Under the previous government’s reform, council responsibility for water services was to be transferred to 10 new multi-regional entities from July this year.
The legislation was repealed under urgency by the new Government in mid-February. The Government is developing new water reform policy – Local Water Done Well – which is expected to introduce a range of financing tools and allow neighbouring councils to jointly form council-controlled organisations (CCOs) to manage water assets collectively.
The joint CCO model could achieve balance sheet separation and the entities could borrow more than individual councils are able to on their own.
But nearly six months after the Government scrapped Labour’s unpopular Affordable Water Reform (earlier called Three Waters), councils were no further ahead with solving the water assets funding problem, Kirton said.
“There has been no clear direction as to how to put a lid on the escalation of prices of water services. We have been left with burning questions.
“Is it true that a broader base of ratepayers would help subsidise and make it easier to borrow more money collectively?
“Should we centralise or stick with our own – and get our own people to pay?
“Will some of the urban entities be happy to subsidise some of the smaller rural areas?
“What is the incentive for neighbouring councils to do that? I can’t see any incentive.
“I don’t think anyone else would want our problems and we don’t want theirs.”
Kirton said any joint approach would rely on a collective entity to take over water systems “warts and all”.
“Whether they would take over debt is yet to be determined. There’s no guarantee at all that they would.”
Over the past three years, Ruapehu District Council increased debt by borrowing between $16 million and $20m to upgrade water and wastewater at its six plants.
It borrowed the money to achieve compliance and on the basis that debt would be repaid in July 2024 by the Government through the Three Waters reform. The council has asked the coalition Government to take $16m of Three Waters debt off its books.
Kirton has described the resolution of water assets management and funding as one of the council’s key challenges over the next 10 years.
He said the Ruapehu council remained open-minded about whether to go it alone or join up with other councils.
“How that looks is yet to be determined by the individual councils who wish to join up on a regional basis,” he said.
“My gut feeling is that we’re almost back to where we were before the previous government’s water reform – a local council that has to accept the responsibilities of running its own district-wide water scheme.”
In March, Rangitīkei Mayor Andy Watson described water provision as a ticking time bomb for local government and said some councils would have a hard time finding partners for water services collaboration.
Watson said councils may not have invested equally in infrastructure and some could face higher compliance costs.
“Why as a business would anyone want to take on provision of services for a council that can’t fund it themselves?” Watson asked.
Local Government Minister Simeon Brown said on Tuesday the Government’s new waters policy was progressing well.
“Shortly I’ll be providing key details of Local Water Done Well’s enduring settings. This will include new water services delivery models that provide councils with further options and flexibility to determine their future delivery arrangements.”
LDR is local body journalism co-funded by RNZ and NZ On Air.
