Local Government Magazine
Guest editorial

Where are we at with the water reform programme?

By CCNZ Chief Executive Alan Pollard.

Most recently, CCNZ opposed the draft Water Services Legislation Bill, not challenging the need for reform, but challenging the process of consultation, including the truncated period for submissions on this large and complex piece of legislation, and the risk of rushing one of the most critical reforms of our time. 

More specifically, we challenged the uncertainty with respect to the transition arrangements, procurement processes, the lack of consultation with the very people and companies that will perform the physical works, and the impact on council owned or controlled entities.

Following the consultation, which included a submission process and select committee hearings, the Government has now scrapped its plans to amalgamate the country’s water services into four mega-entities, instead opting for 10 smaller regional entities on the premise that having more entities allows for water solutions that take account of regional nuances.

CCNZ has not taken a view on the structure of the new entities. That is a matter for the asset owners. However, we are strongly of the view the current system of funding the maintenance, replacement, and development of our water assets is not working. Council rates haven’t risen to meet water infrastructure needs, meaning systemic change is needed.

We support the need for change, and an outcome resulting in more efficiency, more transparency and better management, whether this be through water entities or councils. So, we called for a pause to make sure change could happen the right way, rather than risking the outcome on a rush caused by electoral cycle timeframes.

Implementation has now been delayed by two years to 2026. And the term “Three Waters” has been dropped in favour of “affordable water infrastructure improvements” – despite being a common term prior to the reform programme, the previous name had become a bogeyman that had captured the public imagination, following a clumsy and disastrous PR campaign.

CCNZ President, Bailey Gair, and I had the opportunity to meet recently with Water Reform National Transition Unit Executive Director, Heather Shotter, and Manager Strategic Relationships, Peter Cox. We had a very useful discussion, canvassing a number of matters that have been of concern to us.

We have been concerned about the lack of a contractor voice in the design and implementation of the reform programme. 

We are pleased that we are now more actively engaged with the Unit. We are gearing up to contribute to the construction section of a new water Code of Practice, and CCNZ Communications and Advocacy Manager, Fraser May, is working with the Unit on establishing and implementing an effective industry engagement plan so contractors can contribute their practical knowledge and expertise. 

This will include using our branch networks to provide the opportunity for exchanging information, testing ideas, and hearing direct contractor feedback. We believe the regional representative groups must include representation from the civil construction sector. 

Too often the people who are expected to deliver or maintain the water infrastructure are excluded from having any meaningful voice or influence. That cannot be allowed to happen here.

The Transition Unit is looking at procurement models under the new “affordable water” programme. Again, the civil construction industry needs to be included in this discussion. CCNZ has stressed the importance of recognising the current relationships that have been formed between contractors and local authorities. 

We should not risk those relationships. 

CCNZ has also advocated for a fair and equitable distribution of work across contractor firms of all sizes, from the largest to the smallest. The future three waters model should support all supplier businesses to invest and grow, develop their people and introduce new technology. That leads to specialist capability and a healthy, competitive, productive contractor market.

CCNZ has expressed industry concerns about the transition from the current water model to the new water model. Already we are seeing local authority investment in water infrastructure paused, some due to the need to reprioritise Long Term Plan funding after the flood and cyclone events, and some due to the uncertainty about the direction of three waters. 

Some of this uncertainty comes from the Government sending conflicting and confused messages about the proposed model. 

Some comes from 2023 being election year, with the election currently too close to call and the National opposition indicating it will repeal the legislation if elected, but with no indication of how it might address the state of our drinking, storm and wastewater (other than pledging to enforce stricter water regulations on local councils).

If investment in both capital and maintenance work does not continue during the transition and despite the election, contractors will be forced to redeploy people, plant, and machinery to other projects – they cannot afford to have people and equipment under-utilised. 

The risk is that when investment decisions finally start being made, there may not be the people and equipment available to do the work. A further area we have requested be reconsidered is the status of Council Controlled Trading Organisations (CCTOs). These are successful businesses in their own right, and often have a client base that is a mix of their local government owner and private clients, spread across different fields of contracting and different regions. 

Originally, proposals for the transition of people, plant, and equipment owned by CCTOs to councils and then the new water entities were included in draft legislation, but these proposals showed a lack of understanding of what these businesses actually did, how they are structured, how successful they have become, and the fact they were businesses at all. 

We understand the submission process has caused a rethink of these proposals, and we look forward to those businesses continuing to make a significant contribution to Council budgets for the benefit of ratepayers.    

I doubt anyone would argue against improving the health and well-being of our communities by ensuring the availability and quality of our drinking water through a well-funded, well planned, and effectively managed system. 

We must upgrade our aging wastewater assets and keep up with an effective maintenance programme. And the past few months in Northland, Auckland, Coromandel, Gisborne, East Coast, and Hawkes Bay have reminded us of the critical importance of stormwater infrastructure.  

But this is a complex area, and. planning for the future should not be rushed. We have long anticipated the involvement of contractors to shape the new system, once the structure of our clients is decided. This hasn’t happened yet, and political polarisation of the discussion and rushed legislation timeframes have proven a distraction from the work at hand. 

So, as you can tell, this remains a work in progress. Hopefully our current engagement will introduce practical reality to conceptual discussion and design. LG

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