While supplies last!

Planning for water services in HB is in turmoil.

A staff paper for next week’s Napier City Council meeting – but applicable to all four of our territorial authorities– reveals that the Government’s unsettled plans for ensuring quality water services throughout NZ have created a situation as leaky as the infrastructure they are meant to fix.

This as a recent pipe leak affecting Waipukurau’s main water delivery threatened to drain the supplying reservoir, with outflow exceeding inflow. A situation CHBDC seems now to have remedied, but a reminder of our region’s crappy water infrastructure. How many pipe bursts await us?

The NCC paper recounts the saga of Labour’s ‘3 Waters’ reforms, only partially enacted before the election, but still in effect. The Coalition parties – now Government – derided the Labour approach and promised to replace it with something more to the liking of local authorities.

But the new approach is yet to be fleshed out, let alone legislated.

The NCC paper summarises the expected new Government approach, as declared during the election campaign, as follows:

“Creation of a new Water Infrastructure Regulator to: 

o  Monitor investment in waters assets to ensure sufficiency and sustainability, 

o  Ensure fair pricing for consumers, and

o  Set quality standards for infrastructure. 

–     Introduction of new financial requirements that require: 

o  Water services revenue to cover maintenance and depreciation of assets,  

o  Water services to be self-funding (no ‘top ups’ from other council activities), and 

o  Access to sufficient borrowing to enable growth.   

–     A requirement that within a year of the repeal of the WSE Act, councils deliver a plan for an alternative model to the Minister of Local Government for signoff. That model must provide financial sustainability and meet the investment and quality standards set by the new Water Infrastructure Regulator. 

Provided those bottom lines are met, councils will have flexibility to choose a model and governance structure that works best for them and their communities.”

Essential to the model our local councils have championed is getting water infrastructure costs off the balance sheets of the councils, already stressed even before Cyclone Gabrielle recovery costs arose. 

As the NCC paper notes: “Affordability challenges are more pronounced than ever as the response and recovery costs incurred following Cyclone Gabrielle have pushed Hawke’s Bay councils closer towards their upper debt limits.”

Our councils’ ‘solution’ is to create a new Council Controlled Organisation to handle water infrastructure regionally, funded via a separate balance sheet and borrowing (and rating?) capacity. But current legislation doesn’t permit this.

Note that the summary above indicates the expectations that water services must be self-funding and entities must have sufficient borrowing to enable growth.

No one has a clue as to where these funding resources are to come from. The Government has not indicated what financial support it might give to help underwrite infrastructure upgrades. Moreover, monies that the Labour Government was giving our councils (nearly $1 million in NCC’s case) to help plan for its new scheme have only been partially awarded, with major chunks now in limbo. “The continued availability of this funding is unclear,” says the staff paper, and could even be recalled. 

Finally, compounding this mess, councils are hip-deep in planning their new Long-Term Plans (LTPs). But under the legacy Labour legislation are prohibited from including budgeting for water services beyond 2026 (because the expectation was that the new entities would be in place and taking that responsibility).

So the NCC paper concludes with this Risk statement:

“The replacement framework outlined above is merely indicative and is subject to change. The community and council staff find themselves again facing uncertainty in relation to the governance and management of water service going forward. The commitment to repeal and replacement by the new government risks an extended period before a more sustainable solution for water asset management and funding can be implemented.”

What a mess democracy has wrought! Might be time to start stocking up on bottled water and backyard long-drops or porta potties!


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