Kāpiti Coast District Council is facing the potential alienation of $330 million of its core assets to a yet-to-be-established public entity as part of a major government reform of the delivery of water, wastewater and stormwater by councils across the country, mayor K Gurunathan said.

"The reform, signalled by the Government more that two years ago, will see the setting up of a national regulator fully operational within 12 months.

"The reform also aims to create a small number of aggregated service providers which will take over the management of the three waters.

"This is expected to be transitioned over two years.

Advertisement

"The removal of these core services and assets poses significant challenges to all councils.

"For Kāpiti we can anticipate a loss of 20 per cent of revenue and 40 per cent of staff.

"Because the transition will take two years to work through the reform will immediately destabilise financial underpinnings of all our Long Term Plans.

"Given the huge three waters infrastructure replacement costs faced by other councils in the Wellington region there is also no guarantee that the aggregation of Kāpiti into a greater Wellington service provider will not result in Kāpiti ratepayers cross-subsidising the other councils."

The reform has been triggered by the 2016 Havelock North debacle which saw contaminated drinking water supply causing 5000 to fall sick and four deaths, he said.

"The 2017 inquiry identified significant nationwide problems with ageing infrastructure, shortage of skilled labour, and funding affordability especially amongst smaller councils.

"While I fully support the need for national reform, councils like Kāpiti, which have been good stewards in managing our three waters, should not be penalised.

"I welcome the Government's approach to work in partnership with local government to help design the potential solutions.

Advertisement

"This includes community engagement."

Mr Gurunathan said Kāpiti was already a unique case when it came to community engagement.

"Six years ago, as part of the introduction of water meters, and the perceived threat of privatisation, councillors helped entrench into its Standing Orders for a referendum to gauge public opinion before any decision to alienate its water supply assets.

"It's not clear, however, if new legislation supporting the proposed reform will override our standing orders.

"A steering committee led by the Department of Internal Affairs with members from LGNZ and the Society of Local Government Managers are scheduled to market the proposed reforms through 13 nationwide workshops for elected members.

"The four-hour workshop for the councils in Wellington region is on for tomorrow.

Advertisement

"The reform has been divided into three tranches with the first tranche committing a government budget of $700m of no-strings-attached grants for shovel ready projects.

"Based on a population and land area formula, we could see Kāpiti granted up to $10m in opex or capex spending on three waters projects.

"As part of the Government's economic stimulus package the money must be spent by June 2021.

"The MOU needed to secure this funding is expected to involve a good faith clause to provide accurate network data on the state of the assets, its valuation, and cooperation with neighbouring councils.

"Councils will have to decide to make a legally binding decision to opt-in to qualify for potential additional funding under tranche two and tranche three which will lead to the alienation of their three water assets and management to new, aggregated, publicly-owned organisations."