The Government is lobbying both councils and their constituents to get on board with plans to centralise the management of drinking water, wastewater and stormwater.
It sees major cost savings establishing four entities to manage water assets currently mostly provided by 47 local councils.
But for these efficiency gains to be realised, it needs scale or buy-in from enough councils.
Already, Whangārei District Council wants out, while the mayors of Auckland, Christchurch and Napier councils are grumbling about the overhaul.
While local councils have been engaging with the Government with the understanding amalgamation would be optional, Minister for Local Government Nanaia Mahuta won’t rule out requiring councils to join an entity.
“We’re not in that situation yet,” she said when asked whether she’d force councils’ hands.
Mahuta wouldn’t comment on how much buy-in the proposals would require to be effective, or whether it would make sense for them to go ahead if a couple of large councils opted out.
“I’m looking for as much buy-in as I can get,” she said.
“I want all New Zealanders to benefit from this reform.”
A water entity ideally needs to service between 600,000 and 800,000 people
The Department of Internal Affairs (DIA), which is leading the overhaul, estimated a new water entity would need to service between 600,000 and 800,000 people to “achieve a level of efficient scale to contribute to meeting the investment deficit”.
The four proposed water entities are expected to service populations of between 799,608 and 1,725,853 people each. So, buy-in from councils representing between 35% and 75% of the populations within the boundaries of the proposed entities would be required for the overhaul to increase efficiency.
Because the proposal is for Auckland and Northland to be in the same entity, Whangārei District Council could opt out without hampering the efficiency of the entity it's put down to be a part of.
The DIA said the international evidence it drew on suggests you can make a stronger case for scale efficiencies when dealing with wastewater than drinking water.
It said the entities would make it easier to finance investment in water services. Councils - some of which are already up against their debt limits - wouldn’t have to take on more debt to pay for water infrastructure. Rather this would go on the water entity’s balance sheet, giving the councils more capacity to borrow for other services.
"Balance sheet separation, coupled with autonomy of funding decisions, would also be expected to result in an increased ability to borrow. Initial guidance from ratings agency Standard and Poor’s indicates that current borrowing capacity of 4 times debt to revenue ratio could increase to 6 times debt to revenue under the reform scenarios," the DIA said.
"Initial estimates are that the reforms could increase the borrowing capacity of the local government sector by up to $2 billion across all local authorities."
Govt makes sales pitch to ratepayers
Mahuta made her case for centralisation: “Without these changes, DIA modelling shows that even at the more conservative end of estimates, the average household bill for water services could be as high as $1900 to $9000 by 2051, which would be unaffordable for many communities.
“Under our proposal for four providers those figures range from $800 to $1,640, saving households thousands of dollars.”
The DIA reached these conclusions using data provided to it by councils.
It has put a comprehensive tool online that allows the public to see what they might pay for their water services by 2051, should their council join an entity or not.
The DIA is also running newspaper and TV ads promoting centralisation.
Under the proposals, local authorities will be the owners of the new water entities.
The Government is developing safeguards against water assets being privatised.
The entities will also be established in such a way that prevents them from paying dividends or offering other financial rewards to their owners, making them unattractive to potential alternative owners.
Mahuta said the Government will make further announcements in coming weeks, including on a financial support package for councils.
Councils that don't join an entity will need to comply with a tough new three waters regulatory regime without central government support.
National opposed
National opposes the proposed reforms, but supports a water regulator with greater power to set and enforce standards.
Its water spokesperson Simon Bridges said: “The problems with Three Waters are complex, National recognises that, and we understand the need for change. But the proposed solution will end up with more problems than solutions.
“The benefits of scale are not convincing. Water services are not like the power grid – they are individual assets that are distanced and difficult to network. Yet the whole premise of four water entities assumes significant scale benefits.
“The result will be large service organisations that won’t work together or create any savings. The last thing New Zealanders need is more bloated bureaucracies.
“We have yet to see a thorough implementation plan. How will the water assets of communities like Kaikōura and Bluff, some 800km apart, be practically networked and merged into one entity?
“Ratepayers face losing local control of the assets they’ve paid for over generations, while being asked to foot the bill for poorer-performing neighbours – all while getting no guarantee that the service will materially improve.”
47 Comments
"would make it easier to finance investment in water services"
We've run up against a debt limit so we'll tap into a bigger debt limit. Excellent. Sounds like growth-forever economics is still with us.
The reality is that events will overtake; society cannot 'afford' itself from here on, water included. In fact, it's a requirement for more fossil energy, and more fossil feedstock, not just for build, but maintenance. And that is leaving us.
My view is that this is just another way for central Government to seize control of more assets. Hundreds of millions of dollars worth of rate payer owned assets will be effectively confiscated and controlled by Government bureaucracies. There is no mention of rates bills going down when councils no longer manage their water assets, but rate payers will receive additional bills for the management of those assets. All the while government is acting to drive down incomes. In truth many councils, especially Auckland, have failed their rate payers over water supplies, and need to be more accountable over their financial management, but as other have said, this looks just too much like National's privatisation of the power networks.
Auckland, ironically enough, has the best implementation of 'User Pays' in the country, while other regions whinge about potentially having their usage metered. You are right, however, that capital investment in new supply has been lagging, and suggests that the sheer size of Watercare is reaching the point where government organisations become impotent sponges. It's hard to see how a Water Agency 30% bigger will be any better.
You are also bang on about ratepayers losing assets. This is a theme of this government - they are also proposing to take the Port away from Auckland too, while expecting Auckland to be the only region in the country who pays a regional fuel tax. I'm prepared to wager congestion charging will be a similar story - only applied in Auckland. It's time Aucklanders asked what they're really getting from this government - it's not the transport system we were promised, and it sure looks like we're seeing public asset sales - from Auckland to Wellington. Which party is in power, again?
Yup. It's Standover tactics. Hand over your assets now or we will run you out of business.
For someone who has done very little for her 20+ years in parliament, Nania is making some big plays.
The Puapua doctrine, and this as well as putting in a Commissioner in Tauranga and Waikato Tainui Claiming Auckland in their recent Treaty Claim.
There's definitely something in the water.
Seems to me many councils have made a hash of it. Neglected maintenance, upgrades while squandering money elsewhere on vainglorious projects not at all essential to the basic needs and running of the district. Some haven’t though Wanganui for instance. On the other hand the collapse of the safety of the water recently in Hawkes Bay, Nth Otago, Banks Peninsular cannot be ignored and the mismanagement in Auckland which eventually saw the highly paid CEO resigning has created crisis after crisis. In Christchurch nothing has been exactly right in the three services since the independent Water & Drainage Board was disestablished & merged into the regional council. In some ways this is a return to that independent and specialist status. Simply put up and down the country the present bureaucratic system has failed too often in safety and efficiency. The new structure would mean that it is focused independently on these services without being shortchanged by the other fanciful creations councils are all to eager to indulge in.
Councils have NOT drifted from their core business - they have been forced over recent years by government decree.
Council's now have huge policy teams instead of roading and water teams as government forces constant reviews on council resources.
And there is nothing voluntary about the current three waters proposals. The government are waving a big stick to bring councils into line. Why would Northland councils want to be dominated by Auckland when they cant even keep their beaches safe?
And that is another concern. Phil Goff in the MSM said he would want Auckland to be prioritised in this system. I asked myself what does that mean, and the only answer I could come up with was that other parts of the country would fund Auckland's waters with no guarantee of success.
Perhaps a better system would be for the Government to set up a water infrastructure standard and alongside it an audit structure that would tell everyone how well it is run. This would likely motivate councils to be better at this.
Goff's not completely stupid! He's probably looking for some leverage?
Handing over these assets for no return other than you get to manage the work orders that come down the pipeline.
Aucklands debt level is unsustainable and everyone knows it.
They need a cash injection or else they're in trouble. If they handover these assets, their ability to borrow more is zilch. That's when their creditors will be making demands because the councils balance sheet will be minus the WaterCare Assets. There will be a mighty big hole in the balance sheet to fill. Or option 2; he'll take the US Ambassador role and cave to the Taniwha of the Waikatos decrees.
You'll have to take into account these things;
1. There's $35b left of the first QE tranche of $100b
2. The RBNZ boss A. Orr said there's enough in the tank for another $100b
3. The floodgates for NZ Inc Fire Sale via the CTPPA is about to kick off in Europe where Jacinda is heading in August on a "Trade' mission with her ministers for a meet and greet with the movers and shakers in Europe and then a quick stop in the States afterwards.
Its game on!
All whilst cut livestock numbers and increase costs for farmers.
We hardly have or will have a surplus of anything to sell.
Also you may be able to fund it but interest rates will increase AND you have to pay it back sometime. Auckland alone pays 1 million per day in interest.
So Akl funded LGBT parades, cultural events etc etc etc are core business? More like feel good virtue signaling council spending they simply cannot afford.
They've hit their debt ceiling. Meantime the basics like land and park maintenance, water supply, roading etc is a shambles.
All feckless Phil can just raise rates rather than attempt to live within his means.
yes that is the sad reality. there is just as much likelihood of worsening than improving. in my opinion the last major shake up, the formation of the regional councils made matters worse. and not only that created a area of demarcation that allows responsibility for issues to be palmed off, back and forth, between them and the city councils.
Crown approved appointees. I'm guessing regional appointees and Maori iwi entity representatives and the Maori Council reps, and Crown hacks appointed as independents.
The conduit to the CTPPA, the Comprehensive Trans-Pacific Partnership Agreement is back on the global table.
"Anybody Want to Buy Any Assets!" Or Natural Resources! Or Industry, sector! Going Cheap!
I can see for Christchurch that clean, safe, untreated water will go under Mahuta's plan. A toanga (treasure) that generations of my family have enjoyed.
Christchurch has sealed artesian water - unlike the Hawkes Bay - it cannot be contaminated from the surface. As long as the pipes and well heads are in good order there is no need to chlorinate drinking water. But if the national regulator says the base-line is chlorination then of course the South Island water entity will just chlorinate all of Christchurch's water because that is easier than monitoring and maintaining the pipes.
There is a real risk a distant and unaccountable water entity will lead to lower quality water services. Mahuta needs to front up and answer these sort of questions if she wants the public to support her plan.
NZ Councils are psychologically Deaf, and psychologically Blind
Do you not believe this
A report by the Water Industry Commission for Scotland estimates that NZ needs to invest between $120 billion to $185 billion on water infrastructure over the next 30 years to meet standards and provide for future population growth.
https://www.newshub.co.nz/home/politics/2021/06/multibillion-dollar-thr…
Where is the cash?
Auckland's share of that $180 billion is $60 billion
Nealy all of 67 councils have stolen $billions over the years, charging depreciation on water assets, then annually revaluing the assets upwards, and charging increased depreciation on the up-valued assets, and charging increased water rates, then failing to put the funds aside in a sinking fund, but spending the cash on vanity projects.
Auckland has had 60 years to correct the ouflow of sewerage into the Waitemata harbour and done nothing
It's called theft and corruption
A couple of questions The WIC for Scotland? Were they commissioned to do the study?
And Here's a clue for us to talk about - "..and provide for future population growth." Simple really, just cap population. But this is a much bigger question, because all the climate change issues, the resilience issues highlighted by COVID, and the other sociological issues are all pointing to the crunch that PDK keeps pointing us at, and really with a big picture view, why are we even considering population growth, and not starting to talk about how we can roll the population back?
$36,000 for every single entity of the population. Seriously?
A percentage of the population aren't even connected to a council supply, another percentage are connected to a recently upgraded and perfectly adequate supply. Someone's just taking the Micky.
PDK is also, of course, correct.
The main message is ratepayers have been paying all along, but the councils have re-directed the rates revenue to other things such as vanity projects and other funds starved activities. It's called theft. Situation is what is now called outstanding dilapidated repairs
You're new here with a brand new axe to grind apparently.
Problems that predated the current government & back to the 1990s:
Housing affordability
Child poverty
Homelessness
Healthcare
Infrastructure
Law and order
To which we now add, following decades of do-nothing:
Climate action
Fresh water quality
Defence
This government's mistake was to acknowledge that there were any problems and indeed try to tackle some of them in 1 election term.
Its a long drop for Nanaia back to reality. She will have to do better than this:
Mahuta made her case for centralisation: “Without these changes, DIA modelling shows.......
Let her start with Wellington and half of North Island, once that area is up she is bathing in saving, then come to the others.
I would not mind betting that the government are trying to scoop up these assets to give to the Maoris?
More generally, there are so many greedy and incompetent forces at work pro-porting to serve the public, that I believe that the best move is to get onto a piece of rural land and divorce yourself as much as possible from these incompetent leeches.
You gotta love the reactionary Q-Anon style response from some folks here. You should all be grateful that government is eliminating 67 bureaucratic entities and streamlining them into a lesser number - it's the same catch cry that the likes of Mike Hosking have wanted for years with DHBs.
On top of this, investment support from central government is offered and new water quality standards are to be introduced so no one else has to die from negligence like in Havelock North in 2016.
The fact is that central government built most of our infrastructure assets and local government doesn't have the resources to maintain or replace them. Most folks on town supply are not metered and don't pay for fair use of the system. We use horribly high amounts of water per capita in NZ and metering is the only way to drive efficiency. If you can't measure it you can't manage it. If something has no price, it has no value. This is basic market economics not communism.
The simple fact is that the loudmouths don't want to pay for anything. You expect a European level of infrastructure with an American view on taxation. You aren't paying enough, you never paid enough, and you don't want to pay to improve it now.
The same tired old story is repeated across public health, transport infrastructure, the environment, education - basically every indicator of a strong civilised country is flashing red and all you can do is whine and see imaginary Reds under the bed.
Hell - the govt will now GIVE you money to buy an EV but no doubt you will whinge about your Second Amendment rights to buy a Ford Ranger or something.
Like the amalgamation of the Auckland municipalities. What were we promised to suck us in, lower rates, increase efficiency and improve the service.
What did we get? Runaway rates, a bunch of unaccountable quangos and a totally dysfunctional city.
Sounds very like another verse from the same song book.
They need to concentrate on something more important and worry about the most important problem that we face. Housing. They made all sorts of promises on this too. What have they achieved? Probably as much as they will achieve in the water sector.
How many times have we been sucked in by these sorts of promises only to bitterly regret it? Run a mile.
Regret rampant immigration that drives down wages and leaves infrastructure constantly scrambling to keep up. The housing crisis is also related to this issue.
Auckland has suffered the pointy end of government’s policy to import wealth by importing migrants and encouraging us to buy and sell houses to each other. All that capital investment tied up in silly little wooden boxes, nothing invested in productivity.
And the ratepayers love it - keep rates low and earn our capital gain. This government has realised, reluctantly, that governing means doing stuff. Some folks here don’t want that because they are doing just fine thank you. Meanwhile Rome burns/runs dry/is mired in traffic/emits more/emigrates/dies of campylobacter.
While for some places you may be correct Larry, but for others it is utter BS. While criticising responses your generalisation falls into the QAnon style responses too. Whanganui's water infrastructure has been all paid for by the rate payers, not central Government. It has been generally well maintained and does a good job. Whanganui's rates have been higher than almost every other area for decades, so we have been paying for it - paying a lot! The Government's scheme offers little to no visible savings for rate payers here so why should we be a part of this?
Its not very often that I agree with a statement from a National Party spokesperson but simple logic says that it is impossible to achieve efficiencies of scale with respect to 'three waters ' services when the needs are so widely dispersed across the whole country. For example, just look at the number of small towns in the Waikato. How do you achieve economies of scale, i.e. running joint services, when the towns are 30-40 kms apart? Also the state of the infrastructure varies so much between the different areas in NZ that cross-subsidisation would be inevitable, so the plan is politically a non starter. The only cost savings might be through centralised access to funding. In which case why not use the existing centralised local government mechanism.
Not that I expect any degree of urban sympathy but think of the multitude of effects this 'knee-jerk' green government is having on NZ's rural populations. In my case I am not a burden on any council water, sewerage or storm water infrastructure having myself fully funded the roof catchment and storage of 75k litres of tank water (50k litres of which is for the council dictated rural fire fighting storage), including an expensive council mandated filteration and UV sterilisation system. Sure, I don't pay water rates but in my case I am now having to contribute towards bailing out an ill founded dam construction project located 150km from where I live that our inept council has gone 50%, and rising, over-budget on. Now it seems our water services are to be centralised/nationalised so I suspect that I will have to pay once again for this 'transformational' water policy via my central government taxes. We don't get ultra-fast broadband coming anywhere near our door and our rural wifi broadband is hit and miss at best so doing things like online banking in the face of rural township bank closures is not particularly easy. We can't use electric vehicles for the journey lengths we have to make or the work we need to use them for and so Jacinda's grand E vehicle plan or the focus on cycleways or public transport completely misses its mark with us. We are waiting also with some trepidation as to how the disbandment of the DHB's will affect those of us who reside beyond NZ's main urban centres, who it seems get the bulk of government funding consideration (because I guess that is where the votes are). At the same time we are often reminded that elements of the rural sector are to blame for the bulk of our carbon emissions and so by association our rural communities are feeling somewhat demonised in this climate change conscious age. Well, thanks interest.co for allowing me to get that off my chest but seriously I do feel there are quite a few elements of "separatism" developing in our society at the moment, the urban-rural divide being just one.
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