3 Jun 2021

Mayors split over key water reforms

11:13 am on 3 June 2021

Claims that an overhaul of water management would bring huge savings to household bills are failing to convince some mayors.

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File photo. Photo: 123RF

A report out yesterday showed the bill for fixing water infrastructure nationwide has ballooned to between $120 billion and $185 billion.

It found for some ratepayers that could mean a yearly water bill of $13,900. That is, unless key reforms progress.

The government has been working with local government and iwi over the reforms.

The intention is to hand over the management of the nation's water assets into just a handful of organisations (the number and geographical spread of each organisation is still to be confirmed, but is likely to be between two and five).

Currently, each individual council is responsible for the management of its water assets.

The reforms are an opt-in process, and councils are able to stop being a part of it at any time. Currently, they all remain involved.

But there has been significant scepticism and fear over the proposals.

Selwyn Mayor Sam Broughton said "the case for change is yet to be convincingly made to many councils by the government".

Meanwhile, Wairoa Mayor Craig Little described the proposals as "pretty scary."

Yesterday, the government released a number of documents providing the latest information on the Three Waters reforms.

Completed by the Water Industry Commission for Scotland, it ramped up the estimated cost of how much work needs doing to upgrade the country's water systems.

But an analysis by Deloitte also showed such an investment would reap economic rewards, with a growth in GDP of up to $23b, and thousands of jobs created.

One of the most important pieces of data, however, was a projection on how the investment would impact ratepayers - and likely what councils will be concerned about the most.

By foregoing the reforms, it showed the cost burden on ratepayers would be extremely lopsided. Some could end up paying nearly $14,000 a year in their water bill, while others would pay just $1,900.

But if reforms did go ahead, and if two to four entities were created to oversee the water network, the bill would instead be a lot more evenly split amongst ratepayers.

The highest average bill would end up being just $1,600 while the lowest average would be around $800.

"It really does show a case for change," said Hutt City Mayor Campbell Barry.

"The status quo as we know it currently, simply won't work for the level of investment that's required in Three Waters across the country over the next 30 years."

He said reforms would lead to a more equitable way of paying for the investment.

As a result, rural councils with a smaller base of ratepayers would profit from it, "because you're able to obviously aggregate services, and you have those economies of scale.

Lower Hutt mayor Campbell Barry

Campbell Barry. Photo: RNZ / Meriana Jonsen

"It would be very difficult for a small district to be able to invest in a significant renewal programme that's required to keep their Three Water network up to scratch."

'The implications are huge'

But many questions still remain for other mayors, who are not so supportive of the reforms, despite the latest projections.

"It is easily the trickiest and the most complex issue that faces local government for a generation," Clutha District Mayor Bryan Cadogan said. "The implications are huge."

He said one of his biggest concerns is how to communicate the complexities of the proposals, and what it could mean, with the public.

"We still aren't privy to real critical details, and until those critical details come through, it would be foolhardy to make a prediction."

He said he is also concerned over how much compensation the council would receive if a new authority were to take over its assets.

The government has signalled it would compensate local authorities for taking its assets, and would also take on its debt.

But Cadogan said Clutha District had "virtually no debt", so "that's not a smart move for us."

Meanwhile, Hastings District Council Mayor Sandra Hazelhurst said she worried about what the figures means for their residents.

"We still haven't got that at a local level, and we understand that many councils are really, really concerned about the reform, just because of the unknown.

"It's not until we get that level of detail that we can make an informed decision and actually have a good conversation with our community."

Lecturer at Te Herenga Waka Victoria University of Wellington's School of Government, Dr Julia Talbot-Jones, said this was a valid point.

"Certainly, because of the regional variation, this proposal is likely to require cross-subsidies across regions.

"How this will affect individual ratepayers and individual water users is one of the biggest challenges, I think, that these reforms face."

The councils in the Hawke's Bay have already done their own analysis and found they need to invest $600 million collectively in their infrastructure.

Hazlehurst accepted it is a large amount, which they can't do by themselves.

"We're going to certainly need a model that is going to work for us, and we look forward to working with the government through the next tranche, and the next investment package to see what this means for us, as both Hastings and the region."

Local Government Minister Nanaia Mahuta said she will be announcing Cabinet decisions on the next steps in the reforms process in the coming months.

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