Affordability of household water and wastewater charges in Manukau City: A case study

Abstract

Low-income households spend a substantial share of their income on utility services such as electricity, heating and water. The difficulty of these socially vulnerable consumers to absorb further price increases is often used as an argument against increasing rates. However, detailed quantitative information on the affordability of rate adjustments for low-income consumers is actually quite scarce. Much of the available information is based on total household's expenses. This study takes a more detailed look at the affordability of water and wastewater service's charges for low-income consumers in Manukau City. While there was no sufficient available data, the project finds that affordability is a problem for low-income consumers in Manukau. Given all household groups of income categories the percentage income spent on water and wastewater was determined and compared with an acceptable benchmark. It was found that the average amount spent on water and wastewater has increased at a higher rate (i.e. 26.84%) than the average income (i.e. 3.15%) in all income groups, and the burden of water and wastewater rates is increasing in terms of percentage of weekly income spent on it, especially, in the lower income earners category. The low-income earners spent 3.24% of their weekly income on water and wastewater service charges in 2001 and were spending 4.11% in 2006. The proportion of household spending more than 3% of their income on water and sewerage charge was 14.6% in 2001 and 13.3% in 2007, and proportion of household falling into this category has declined by 1.3% since 2001. The results showed that a higher number of households may have faced a financial hardship, since 2001. In order to make the government and water industries aware of this problem, the term "affordability" needs to be taken into account as an assistant of the assessment of household water and sewerage services in Manukau City or wider over New Zealand. © 2009 WIT Press.