The government's Three Waters reforms could force amalgamation on the Kaikōura District Council - against the wishes and best interests of the ratepayers.
That is one conclusion of a detailed critique of the reform proposals by the council's operations manager, Dave Clibbery.
Under the reforms, the council would hand over its drinking water, sewerage, and
stormwater services to a new regional water authority.
In his report to today's council meeting, Clibbery says that would bring into question
the broader sustainability of the council.
"KDC as New Zealand's second smallest council is already likely to be subject to ongoing
scrutiny regarding whether its scale makes it viable.
"A loss of three waters services together with other potential future changes to local government could ultimately force an amalgamation with another local authority, which might not be to the benefit of the local community in terms of maintaining a local voice."
The council will face greater scrutiny of the standard of its water services, and resource
consents with the advent of the new water regulator, Taumata Arowai, later this year.
Councils - whether or not they join the new water authorities – will have to comply with higher standards and can be compelled to replace infrastructure to meet them.
Clibbery says replacing infrastructure is not an issue for Kaikoura, and will not be for
"Our key waters assets and systems are currently either compliant with current regulations or relatively close to be able to comply and – largely thanks to the 2016 earthquake rebuild that replaced many older or substandard assets – we do not appear to face a major renewals challenge for the next 30 years at least."
The council would have to reallocate overheads (corporate costs spread over various services) of $742,000 if it lost water services, it has confirmed.
Overhead costs allocated to water for the 2021/2022 financial year are forecast to be
$408,033; sewer overheads $252,169 and stormwater overheads for $81,947.
The costs of running those services would also be removed, but based on the information the government has so far released, the council cannot yet gauge the net effect.
But it would also have to hand over water reserve funds of $1.03 million in June 2024, the
assumed date of transfer to the new entity, along with a debt projected to be about $100,000.
The council would gain about $6 million in compensation from the government.
But it says that has to be weighed against the long term impacts, including the "stranded
overheads," a 28 per cent reduction in assets, and an 18 per cent reduction in council revenue.
Clibbery says the modelling has assumed that overall cost efficiency of services delivered by the
new entity improves by between 35% and 50% relative to the current arrangements.
"The assumption of these large improvement values is based on achievements made in Scotland since the formation of Scottish Water in 2002. -the suggestion that such large improvements can be made in NZ is a startling one."
Other cost projections were "unreliable" and not credible, the report says.
Feedback from Kaikōura people to a council questionnaire showed a majority were not comfortable with losing local control of their water services.
More information about the proposed reforms is expected from the government this week.