublic magazine (Interflow) to assert that: "Watercare continues to support vision for Puketutu Island..." Extraordinary really. This public body is giving two fingers - in public - to Auckland's regional environmental regulators. This is heading to a gunfight. Reason: Watercare has backed itself - and Auckland - into a shitty little corner. Critical to this is Watercare hanging onto the right of commercial polluters to dump heavy metal contaminants into sewers, thereby contaminating otherwise clean sewage, rendering it dangerous to apply to land - as is the practice in Northern hemisphere cities, Sydney, and so on. Dumping sewage biosolids in a hole in an island in a harbour is dark age stuff. But Watercare wants that "vision", and is pressing on its independent, unaccountable course.

Bureaucracy: A thickening layer of bureaucracy is growing between Auckland Council and Watercare - between elected decision-makers, and the managers responsible for delivering Auckland's water and wastewater services. Some degree of transparency is possible now - and is reported - comparing and bench-marking the relative performance of local services provided by North Shore, Waitakere, Manukau and Auckland City. This is good for performance management and reporting. After the integration, this separation will be absorbed into the Watercare corporation. Councillors will want to get a good handle on what Watercare is doing - and bureaucrats will be needed to extract useful information. But information assymetry will be alive and well: Watercare will know everything and Council bureaucrats will only be able to guess at the facts. Unless there is an independent audit. In my memory - there has only been one such independent audit. While I was on the SRG I managed to get support for international authority - Halcrow - to investigate Watercare's performance. No filing cabinet remained closed - in theory. It was a very useful report - which Watercare sought to influence, manipulate and deflect relevant recommendations - even going so far as to commission Price Waterhouse (if my memory serves me right) to rebut Halcrow. The thickening layer of bureacrats will further distance elected representatives from what is happening....

Wastewater network overflows: In this issue of Interflow, Watercare admits to 9 overflows from its sewer network to 30th September due to stormwater getting into the network, and 1 due to external power failure. Interflow notes that: "illegal stormwater inflows into Local Network Operators' sewers can cause overflows in heavy rain...." Speaking from experience, I am aware that exactly this problem applied on the North Shore. It's sewere network overflowed in heavy rain, and also when there was a power failure. That is why North Shore has invested heavily in storage systems to collect overflows (before they overflow), and why most pump stations have standby generators that kick in when there is an external power failure. In this way, North Shore is aiming to achieve a target of no more than 2 overflows per year. North Shore is setting an example. And here's the rub: a little birdie has told me that Watercare is propsoing a target of 6 overflows/year from local networks. 300% worse than North Shore's target. Talk about lowest common denominator. That's what integration will give Auckland I think - a decline in environmental standards and a structural failure of governance.

There's a lot more to say on this. Keep watching.

2 comments:

tip said...

Noticed your recent Watercare comments....here is some info for your fire.
The name of the person being appointed as head of customer service at Watercare is Mark Lawrence, from an Australian company called Ergon Energy. I find it interesting that Mark Ford has signed off on this, even though the government has yet to sign off on the new structure of Watercare; and they are about to announce a new interim chief executive (who no doubt would have liked a say in this ..... unless of course it is going to be a board member who already knows of the appointment - perhaps Ian Parton ;-). I don't think Laile Hare is happy with this process as it would seem to be outside the draft process for Council appointments that was recently announced. Surely if this role has been created it should be offered to all Council staff first.... not just given to an outsider in an uncontestable way. It is typical unilateralism from Mark Ford. I suspect they'll Watercare is different because it is not a new organisation..... but the role is new and I suspect there are plenty of people in council organisations who would have liked a crack at it.

tip said...

By the way..... when is someone going to do the story of the executive pay increases in the latest Watercare annual report (it's online)? .... they make the Leigh Auton's pay increase look tiny.


The data is on page 98 of the latest annual report which has just been issued.
the pay increases were largest in the 2nd tier of managers. Fords went up from $560-570k to $660-670k, although $86k was a payout of annual and long=service leave as he moved to the transition authority.
second highest-paid went from $250-260k to 280-290 k (up about 11% , while the 3rd in command went up to $270/280 k from $250/260k (up 7.7%) and 4th in command went up to $260/270k from $240/250 k (up 8%)

In total there were 66 people paid more than $100k a year at Watercare in the latest year, a 27% increase (or 14 more people paid more than $100,000 a year) on the 52 people paid above this figure in 2008.

These seem like very hefty increases at a time when public service was supposedly tightening its belt.... with Watercare in charge of the amalgamation it it would seem that these Imelda Marcos's have been given the keys to the shoe store.



I see we have the Auckland Transport structure issued; but still no sign of the proposed Watercare structure.
Why is it that the only organisation that survives the transition is looking likely to be the last one that issues its structure. Could it be that there is a dispute over which parts of the organisation are included in the structure; and which parts are considered by the ATA to be specialist services that will be contracted by the organisation ..... so will Watercare have its own call centre or will we face phoning Mayalysia when our pipes burst.


Last one out turn the lights off.....

I see the transition for Watercare is getting harder as people who don't want to work for it jump ship. Metrowater's network manger Ian Peffers has resigned, as has Manukau Water's general manager of infrastructure Martin Smith, and Manukau Water's general manager of customer services Jan Corick.

Very difficult to replace the institutional knowledge these peole have...... but with no leadership in the proposed company I can see why they would leave. There is also talk that Ross Kennan might soon be chair; his former ceo at Metro Water Jim Bentley is being paid so much for consultation at Watercare it might be cheaper to have him as chief executive. Someone should be asking more questions about what he is being paid for consultation, I reckon.

As tipped a while ago, Watercare have confirmed internally that they are going to be using SAP's services for their financial/IT servicing. This despite none of their staff nor staff in the regional water companies using this system. Might be worth enquiring the value of the contract and the degree of compettitive tendering, if any, that went into this decision.

I'm also still astounded that nearly $1.5 million was spent by Watercare last year with Russell McVeagh.... that is a hge amount for a company that ought not to have had any legal issues last year..... unless the board approved a whole lot of legislative lobbying that no doubt its shareholders wouldn't have agreed with.... were the shareholders aware of such legal spending?

Tuesday, December 8, 2009

Watercare declares independence from Auckland

Watercare is the ONLY local government entity that will survive Auckland's draconian re-organisation unabolished, unscathed, and - in fact - considerably enlarged.

I've had a lot of interaction with Watercare over the years.

Between 1994 and 1998 I was occupied - some might say pre-occupied - with the Waikato Pipeline project (in its emergency guise and then as permanent supply, see elsewhere in this blog for info about the Manukau Agreement that arose). And then from 1998 to 2004 I was North Shore City Council's main man on the Watercare Shareholder Representative Group (each of Auckland's councils hold shares in Watercare, and these give them the right to govern Watercare through a Statement of Intent and through appointment of directors to Watercare's Board).

I have been on ARC since 2004, and note here that ARC's role in respect to Watercare is a environmental regulator. ARC does not hold shares in Watercare. I was ARC commissioner when Watercare sought extensions to its resource consents to operate its "Pond 2 Landfill", which is on the edge of the Manukau Harbour, and is where most of Auckland's sewage sludge is presently disposed of. On the periphery of this, I have also acted as Conmmissioner on other wastewater related consents - notably North Shore City Council's wastewater and stormwater network discharge consent hearings.

Under SuperCity legislation, all of the Auckland Region's wastewater and freshwater networks and systems will be integrated, and transferred to Watercare. I understand that Watercare will maintain its status as a "Council Controlled Organisation", and that Auckland Council will "govern" it through an Annual Statement of Intent and through the hiring and firing of Watercare Board Directors.

I have to say that this is a remarkably arms-length arrangement. It would be hard to name a single project or initiative that Watercare has been responsible for over the past decade that has been driven by the collective will of Auckland ratepayers and exercised through the governance arrangements that exist, and which serve to protect Watercare - shelter it - from the will of the people.

Before I get too carried away here, I will talk only about 3 things:

Puketutu. Watercare sought a designation and resource consents to dispose of biosolids (Auckland sewage) into Puketutu. Manukau City Council did not accept the designation, and ARC declined the resource consents. Among the reasons for the rejections were that there were significant Maori concerns over what Watercare intended, and also that commissioners did not accept watercare's contention that its activities would "rehabilitate" the quarry on Puketutu. There were other reasons. Watercare has appealed those decisions - as is its right. Unusually - even significantly - Watercare has gone public in NZ Herald and its own oublic magazine (Interflow) to assert that: "Watercare continues to support vision for Puketutu Island..." Extraordinary really. This public body is giving two fingers - in public - to Auckland's regional environmental regulators. This is heading to a gunfight. Reason: Watercare has backed itself - and Auckland - into a shitty little corner. Critical to this is Watercare hanging onto the right of commercial polluters to dump heavy metal contaminants into sewers, thereby contaminating otherwise clean sewage, rendering it dangerous to apply to land - as is the practice in Northern hemisphere cities, Sydney, and so on. Dumping sewage biosolids in a hole in an island in a harbour is dark age stuff. But Watercare wants that "vision", and is pressing on its independent, unaccountable course.

Bureaucracy: A thickening layer of bureaucracy is growing between Auckland Council and Watercare - between elected decision-makers, and the managers responsible for delivering Auckland's water and wastewater services. Some degree of transparency is possible now - and is reported - comparing and bench-marking the relative performance of local services provided by North Shore, Waitakere, Manukau and Auckland City. This is good for performance management and reporting. After the integration, this separation will be absorbed into the Watercare corporation. Councillors will want to get a good handle on what Watercare is doing - and bureaucrats will be needed to extract useful information. But information assymetry will be alive and well: Watercare will know everything and Council bureaucrats will only be able to guess at the facts. Unless there is an independent audit. In my memory - there has only been one such independent audit. While I was on the SRG I managed to get support for international authority - Halcrow - to investigate Watercare's performance. No filing cabinet remained closed - in theory. It was a very useful report - which Watercare sought to influence, manipulate and deflect relevant recommendations - even going so far as to commission Price Waterhouse (if my memory serves me right) to rebut Halcrow. The thickening layer of bureacrats will further distance elected representatives from what is happening....

Wastewater network overflows: In this issue of Interflow, Watercare admits to 9 overflows from its sewer network to 30th September due to stormwater getting into the network, and 1 due to external power failure. Interflow notes that: "illegal stormwater inflows into Local Network Operators' sewers can cause overflows in heavy rain...." Speaking from experience, I am aware that exactly this problem applied on the North Shore. It's sewere network overflowed in heavy rain, and also when there was a power failure. That is why North Shore has invested heavily in storage systems to collect overflows (before they overflow), and why most pump stations have standby generators that kick in when there is an external power failure. In this way, North Shore is aiming to achieve a target of no more than 2 overflows per year. North Shore is setting an example. And here's the rub: a little birdie has told me that Watercare is propsoing a target of 6 overflows/year from local networks. 300% worse than North Shore's target. Talk about lowest common denominator. That's what integration will give Auckland I think - a decline in environmental standards and a structural failure of governance.

There's a lot more to say on this. Keep watching.

2 comments:

tip said...

Noticed your recent Watercare comments....here is some info for your fire.
The name of the person being appointed as head of customer service at Watercare is Mark Lawrence, from an Australian company called Ergon Energy. I find it interesting that Mark Ford has signed off on this, even though the government has yet to sign off on the new structure of Watercare; and they are about to announce a new interim chief executive (who no doubt would have liked a say in this ..... unless of course it is going to be a board member who already knows of the appointment - perhaps Ian Parton ;-). I don't think Laile Hare is happy with this process as it would seem to be outside the draft process for Council appointments that was recently announced. Surely if this role has been created it should be offered to all Council staff first.... not just given to an outsider in an uncontestable way. It is typical unilateralism from Mark Ford. I suspect they'll Watercare is different because it is not a new organisation..... but the role is new and I suspect there are plenty of people in council organisations who would have liked a crack at it.

tip said...

By the way..... when is someone going to do the story of the executive pay increases in the latest Watercare annual report (it's online)? .... they make the Leigh Auton's pay increase look tiny.


The data is on page 98 of the latest annual report which has just been issued.
the pay increases were largest in the 2nd tier of managers. Fords went up from $560-570k to $660-670k, although $86k was a payout of annual and long=service leave as he moved to the transition authority.
second highest-paid went from $250-260k to 280-290 k (up about 11% , while the 3rd in command went up to $270/280 k from $250/260k (up 7.7%) and 4th in command went up to $260/270k from $240/250 k (up 8%)

In total there were 66 people paid more than $100k a year at Watercare in the latest year, a 27% increase (or 14 more people paid more than $100,000 a year) on the 52 people paid above this figure in 2008.

These seem like very hefty increases at a time when public service was supposedly tightening its belt.... with Watercare in charge of the amalgamation it it would seem that these Imelda Marcos's have been given the keys to the shoe store.



I see we have the Auckland Transport structure issued; but still no sign of the proposed Watercare structure.
Why is it that the only organisation that survives the transition is looking likely to be the last one that issues its structure. Could it be that there is a dispute over which parts of the organisation are included in the structure; and which parts are considered by the ATA to be specialist services that will be contracted by the organisation ..... so will Watercare have its own call centre or will we face phoning Mayalysia when our pipes burst.


Last one out turn the lights off.....

I see the transition for Watercare is getting harder as people who don't want to work for it jump ship. Metrowater's network manger Ian Peffers has resigned, as has Manukau Water's general manager of infrastructure Martin Smith, and Manukau Water's general manager of customer services Jan Corick.

Very difficult to replace the institutional knowledge these peole have...... but with no leadership in the proposed company I can see why they would leave. There is also talk that Ross Kennan might soon be chair; his former ceo at Metro Water Jim Bentley is being paid so much for consultation at Watercare it might be cheaper to have him as chief executive. Someone should be asking more questions about what he is being paid for consultation, I reckon.

As tipped a while ago, Watercare have confirmed internally that they are going to be using SAP's services for their financial/IT servicing. This despite none of their staff nor staff in the regional water companies using this system. Might be worth enquiring the value of the contract and the degree of compettitive tendering, if any, that went into this decision.

I'm also still astounded that nearly $1.5 million was spent by Watercare last year with Russell McVeagh.... that is a hge amount for a company that ought not to have had any legal issues last year..... unless the board approved a whole lot of legislative lobbying that no doubt its shareholders wouldn't have agreed with.... were the shareholders aware of such legal spending?