DIA warns Gisborne council on water plan’s ‘financial sustainability’

Gisborne District Council is one of six councils to receive a letter from the Department of Internal Affairs requesting to see its draft water plan. Photo / Zita Campbell

Gisborne District Council has been warned its standalone water plan faces “significant barriers to achieving financial sustainability”.

It is one of six councils to receive a warning from the Department of Internal Affairs (DIA), which requested the councils provide draft water plans by August 5.

The DIA wants to identify any major issues that may stop the plans from being approved.

However, Gisborne District Council’s chief executive Nedine Thatcher Swann is standing by its water plan, saying the plan supports all the financial and performance measures.

Councils must submit their water plans to the Government by September 3 under the Local Water Done Well reforms.

Gisborne District councillors approved a modified in-house delivery model for its future water services delivery plan on May 21.

This followed consultation with the community, which received 204 submissions, and ran from April 1 to May 1.

The council consulted on two options: a council-managed water service, or a Council-Controlled Organisation (CCO), which would be governed independently and funded through user charges and external financing.

According to a council document, after assessing financial sustainability and operational efficiency, and considering statutory timeframes, these were the only viable options for the region.

During the consultation, 90% of Gisborne submitters were in favour of keeping water services within the council through ring-fenced funding and targeted rates.

Water Services Delivery Reform Programme executive director Lori Hand sent the letter to Thatcher Swann on July 29.

The DIA also sent letters to Kawerau, Mackenzie, Stratford, Waitaki and Whakatāne councils.

“Through analysis of your long-term plan, the department has identified that the council would face significant barriers to achieving financial sustainability through a standalone model,” Hand wrote.

A DIA spokesman told Local Democracy Reporting the letters to Stratford, Mackenzie and Waitaki district councils also stated that those councils could be better placed financially with the “respective multi-council arrangements they had been previously considering”.

The spokesman said the department had been consistent in its messaging to councils on the benefits of the multi-council CCO option in addressing the financial sustainability challenges.

“Councils are expected to take account of the interests of future as well as current communities when making decisions, and have the discretion to exercise judgments in their decision-making processes,” he said.

Hand requested the council provide the department with a draft water services delivery plan by August 5, to allow its team to provide feedback “on whether there are any major issues which may prevent your plan from being approved, and to help us consider whether further advice to the Minister may be required”.

Thatcher Swann said the request allowed the DIA to assess the water plan in terms of the key elements, which were revenue, investment and financial sufficiency.

“We believe our plan supports all the financial and performance measures.

“We are preparing to submit our draft Water Services Delivery Plan to DIA by mid-August. It will be around the same time as this goes to the council meeting.”

She said the council’s current position, based on its modelling and strong community feedback, was to retain water services within the council through an in-house business unit.

“While the DIA letter references concerns about the financial sustainability of this model, the specific areas of concern have not yet been made clear.”

Thatcher Swann said the council had asked for further clarification so it could better understand and respond to any issue the DIA had identified.