Watercare gets extra $130m in debt funding after weather, sinkhole setbacks

A main sewer line collapsed, leaving a massive sinkhole 13 metres deep on a private property on St Georges Bay Road, in Parnell, last September. Photo: RNZ / Jordan Dunn

Auckland Council has voted to temporarily increase the amount of debt funding for its water infrastructure company by $130 million.

Watercare told council it needed more money as a result of the severe weather events of last year, and the Parnell sinkhole that formed last September.

The council's annual plan for 2023/2024 previously approved Watercare to borrow nearly $485m.

Watercare assumed insurance receipts would not cover these events in the short-term, leading to a temporary cash deficit of $30m to be funded in the 2023/2024 financial year.

Today, council approved the request to temporarily increase debt headroom by $130m.

The decision will increase the council group's debt to revenue ratio by two to three percent this financial year.

Council had originally been debating giving Watercare a hard timeframe for the increase till January 2025, before simplifying the recommendation to make the increase temporary.

Auckland deputy mayor Desley Simpson said the decision was necessary.

"You can't put a hard date if you haven't got the pay back from the insurance," she said.

"You can put it there as a hopeful, but it's actually beyond [Watercare's] control, you're waiting for somebody else to give it back."

Mayor Wayne Brown said it was up to Watercare to manage its own insurance.

"They do have the opportunity, if it all turns to custard to come back anyhow," he said.

Council expects Watercare to return its debt to revenue ratio below 340 percent for the next financial year.

The vote was passed unanimously.

The mayor thanked Watercare staff for their time, asking them to "try not to do that again, please".

He finished by asking: "When will there be good news?"