Three Waters compensation package welcomed by mayors in Whanganui region

Local Government Minister Nanaia Mahuta said funding water infrastructure and services had put councils under pressure for too long. Photo / Bevan Conley

Local government leaders in the Whanganui region say it is too soon to confirm how a new Government funding package might be spent in their districts.

Councils can apply for a share of the "better-off" funding from the Three Waters reform package to invest in their local communities and the mayors of Whanganui, Rangitīkei, Ruapehu and South Taranaki agree that their councils each have a number of projects where the money could be well spent.

Announcing the opening of applications for the first $500 million portion of the $200 billion package this week, Local Government Minister Nanaia Mahuta said it was a recognition of the fact that councils had been under financial pressure for too long.

"For far too long, councils have had to offset difficult decisions about funding water infrastructure and services against other important initiatives, with water infrastructure often coming out second best," Mahuta said.

"Councils are facing significant challenges over the coming years with population growth, housing pressures, an increase in natural disasters and climate change, it is important that councils are able to prepare their communities for the future."

Whanganui Mayor Hamish McDouall, who is also vice-chairman of Local Government New Zealand (LGNZ), said the association had negotiated the agreement with the Crown.

"It means we can build new assets and secure loans because under the Three Waters reforms we would lose the ability to do that with our water assets," he said.

"There are several projects that would meet the criteria for this funding but it's too soon to say where it would be applied."

The terms around the use of the funding are set out in the Heads of Agreement negotiated by LGNZ last year.

Rangitīkei Mayor Andy Watson and South Taranaki Mayor Phil Nixon said they were yet to discuss the funding announcements with their chief executives and councils.

"When we do decide which projects would take priority we can add those to the annual plan," Watson said.

"It is welcome news."

Nixon said he could think of several worthy projects in his district.

"I wouldn't want to name any off the top of my head until we have discussed our priorities but any support from the Government is welcome," he said.

While McDouall has acknowledged the necessity of reforms, he has been critical of the Three Waters reforms process. He was concerned about the Whanganui District Council's current debt for investment in water infrastructure and wanted assurance the Government would compensate the council.

Whanganui district councillors agreed to consult with the community to gauge their position on Three Waters and how to best lobby the Government while Rangitīkei, South Taranaki and Ruapehu councillors have voted in favour of joining the Communities 4 Local Democracy Coalition (C4LD) lobby group, comprising around 32 local bodies.

Ruapehu Mayor Don Cameron said he was pleased the Government had allowed for a wide scope of projects for the "better off" funding.

"It allows individual councils to decide their priorities based on their community needs," he said.

"We have a number of projects that will meet the criteria so the money is very welcome."

While Cameron recognised the concerns of neighbouring councils and was recently out-voted by his own councillors to join C4LD, he maintained a "glass half full" attitude to the Government's water reforms.

"As a rural council with a small rating base, Ruapehu has a lot to gain financially from the Three Waters reforms," he said.

"Over the next 10 years, we were facing our debt climbing by over $65m to address drinking water compliance standards alone. The reforms will remove that crippling debt and allow us to make some real progress in other areas. This funding package is a really good start towards realising other projects."

LGNZ president Stuart Crosby said councils would be able to use the additional funds to invest in their local communities' wellbeing.

"It gives councils the opportunity to create and accelerate projects that build resilience to climate change and other natural hazards, deliver infrastructure that supports housing development, and enhance local placemaking and community wellbeing," he said.

Crosby said accessing the funding would not preclude councils from holding a position on Three Waters reforms.

The first portion of $500m of funding would be available from July 1, 2022, and any unallocated money would be rolled into the next tranche, which becomes available on July 1, 2024, when the four publicly-owned water service entities would be established.