Question: What do Whakatane, Whitianga, Raglan, Hamilton, Tauranga, Rotorua, Taupo, Whanganui and Stratford have in common?
Answer: All these places will be part of the same enormous water services provider shown on the adjacent map (blue area) as Entity B.
When the Government adopts the proposed Three Waters Reforms; the drinking, waste and stormwater services currently being delivered by New Zealand's 67 councils will be amalgamated into just four huge entities. These are based on scale and population size, with Stratford's new extended family of Entity B, having a connected population of around 800,000.
The Government says somewhere between $125 billion to $185 billion needs to be spent over the next 30 years to bring New Zealand's infrastructure up to the gold standard that someone, somewhere is pushing for.
Surely, a $60 billion variation must raise some questions about what is truly needed and what is simply utopia? Which figure is accurate and which one are we supposed to be agreeing to?
The Government says there will be many benefits arising from the creation of these new water entities and these will save households thousands of dollars a year in water bills. The main benefits are expected to come from economies of scale and operating efficiencies.
Other all-encompassing changes that will occur include: the ownership and governance arrangements of the entities, new iwi partnerships, along with different funding and borrowing opportunities. Adding to the mix of change will be the new regulatory standards for water that over time will set the bar at increasingly higher levels.
Minister Nanaia Mahuta says, "The data shows the case for change is compelling."
From my observations, this is a generally accepted view across the local government sector and also across political parties. Where the argument truly lies is with the actual reform proposals the Government has put forward as the solution.
There are many who argue the benefits of scale are not convincing and that we will end up with more problems than solutions? I am in no doubt there is a risk here. The result of water services amalgamation will create large provider entities that may be so cumbersome, bureaucratic and lacking in local knowledge, they may simply fail to deliver on the promises. Furthermore, there will be no turning back.
Can councils make a choice?
The Government's current position is that each individual council will have a choice whether to opt in or opt out of the new water entities. While the minister has repeatedly said it is optional, what a hell of a choice it will be! At first glance, there are as many reasons to opt out of the amalgamated water entities as there are to opt in and will, in the coming months, that choice remain?
Personally, I have my doubts. If too many councils choose to opt out, especially the big metro councils, the potential cash benefits for those remaining in the entity are adversely affected. This could lead to even more councils staying out, compounding the problem.
The Government is batting the opt out scenario away, saying it is only a theory and won't happen, they are probably right. Right because, if it looked like a real possibility, they could remove the "choice" and make it mandatory for councils to "opt in".
Opting in means handing over all council's water assets to the new entity. Along with that goes any debt associated with those assets. This has benefits for many councils and is a key driver of the reforms. The entities will be able to borrow money on their own, which will be crucial to the success of the reforms and will also have a major impact on the balance sheets of councils.
So where does this place the Stratford District Council? Like everyone else, we will be taking some time to analyse and understand the details of the proposed water amalgamations. There is lots of information still to come and many questions to be answered. Hence, I have deliberately not included specific dollar amounts for the Stratford District Council in this article.
For those seeking detailed information, the Department of Internal Affairs website has it all. The Three Water Reforms are probably the most significant change facing councils since the 1989 Local Government Reforms, the debate has started.