Water challenges ‘simply not sustainable’ – minister

Analysis: In an online call with mayors, Local Government Minister Simeon Brown has acknowledged the funding and financing challenge they face, especially in delivering water services.
Internal Affairs has released a large tranche of ministerial briefings about the coalition Government’s water reforms, including Brown’s talking points for the call. He says he recognises this is a challenging time for local government.
“These challenges are all too often readily apparent in the potholes and leaky pipes in the streets of our communities, and prominent in the news media reports of councils considering large rates increases. It’s simply not sustainable.”
It comes as a global survey, commissioned by engineering consultancy GHD, shows New Zealanders lag behind other countries, both in willingness to conserve water and in willingness to pay for what we use.
Simeon Brown has asked councils to redirect water funding provided by the previous government, including the Ardern administration’s so-called Better Off funding, to the new Government’s Local Water Done Well programme.
He intends to offer councils a menu of structures they can choose from, to help them achieve efficiencies, fund compliance with more rigorous water quality rules, and finance the upgrade of expensive, ageing water assets that will now remain their direct responsibility after the Three Waters repeal.
While Brown hasn’t disclosed the details publicly, he has given a rough outline to the mayors in the March 25 call. He’s promised them a comprehensive range of options, tools and models that they can choose from, to deliver their water services.
Among those financing tools, he told them, will be a new class of financially independentcouncil-owned organisations.
The most critical question he’s left open, to be answered when he introduces the coalition Government’s third water reforms bill, is this: who will own the water assets? It’s ironic that after the Government campaigned on keeping the assets fully in local council hands, that question is on the table.
On Tuesday this week, the Waikato Mayoral Forum published a report into the region’s water services, highlighting the need for the 11 regional, city and district councils to work together to deliver their water infrastructure. 
In a footnote, the Waikato report says: “The ownership of assets is a matter that will be addressed once there is clarity on the options that will be made available to councils via legislation.”
The ministerial briefings show other regions are fast reaching the same conclusion: Bay of Plenty, Hawkes Bay, Taranaki, Wellington/Wairarapa, the top of the South, West Coast, North Canterbury and Central Canterbury – they’re all moving to set up their own super-providers after the repeal of the previous government’s plans for 10 regional water entities.
Matamata Piako District Council chief executive Don McLeod who’s led the Waikato work, says all ratepayers will be better off if councils work together more closely, rather than continue to go it alone.
“Councils are between a rock and a hard place,” he explains. “Our ratepayers simply cannot afford to pay for the water infrastructure we need to build, yet we must build it. And we are required by law to meet increasing levels of compliance which is only going to get more expensive.  
“The current system is fundamentally broken – our contractors, our staff, the water experts, the ratepayers are all telling us that. Something must change.”
Waikato councils have budgeted nearly $5b over the next 10 years, for drinking water, stormwater and waste water capital works. The report concedes there’s more councils are advised to do, but they can’t afford it. Add in the operating costs, and the region’s water services will cost more than $7.5b. By working together, the region could trim $338m off that.
The report also says water charges will be increasingly unaffordable, unless something changes. In the Waikato district, for instance, average household water charges could range up to $7,921 a year by 2035 – complicated by the district’s contract with Auckland Watercare ending in 2026.
“We cannot expect ratepayers to stump up with that sort of cash, and not consider more cost-effective ways of providing services,” McLeod says. “We have a duty to try and do better.”