Local Government Magazine

Water Reform- the New Zealand way

Hon Nanaia Mahuta, Minister for Local Government

Last month three waters-related reports caught my eye. One was the Ministry of Health’s latest Annual Report on Drinking Water Quality.

It signalled multiple failings in the safety of our drinking water around the country during the past year.

Another shocker was Auckland Council’s latest river water quality report, which analysed data from 2016-18 across 36 freshwater sites in the region and found that there was “widespread’’ faecal contamination, largely due to overflowing wastewater systems.

The third pointed to Wellington’s sewage pipe problems being at least partly due to aging infrastructure, poor inspection protocols and asset knowledge, and “regularly declined’’ investment in the pipes by the council.

None of this is surprising and these issues haven’t ‘just happened’ overnight. A decade or more of increasing fiscal pressures have pushed out the level of investment required to get our water network to world class standards.

These reports are consistent with a steady flow of information and data I have seen over my last three years as Minister of Local Government leading the Three Waters Review. They underline the urgent issues facing our three waters services and infrastructure nationwide. They also summarise the areas in which we face our most critical challenges: drinking water safety, environmental performance of our wastewater and stormwater networks, and old and failing pipes. Factor in climate change and the frequency of severe weather events, we must act with a sense of urgency.

There are huge looming costs of fixing these problems: for example, the cost to upgrade water treatment plants to meet drinking water standards has been estimated as up to $574 million; and the cost of upgrading wastewater plants that discharge to coastal and freshwater bodies to meet national minimum standards is estimated to be between $3-$4 billion. This does not include renewing aging pipes which represent up to 80 percent of our infrastructure.

What is scary is that overseas experience in countries that have reformed their water services found that actual costs can be two to three times higher than initially thought.

This picture of expensive infrastructure maintenance and upgrades, paired with greater community expectations for enhanced environmental outcomes and equal access to safe drinking water has shown that the current arrangements for water services are not sustainable.

The impact of Covid-19 on councils that largely own and manage these critical water services and infrastructure will have put even more pressure into the system.

Last week the Prime Minister and I announced a $761million fund for investment in these vital services. In part this is to ensure that councils can continue to renew and upgrade water services thereby helping to kickstart local economies and providing jobs.

But it is also a fund that is allied to a reform programme to put our water services on a more sustainable, efficient and resilient footing for generations to come.

With challenges come opportunities. We have been talking with local government on approaches to these matters for some years now. In fact, many councils are to be congratulated for their own work towards detailing these challenges.

Very shortly we expect to pass legislation that creates Taumata Arowai, the new dedicated water services regulator, recommended by the Government Inquiry into Havelock North Drinking Water – an initiative that local government has broadly supported. This will go a long way to giving our communities confidence that when they turn on the tap the water that comes out is safe to drink.

Central and local government are now working together to address the challenges facing water services and infrastructure. We both agree these are significant challenges. The fund we have announced, and the associated reform programme, is put forward on an opt-in basis for councils.

Our view is that having 67 councils around the country all providing separate water services is no longer fit for purpose. It is neither efficient nor sustainable.

In large rural areas with low and sometimes declining populations there can be an insufficient rating base to fund the services to meet regulatory standards and community expectations.

In high-growth areas, councils cannot always afford to provide the water infrastructure to service urgently needed and affordable housing.

Then there is the need to build in resilience to climate change and natural hazards, which is another major challenge.

Experience of reforms overseas highlights the benefits of scale and stronger balance sheets. The Government’s intention is for a small number of public water entities. Our preference is for collective council ownership. Larger service providers can unlock strategic opportunities to take a more coordinated catchment-based approach to addressing environmental impacts. Any such entities that are formed would need to be designed to maintain the ability to reflect communities of interest and Maori interests.

These matters will all be subject to the input of central and local government. We are at an exciting new stage of the water journey with a chance to ensure that we provide safe, affordable and resilient services for our communities throughout the country.

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