In the November 2024 edition of the Mackenzie Messenger the Mayor published the following update on Local Waters Done Well.

Local Waters Done Well – What does it mean for Mackenzie?

In this edition of the Messenger I want to make you aware of an important piece of work that Council is undertaking in relation to water services.

The Coalition Government came to power and agreed with us that Councils and the communities they serve should retain their property rights in their water assets.

They have released their plan to address New Zealand’s long standing water infrastructure challenges and have started introducing the relevant legislation.

We need to give effect to the current and future legislation of “Local Waters Done Well”. As part of this reform, we are required to decide on an appropriate structure for delivering water and wastewater (two waters). We must also decide if stormwater is included or not (three waters).

Key decisions for our Council will be around the governance, delivery structure and financing arrangements for the ongoing delivery of two or three waters for our community. This includes considering joint structures with neighbouring Councils to deliver the services.

I believe this will be a once in a generation decision and the importance of getting the decisions right cannot be underestimated. We must ensure the financial sustainability of these services and that we can meet the new economic regulation requirements.

We have until 1 September 2025 to compile a Water Services Delivery Plan for approval from the Department of Internal Affairs. I am concerned that this means we have less than 12 months to complete an important and significant piece of work.

Given the magnitude of these decisions, there will be a need for ongoing engagement and consultation with our community at the appropriate times. I implore you to participate in opportunities that Council will provide for you to offer your input.

The future costs and affordability of water services for our community, along with the extra compliance costs such as professional commercial governance, and future economic regulation, will likely mean that future costs of water will escalate. Affordability for our community will be a prime concern.

The third piece of water services legislation is to be released in December 2024 and will set out a comprehensive regulatory scheme, with full economic regulation, to govern the Three Waters sector into the future.

In August 2024 a document ‘Water Service Delivery models: guidance for local authorities’ was published by the Department of Internal Affairs. You can find this online on their website at www.dia.govt.nz under Central and local government on the front page.

You can also read more details about this in the Local Waters Done Well paper presented to the Council meeting on 1 October 2024 (item 8) and 29 October (item 8.2) in the agenda. There is a link to meeting agendas and minutes on the front page of the Council’s website: www.mackenzie.govt.nz.

Look out for more from us about this topic as we work through developing our Water Services Delivery Plan.

On 6 March 2023, Mackenzie District Mayor Anne Munro and Chief Executive Angela Oosthuizen presented to the Government’s Finance and Expenditure Subcommittee B on the Water Services Legislation Bill and Water Services Economic Efficiency and Consumer Protection Bill. This is the current stage in the Government’s Three Waters reform project.

They reiterated Council does not support the model or the legislation proposed by government and does support the Community for Local Democracy model proposed.

Mayor Munro talked about the impact on the proposed reforms on the communities of Mackenzie District, concerns about the proposed structure after the reforms, and the need for a sustainable funding model that would be affordable for communities. CE Oosterhuizen looked at issues with specific clauses in the proposed legislation.

The full text of the presentation is available here.

The video of the presentation’s livestream is on Facebook and is available to watch here.

Mackenzie’s presentation starts at about the 55 minute mark.

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