Editorial: Undercurrents of concern with Three Waters reforms

Local Government Minister Nanaia Mahuta's water reforms are being rejected by some councils. Photo / Alex Burton

EDITORIAL:

The Government plan to move the ownership and management of water infrastructure from local councils into the hands of four water services agencies, split regionally is causing understandable ripples.

Local Government Minister Nanaia Mahuta says the "Three Waters" reforms on drinking water, wastewater and stormwater infrastructure will save ratepayers money.

The plan is to invest from $120 billion to $185 billion over the next 30 years across the massive networks.

Mahuta describes the present model as "ineffective, inefficient, and not fit for purpose".

While hard to argue with, this could also be said about many other services in both government and local government hands. The inference is, however, that shifting ownership and management will fix it.

There are 67 councils which currently manage their own water infrastructure and each has individual circumstances of assets built by locals through targeted rates, major projects in the pipeline, and even surpluses of funds stockpiled for specific purposes.

One example of the challenges Mahuta faces is Northland and Auckland, which would be covered by one agency. Whangārei District Council has wasted no time in voting to opt out.

It's more than parochialism at play. Mayor Sheryl Mai told the Northern Advocate the council is concerned about what it would mean for the local assets ratepayers had paid for, and the risk Northland would come second to Auckland.

Whangārei District Council (WDC) receives 28 per cent of its income from targeted rates, particularly for water services. Fourteen per cent of its expenditure goes on water, wastewater and stormwater.

The council has steadily built up a surplus of water revenue of more than $26 million, mainly volume usage-based targeted rates, over and above operating and capital water expenditure. This reserve is expected to be used up by significant water projects (including a new Whau Valley water treatment plant) by year seven of the 2018-2028 Long-Term Plan.

With Auckland's troubles around water storage well known, there is understandable concern about Northland's fighting fund being rolled into the same pot as Auckland.

National Party water spokesman Simon Bridges said he's not convinced the new model will result in the savings being promised.

"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," Bridges said.

It's not as though Auckland is happy with the idea, either. Mayor Phil Goff said the ability to ensure Aucklanders' needs are put first will be undermined. Auckland Council could have less than 40 per cent of the representation in governance of the new entity.

Goff cites a report by the Water Industry Commission for Scotland (WICS) — the review on which the Government is basing its water reform proposals — which says Auckland is already the most efficient and effective water supplier in New Zealand.

However, the WICS report also states Auckland needs to invest more to deliver fully on its potential. Ultimately, it appears Goff is concerned this process will happen under Mahuta's reforms and a safeguard preventing privatisation of water services could then be repealed by a future government.

Mahuta says a support package for councils will be announced in the next few weeks. Given the reaction so far, it will need to be very generous or smart to calm the waters.