10152 (2024). Hon Kieran McAnulty to the Minister of Local Government

10152 (2024). Hon Kieran McAnulty to the Minister of Local Government: What is the nature of Watercare’s balance sheet separation with Auckland Council?

Hon Simeon Brown: Watercare is unique in the New Zealand context in terms of its size, its statutory structure as a standalone organisation and its ability to directly access debt funding from markets. A bespoke approach was required for Auckland as it cannot dilute its ownership interests sufficiently in Watercare to achieve strong balance sheet separation. This is because the size of Auckland Council and Watercare make it difficult for Auckland’s ownership interest to be reduced below 50 percent. Under this model, the key change is a statutory prohibition on Auckland Council providing financial support to Watercare. Along with Watercare’s size and its structure as a standalone organisation, this change is sufficient to achieve financial independence from the council. Any loan contracts entered into by Watercare must include disclosures they are not guaranteed by the Crown. S&P Global Ratings has determined the model would mean Watercare’s borrowing is considered separate from Auckland Council for credit rating purposes.