Three Waters Reform

Statement published 14 July 2022

Submissions are now being accepted by the Select Committee on the Government’s Water Services Entities Bill. You have until 22 July 2022 to have your say.

The bill is the first of two which give effect to the Government’s Three Waters Reform proposals. It establishes the four multi-regional entities, their purpose, their objectives, and their representation and governance arrangements.

The Bill also covers the accountability arrangements for the entities and the other levers communities will have to influence the direction of the entities.

Mackenzie District Council supports the government’s desire to improve three waters infrastructure, but strongly disagree with the current 4 entity model being proposed by the government. We do believe achieving compliance is important and have undertaken major upgrades to achieve this. We also have significant investment planned on three waters to achieve ongoing compliance.

The initial report informing the case for three waters change included an analysis of the economic benefits by the Water Industry of Scotland (WICS). At Mackenzie we have shown that the assumptions in WICS model did not hold true for our District in all instances. Our Council has undertaken independent analysis that demonstrates the underlying foundation supporting a 4 entities model is significantly flawed and the economics do not align with actual and proven costs and revenue.  There are many credible alternatives models that deserve analysis and Council believes will deliver far better holistic outcomes to local and central government, mana whenua and our communities.

We are also concerned that one share in Entity D is not enough of a share in a large entity to guarantee an adequate voice for our communities to influence capital investment.

Model of ownership:

Section 166 of the Bill clearly eliminates any rights of Council re any normal definition of ownership. The model of ownership proposed in the Bill falls well below any acceptable definition of ownership giving Council at best “very limited oversight on behalf of the community.

The ownership model is an absolute Clayton’s model. A Claytons proposal that territorial authorities “own” the water entities, but this is ownership in name only, not in substance. Councils will not be able to perform any of the functions of ownership like with any other asset. The shares would have no voting rights, no financial rights and no rights of appointment. They are trying to con the public into thinking that territorial authorities will still have ownership, when all they’ll have is a piece of paper with no rights of ownership.

The transition of assets and debt; the transfer of asset and debt must not negatively impact on our Council’s ability to be a viable organisation (i.e. is not reform by stealth). We await the outcome from the Future for Local Government and the RMA reform to understand the integration of three new pieces of legislation.

The ongoing cost and management of assets; cost and management of any stranded assets must be considered and accounted for, alongside central government speeding up the process and identifying what might “fill the gap” left by waters.

The ongoing affordability of water to our communities remains a concern. A sub regional model would achieve similar economies of scale and provide greater voice for our communities and Council.

Economic Regulator and other legislation being done in piecemeal fashion

This regulation will add transparency and accountability which will go a long way in resolving the issues. Viewing the legislation in piecemeal fashion is not helpful. Economic regulation and consumer protection are important legislation to ensure there are mitigations to manage the pricing and affordability of water.

There appears to be an unwillingness to change the current unsustainable funding model for local government which restricts and limits investment in Infrastructure, especially in small councils with small ratepayer bases but high peak tourism seasons.

We will be making a submission on the Water Services Bill to the Select Committee. We will also make this available on our website.

This is the public’s opportunity to have their say on the three Water Reforms structure through parliament’s Select Committee process.

The government’s evidence shows that, as a nation, there are problems with how we’ve maintained and improved our water service infrastructure. Without change, the safety, reliability and affordability of these services will lead to more New Zealanders getting sick from contaminated drinking water, more sewage spills and increases in cost. A significant driver of this issues has arisen due to the very limited funding sources available to Councils and major restructuring and centralisation does not address these fundamental issues.

Details of the entire reform process, the programme, the reports and updates from working groups and the Steering Committee can be found on the webpage of Te Tari Taiwhenua | Department of Internal Affairs (DIA) at: https://www.dia.govt.nz and type ‘three waters reform information’ into the search function.

If you would like an easy-to-read up-to-date summary, you can find this on the same DIA webpage, or search online for ‘Three Waters Reform boiled down – a quick overview’

If you would like to read the Water Services Entities Bill, find what has been said about the bill in Parliament, or learn more about making a submission to the Select Committee, you can find links to all of these at: https://www.parliament.nz and follow the links to > Parliamentary Business > Select Committees > Make a submission