Local Government Magazine

Drinking water regulations – a long road ahead

Mary Searle Bell looks at the concerns of two water-focused associations over the new water regulator.

Late last year it was announced that a drinking water regulator was to be established to improve the performance and regulation of drinking water systems. In doing so, water authorities and the whole water industry can expect some significant changes in the next few years.
“In as much as we support the establishment of the new regulator, there is a still a lot of detail that needs to be thrashed out in the next bill,” LGNZ president Dave Cull told Local Government magazine.

“One major area of concern relates to a duty on councils to provide safe drinking water to private schemes that fail to meet new drinking water standards. 

“This could potentially place massive costs on councils if they are forced to take over the running of private assets that fail to meet new drinking water standards, to say nothing of the property rights implications.

“We’re working closely with the Department of Internal Affairs and the Minister of Local Government on this, but if Central Government wants to move the dial on water quality, it needs to come to the table with sustainable funding.”

Cull adds that, currently, the ratings base cannot carry this additional cost alone, and that’s before factoring the tsunami of new regulatory costs that are coming our way.

“We will look closely at the respective responsibilities for community supplies between the regulator and territorial authorities when the Government’s proposals are made clear in March [next month].” 

A report prepared for the Department of Internal Affairs by Beca says there are nearly 800 registered networked water treatment plants around the country of which 72 percent are council owned. The remainder are mainly owned by community organisations or private companies. 

As the report states: “The analysis presented in the report builds on and supports previous studies which have shown that the costs of providing water treated to the level required by DWSNZ [Drinking Water Standards for NZ] is disproportionately expensive for smaller supplies.” The costs to upgrade smaller private water networks will be “significant”, it says.

Beca estimates the total capital costs for the necessary upgrades to networked supplies servicing fewer than 25 people, specified self-supplies, RADWS [Rural Agricultural Drinking Water Supply], and self-supplies is in the order of $2.3-$3.6 billion. 

In comparison, the estimates for networked supplies serving more than 25 people is between $560 million and $830 million. 

“One of the advantages with council owned networks is that the costs are known, and any upgrades to these networks will be broadly affordable using debt,” says Cull.

“Indeed, many small councils have made the necessary investments and upgraded their drinking water supplies already.

“There will of course be some cases where meeting the standard will be more challenging, but there are options open to them such as aggregating their services with neighbours, or forming CCOs.

“The big unknown is the cost of upgrading privately owned networks, but we do know it will be significant. The Government needs to heed our call that rates alone are insufficient to meet these costs.”

Another issue could be around the timeline given to upgrade treatment plants, with concerns that some drinking water suppliers, while willing to undertake the necessary improvement works, will be unable to do so in the given timeframe.

However, Cull says there has been considerable engagement with government officials on this and other issues relating to the introduction of the regulator.

“We will need to wait to see what is in the next bill regarding timelines and transitional arrangements,” he says. 

“We are keen to work on this with the Government and it may depend on what obligations are imposed on councils regarding their responsibility for supplies other than those they manage directly. Either way a significant transition period is required.

“What we do know is that change is coming, and that is something we must accept. 

“We would encourage councils to keep all options on the table in order to provide safe drinking water in a manner that communities can afford.”

But, before we even get to the issue of implementing and paying for improvement works, the first big challenge for the drinking water sector will be setting up the regulator itself.

The new organisation won’t have any authority until the legislation has passed and this is unlikely to be before Christmas this year.

Jim Graham, chief water quality scientist with Water New Zealand, says getting the drinking water regulator set up is going to be a “massive task to put together”.

The association estimates that it will take 18 months to set up and get going, and cost $8.5 million to do so. “There won’t be a lot of change initially but, over time, potentially starting in 18 months [June 2021], there will be a lot of change,” says Jim.

“Water suppliers will need to be prepared for these changes and they’ll find that the new organisation is more active, far more knowledgeable, and far more involved in assisting and helping water suppliers achieve drinking water supplies compliance.

“I’m hopeful that the organisation will provide the much-needed leadership that’s been missing from the drinking water sector and that was highlighted by the Havelock North Inquiry.

“My view is that industry needs to get behind the new regulator – they need to support it, they need to engage with it, and they need to make it work for the betterment of all of the industry.

“It’s important that we make this work. It’s in the best interests of the industry,” says Jim. LG

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