Mayor Rehette Stoltz
by Mayor Rehette Stoltz
Based on our 2021-2031 Long Term Plan, the high-level forecast Three Waters debt as of June 30, 2024 is expected to be $61 million and reserves balances, which will be transferred to the new entity, are forecast to be around $19.9m. Therefore, the net debt owing to council on this high-level basis is $41.3m. This means we would expect to be reimbursed up to $41.3m from the Crown. Under this scenario, due to “paying out” for our reserves balances, our non-Three Waters debt would increase without any associated “depreciation” rates coming in.
The financial impact of participating in the Three Waters reform remains unclear. While there is some comfort in the Crown’s commitment that no council participating in water reform is in a materially worse position financially to continue to provide services to its community, the extent and nature of this commitment is still to be tested. During both tranches, all councils were eligible for lump-sum support payments from the Government.
Council is responsible for 683km of reticulation, providing the Three Water services to more than 13,000 homes and businesses. Council currently has 27 staff employed in Three Waters services and approximately $3m per annum in contracts. It is also unclear how much overhead will be stranded as a result of the transfer.
With the information we have so far, we have five options to consider, but a decision will only be made later in the year when we have all the information we need to discuss the options, opportunities and risks with our community.
Option 1: Join the Three Waters Reform. Under this option, we are in Entity C, a publicly-owned water services entity that owns and operates Three Waters infrastructure on behalf of councils, mana whenua and communities.
Option 2: Status quo. Council delivers Three Waters services itself through a mixed model of in-house and contracted services.
Option 3: Council continues to deliver the services but at a higher level. This option is a modified version of council continuing to deliver services to reflect the anticipated regulatory environment for Three Waters delivery.
Option 4: Asset-owning CCO in partnership with iwi — This option has been developed as council-controlled organisations (CCOs) are provided for in the Local Government Act with governance, management and operational oversight. Although yet to be formally discussed with iwi, this option could include entering into a governance partnership with iwi to give effect to the intention of the overall drivers for the Three Waters reforms.
Option 5: Do nothing — While the do-nothing option is conceptually always an option, the reality is that council needs to continue to deliver its water, wastewater and stormwater responsibilities. Doing nothing is therefore not a practicable option.
While there are five options that can be considered, there is still a lot of information that we are requesting from the Government. Several issues that need to be resolved include (to name a few), the final boundaries, protections from privatisation, consultation with mana whenua and communities, how will our community voice be heard and what influence will we have if we join. There are still many pieces of the puzzle missing that will allow us to weigh up the options and decide which option will be best for us now and well into the future.
The Government has six more weeks to supply us with all the information we need to make an informed decision. We will wait with baited breath to see if the reforms are made mandatory at the end of September. Later in the year, we will discuss options with our community before we make a decision.