Affordable Water Reforms

That’s the new name of the Government’s ‘3 Waters’ proposal, the subject that most pre-occupied our region’s four mayors until Cyclone Gabrielle temporarily blew the matter off the table.

The new name and reshaped proposal reflects the Government’s determination to make clear to ratepayers and taxpayers what all the fuss is about – delivering water services safely and equitably throughout NZ … and at lowest cost.

So let’s go right to the numbers, then to how the deck chairs are arranged. 

From Local Government Minister Kieran McAnulty’s announcement:

“The cost of meeting the upgrades needed for our water systems is projected to be up to $185 billion over the next 30 years. Local councils cannot afford this on their own, and households in some areas could see rates rise up to $9,730 per year by 2054 if we do nothing. 

“The projected costs have been peer reviewed by both Farrierswier Consulting (an expert Australian regulatory economic specialists) and Beca (a leading international engineering firm) and make for pretty grim reading. Leaving councils to deal with this themselves will lead to unaffordable rate rises. It would be setting councils up to fail and I can’t in good conscience do that.

“Under our proposal to establish 10 entities New Zealand households will still make big savings, projected at $2,770 – $5,400 a year by 2054 on average within each region.”  

Here are the average household costs in 2054 (2022 prices) and savings projected specifically for Hawke’s Bay (and Gisborne, included in our new regional entity for water service purposes):

Jurisdiction	Current council approach	Cost difference	Annual HH savings with reforms
CHB	$9,890	59%	$5,880
Hastings	$8,150	51%	$4,140
Napier	$4,880	18%	$870
Wairoa	$20,860	81%	$16,850
Gisborne	$16,700	76%	$12,690
Weighted average	$9,410	57%	$5,400

These savings numbers have been crunched, re-crunched and peer reviewed. Our local elected officials, if they actually care about lightening the financial burden on their constituents, need to accept fiscal reality and work with, not against, this initiative. 

Of most appeal to our local leaders is that the new scheme envisions ten regional bodies to plan and implement water services (drinking water, stormwater, waste water) instead of the originally proposed super four.

Says the Government Q&A: “By establishing ten entities closely based around existing regions we can make sure the new entities have a closer relationship with the communities they serve and still deliver big cost savings to New Zealanders. This will strengthen local representation and influence over the entities’ high-level decision making.” 

The new entities will be stood up from early 2025. One might hope to see HB placed early in the queue, since our mayors have always asserted they have a regional model already on the drawing boards.

Apart from upsizing from four to ten entities, the Government scheme seems pretty much unchanged.

The Government argues, as it always has, that size matters. Specifically, that these new entities are large enough to borrow more over longer periods than councils can. And that the larger entities will be able to purchase equipment and services more efficiently.

Local water assets will still be in public ownership, but transferred to the new regional entities, which will have “operational and financial independence”, holding the authority to determine priorities, set budgets and finance (including rating) accordingly. The governance of each of these will be in the hands of a “competency and skills based” professional board.

Each these entities will have its Regional Representative Group (RRG), consisting of representation from each relevant council and equal numbers of Māori. RRGs appoint the professional board and “set expectations of how the entity is run that reflect the needs of communities”. However, the RRGs will have no role in the day-to-day governance and operation of the new entities.

Our local elected officials can now choose to ‘go with the flow’ – indeed be one of the first in NZ out of the starting blocks to implement the new regional scheme – or continue to carp and await a potential new Government that will miraculously meet our $185 billion water infrastructure deficit at no additional cost to ratepayers. 

The now customary media release from local officials was promising, but less than a rousing endorsement: “we are all much relieved” (Mayor Hazlehurst, referring to colleague mayors), “very pleasing” (Mayor Little), “welcome change” (Mayor Wise, referring to each council having a seat on the RRG).

Mayor Wise commented to BayBuzz: “I still do have concerns about how the entity will be run, especially in terms of how many layers the governance structure will have. This is because the more layers there are the more it lifts decision making away from community. Many councils, including ours, have concerns about central government taking control of community property rights and putting in place top-heavy structures that dilute experienced and meaningful local voices.” 

On the other hand, perhaps the most encouraging sign that councils might be ready to move on might have come in this comment from Mayor Hazlehurst: “This new East Coast model will ensure we meet the standards imposed by new water standards regulator Taumata Arowai, enabling us all to have access to safe drinking water and to dispose of waste water in the most responsible way possible.”

So, what do you want? More council bums on advisory seats or the least expensive, reliable and safe water services? To placate noisy councils (who got the country into this mess in the first place), the Government has served up a bit more ‘democracy’ for somewhat less, but still considerable savings. Do they now have the balance right?