We expect our drinking water to be healthy and safe, and our wastewater to be treated and discharged back to the environment as clean and pure as possible. We prefer not to think too hard about how this happens – we just want it all to work well.
Unfortunately, recent events show that this isn't always the reality. The spate of sewage spills into Wellington Harbour, Lake Taupō and many other places and contamination of drinking water in Havelock North in 2016, which resulted in the death of three people and numerous serious illnesses, are just the tip of a not-so-pure iceberg.
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New Zealand's water infrastructure is well overdue for investment as pipes reach the end of their useful lives. Environmental expectations are increasing and the consequences of climate change, including more frequent and more intense droughts such as the one currently being endured by Aucklanders, require urgent attention. On top of that, over a third of wastewater treatment plants will require re-consenting within the next ten years, and almost a quarter are operating on expired consents.
All of this adds up to big costs for councils and ratepayers. Conservative estimates are that the cost of upgrades and renewals will be measured in billions of dollars. In the case of small rural councils, this could add thousands of dollars to annual rates bills.
These are all issues the Government's Three Waters review is bringing to the fore. The review is considering how to improve New Zealand's three waters service delivery and funding arrangements. It has been examining whether local councils, which largely own and deliver three waters assets and services, are best placed to manage this.
Bold, decisive actions are required to achieve better long-term outcomes, and soon. In January 2020, the Government confirmed its commitment to partnering with local government to consider options for transitioning councils to new service delivery arrangements, allowing for safer, more affordable and reliable three waters services across the country.
Infracom supports the Government's reform agenda. We would like to see the water sector aggregated into four, or possibly even three, entities. That is the level of aggregation that is necessary to capture scale benefits. We also believe that strong regulatory oversight is essential, including an economic regulator to ensure that the benefits of scale are translated into lower long run costs and better services for consumers.
If we simply invested in the status quo it would mean pushing out the opportunity for reform for another few decades until we have another crisis.
If you do the maths, it makes sense. It enables economies of scale, which will not just take significant financial pressure off local authorities, it enables better outcomes for consumers.
A detailed study in the Waikato region found that a collaboration between Hamilton City, Waikato District and Waipa District would save those councils an average of $16.7 million per annum. It would also bring a range of important non-financial benefits, such as ensuring the country's best water engineers are available for communities that might not otherwise be able to afford them.
Not only that, it would free up councils to do the job they do best – focusing on the wellbeing of their local communities.
From a global perspective, the mix of services provided by New Zealand councils is unusually weighted towards providing water and roads and strangely disconnected from being able to consider the overall wellbeing of their communities.
There is a strong argument, put forward by organisations as diverse as Local Government New Zealand, the New Zealand Society of Local Government Managers, the New Zealand Initiative and Infrastructure New Zealand, that New Zealand would benefit if local communities were able to determine and implement their own, unique approaches to local wellbeing.
Re-focusing local government on community wellbeing, and away from the provision of infrastructure would also unshackle elected members from technical debates they do not have the technical or experiential background to participate in, and are usually not particularly interested in.
After all, individuals who decide to stand for election are normally motivated by a desire to improve their community's social wellbeing, environmental sustainability, cultural diversity and/or economic development. Communities, in turn, tend to look to councils to achieve social outcomes.
Ongoing reform is essential if New Zealand's water infrastructure is to cope with the current investment deficit and future challenges, including a growing population, climate change and increasing consumer expectations.
There is a danger that, post-aggregation, the zeal for reform will recede. In order to maintain momentum, we are also proposing a National Reform Agenda which will identify, and monitor, key steps the industry must take to achieve global best practice.
These would be big changes for councils and change is often viewed as a threat. However, in a post-Covid-19 environment, with increased demand for expenditure and increased rates likely to be off the agenda for some time, it becomes an ever more practical solution.
Stepping back from directly supplying water services, leaving that to expert entities with greater capacity to serve consumers – ultimately it's the people that councils wish to serve.
• Jon Grayson is the chief executive of the New Zealand Infrastructure Commission Te Waihanga