Local Government Magazine
Water services reform

Waiting on water reform details with bated breath

Councils around the country will be waiting eagerly for Local Government Minister Nanaia Mahuta to announce more details on the Government’s cloudy water services and infrastructure reform.

All we know to date is that a small number of multi-regional three water entities will be set up and the Government has been touring around the country talking to councils and tribal authorities on funding, delivery and ownership details.

Mahuta has already suggested that a key benefit will be the separating of balance sheets and creating headroom for councils to reset their borrowing levels. While water services will no longer be controlled by councils, they also have an ‘option’ to opt-out of changes and retain ownership of their assets or holding shares in the new organisations.

Even more ambiguous is the notion of Maori ‘ownership’ and involvement under new ‘treaty obligations’ as the Labour Government ratifies the failed English/Maori treaty of 1840 into the 21st century by stealth.

The fear among councils ‘opting-in’ is how will these new, larger water providers address the state of the existing assets and the potential pitfalls of shifting costs from one community to the next? And who pays for it – on top of the estimated $30 billion to $50 billion-dollar infrastructure deficit faced by councils around the country?

Local Government New Zealand president Stuart Crosby is part of the Three Waters Steering Committee that was formed between senior government ministers and LGNZ’s National Council to work in partnership towards the reform delivery. It also includes council mayors, chief executives, Taituara — Local Government Professionals (formerly SOLGM), the Department of Internal Affairs, and the Treasury.

This committee is meant to provide oversight and guidance and works to ensure that a broad range of interests and perspectives are considered through the reform process.

Crosby says a common complaint from councils is a lack of detail on the proposed reforms and how they will work. Councils, especially the smaller ones, are concerned with the effect on their operating revenue, he says.

“The fact the councils don’t have all the information they need on how it will affect them is a common frustration.”

Back in March, the Auckland Council was having talks with Internal Affairs over water reform. Its chief of strategy, Megan Tyler, said; “Like all of the other participants in this process, we’re still at the early stage of learning about and understanding the government’s proposal.”

The council still had some time to decide whether it wants to take part in the reforms, or exit the process, she added. “We don’t expect to be making that sort of a decision until the last quarter of this year.”

At the beginning of the year, Auckland Mayor Phil Goff said his council had no plans to hand over the ownership of its assets to a new entity. And, in August last year, the council agreed only to participate in the first stage of the reform programme, which it said was done; “to assess reform options in good faith, including the government’s preferred option.”

At that time, it stated; “it does not commit the council to any change, and it can exit the reform process in June 2021 if it wishes to.”

Goff said his top priority was to ensure that it all stacks up for Auckland, that water infrastructure remains owned and controlled by Aucklanders through their council, and it doesn’t lead to Aucklanders subsidising water assets in other regions.

However, the Auckland Council has noted that one huge advantage of the Government’s proposal will be the central government acting as a guarantor for debt to build infrastructure without adding pressure to the council’s debt-to-revenue ratio.

This could allow its Watercare to borrow more to build and replace infrastructure while spreading the cost over a generation so that the level of water rate increases could be moderated.

 

Subscribe to Local Government Magazine >>


Related posts

Risks and opportunities from amalgamation in our water sector

Contrafed Publishing