Three Waters Reform

The Government is reviewing how to improve the regulation and supply arrangements of drinking water, wastewater and stormwater (three waters) to better support New Zealand’s prosperity, health, safety and environment. Most three waters assets and services, but not all, are owned and delivered by local councils.

The Three Waters Review is a cross-government initiative led by the Minister of Local Government. Other involved agencies and portfolios include: Health, Environment, Finance, Business Innovation and Employment, Commerce and Consumer Affairs, Primary Industries, Climate Change, Infrastructure, Civil Defence and Emergency Management, Housing and Urban Development, Transport, Conservation, and Rural Communities.

When did this begin?

The Review, beginning in mid-2017, ran in parallel to the latter stages of the Government Inquiry into Havelock North Drinking Water, which was set up following the campylobacter outbreak in 2016. Up to 5500 people were ill as a result and four people are thought to have died from associated causes.

The initial findings of the Review were consistent with many of the Havelock North Inquiry’s findings, and raised broader questions about the effectiveness of the regulatory regime for the three waters, and the capability and sustainability of water service providers.

Effective three waters services are essential for our communities

• Our health and safety: depends on safe drinking water, safe disposal of wastewater and effective stormwater drainage.
• Our prosperity: depends on adequate supply of cost effective three waters services for housing, businesses and community services.
• Our environment: depends on well managed extraction of drinking water, and careful disposal of wastewater and stormwater.

Memorandum of Understanding (MoU)
AUGUST 2020

In August 2020, the Government signed a Memorandum of Understanding with many local authorities around the country, including our Council. It’s important to note putting pen to paper does not bind our Council to any future agreements or decisions, it simply adds us to the ongoing conversation.

As part of that conversation, Council was granted $3.36 million that has now resulted in proposed work being brought forward and additionally some new projects.

Three waters infrastructure stimulus package
8 JULY 2020

On 8 July 2020, the Government announced a funding package of $761 million to provide immediate post-COVID-19 stimulus to local authorities to maintain and improve three waters infrastructure, support reform of local government water services delivery arrangements, and support the operation of Taumata Arowai. Information about this work, including updates, media releases and background documents, is available on the Central/Local Government Three Waters Reform Programme webpage.

Three waters regulatory reform
27 JULY 2020

On 27 July 2020, the Water Services Bill was introduced to Parliament (an announcement by the Minister of Local Government is available here: New water services bill for safe drinking water 28 July 2020). The Bill contains all of the details of the new drinking water regulatory system, and provisions relating to source water protection and Taumata Arowai’s wastewater and stormwater functions.

The Bill and its progress can be viewed on the Parliament website here: Water Services Bill

A second, complementary Bill, the Taumata Arowai – Water Services Regulator Bill, sets out Taumata Arowai’s objectives, general functions, and operating principles, and establishes Taumata Arowai as a Crown agent.

Communities 4 Local Democracy He hapori mo te Manapori is a new local government action group committed to working with central government to ensure all New Zealanders have access to safe drinking water and that all of our local communities continue to have a say on the use of assets purchased on their behalf using ratepayer funds.

The group’s campaign is inclusive – it’s about safe drinking water for all New Zealanders – whoever and wherever they are. It is also apolitical – we’re completely focused on the issue regardless of political affiliation.

Mayors and councillors are the elected local voice of our communities – communities that are very clearly saying that they want to retain control of their assets. We believe there’s a better way to achieve the Government’s objectives and we want to work in partnership with them on that.

The Waimate District Council is in full support of this campaign.

To learn more, visit https://www.communities4localdemocracy.co.nz/

Three Waters Reforms Programme - Government Support Package

The Government has developed, in close partnership with Local Government New Zealand, a package of $2.5 billion to support the sector through the transition to the new water services delivery system, and to position the sector for the future. This package will ensure that local authorities are supported through the transition process, the financial impacts of reform are managed and importantly, all councils and communities will transition to the new system for delivering three waters services in a better position than where they are now.

There are two broad components to this support package:

• $2 billion of funding to invest in the future of local government and community wellbeing, while also meeting priorities for government investment (the “better off” component)
• $500 million to ensure that no local authority is financially worse off as a direct result of the reform (the “no worse off” component).

Through this package, what is available for Waimate District Council?

Should the reforms proceed, the Waimate District Council has been allocated $9.6 million. This funding will be in return for handing over more than $70 million of water infrastructure and assets within the Waimate District.

How has the allocation of the better off funding been determined?

The better off component of the support package will be allocated to territorial authorities using a nationally consistent formula based on:

• a 75% allocation based on population size
• a 20% allocation based on the New Zealand deprivation index
• a 5% allocation based on land area (excluding national parks)

The Government and Local Government New Zealand have agreed to this formula as it recognises the relative needs of local communities, the unique challenges facing local authorities in meeting those needs and the relative differences across the country in the ability to pay for those needs.

What can this funding be used for?

Council (in order to access the funding) will be required to demonstrate that the use of this funding supports the three waters service delivery reform objectives and other local wellbeing outcomes and aligns with the priorities of central and local government, through meeting some or all of the following criteria:

• supporting communities to transition to a sustainable and low-emissions economy, including building resilience to climate change and natural hazards;
• delivery of infrastructure and/or services that:
  • enable housing development and growth, with a focus on brownfield and infill development opportunities where those are available,
  • support local place-making and improvements in community well-being

Waimate District Council were successful in their funding application through the Three Waters Stimulus Package.

The funding approved is $3.36M. In addition to the $3.36M Government funding, Council also allocated $1.68M to enable a programme of investment totaling $4.6M. This additional contribution allowed for more projects to be funded, enabling a better urban/rural distribution.

The 17 projects prioritised within this application include:

What do our district's numbers look like?
According to the figures provided by Water Industry Commission of Scotland (the company commissioned by the Government), Waimate ratepayers pay an average of $1200 for water, stormwater and wastewater services. If council continues to deliver those services, the expectation is that the figure in 30 years time will be approximately $9,000 per serviced property, and that is in today’s dollars. If we have an entity which covers most of the South Island, the Government propose that figure will instead be $1640 per annum, per household.

Does Council have faith in the numbers?
Quite simply, no. The figures are based on a number of assumptions, which we believe they have got very wrong. Our water assets are in very good order compared to most councils. Most of our water schemes have had upgrades to bring them up to the new drinking water standards and our wastewater treatment plants operate within their resource consents. In addition to that, we have been carrying out a significant programme of pipe renewals and continue to invest heavily in this space for the district.

Could a referendum be possible?
Council are looking into the legal implications, cost and strength of carrying out a referendum, but hold no position on this as yet. A local referendum would not be binding and therefore it is likely further consultation with the community will continue to help guide Council with their decision-making.

Will there be further consultation?
In the coming months, Council intend to host more public meetings to further inform ratepayers of the facts and the situation at hand.

Will my community get the same level of service under the proposal?
The Government has made an explicit commitment that staff working primarily on water would retain their salary, conditions and – critically – location if they transfer to the new water entities. Individual communities have significant potential gain from the proposal. At the moment, small contracts on an ad hoc basis give contractors no incentive to invest in specialised plant, for example, especially outside cities. At the moment, the supply chain has more market power than your average council. With four entities, the market power would switch around to the buyer.
When does Council consult with ratepayers?
Formal consultation is not required yet. That’s because the proposal from the Government hasn’t been finalised. At the moment, we’re in an 8-week review period so you can investigate the reforms, assess the potential impact on your council and suggest ways the proposal might be strengthened. Only once the reforms are more finalised will consultation obligations be triggered – if at all.

Who will own the water assets under the reform proposal?
Local authorities would be the owners of the entity, on behalf of their communities. The entities will own and operate three waters infrastructure on behalf of territorial authorities – they will hold three waters assets and associated debt. The assets aren’t being sold – the new entities would be collectively owned by councils, on behalf of communities.

The Three Waters Review is a separate but related to the Ministry for the Environment’s Essential Freshwater programme. Essential Freshwater is focused on establishing an integrated freshwater management system that ensures all discharges and water users are contributing to the achievement of agreed catchment and regional-level freshwater outcomes.

Three waters questions relate to how best to achieve safety and improved environmental outcomes in relation to largely, but not exclusively, council-controlled drinking water, wastewater and stormwater systems.

Emerging three waters regulatory proposals will be designed to be consistent with Essential Freshwater policy options. However, immediate concerns about the safety of drinking water and insufficient oversight of the three waters regulatory system require some proposals to be progressed as part of the Three Waters Review, as agreed by Cabinet.