What does the Three Waters reform mean for farmers?
Around 1983-84, a government-led initiative was announced to promote rural water supply schemes to ensure adequate stock water for sheep and beef properties in areas where there was not adequate quantity or quality of water, especially during the droughts in the early 1980s.
Dairy farms were eligible, as were horticultural blocks, which were just starting to accelerate as the kiwifruit boom began. Rural homes and lifestyle blocks could also be connected under the initiative.
The subsidy of 30 per cent of the capital cost was funded by the Ministry of Works. The 70 per cent balance was funded by the landowners, who also had to fund the infrastructure to store and distribute the water over their properties.
Landowners funded in full the ongoing running costs of each scheme, including the replacement of scheme assets such as pipes, reservoirs and pumps. These costs were administered and invoiced by the local county council. Each scheme had a governance committee or incorporated society that represented the farmer participants, and managed the running of the scheme, including the programming of maintenance, extension to new participants, budgeting and approval of charges to participants.
In summary, the schemes were farmer run, with the relevant local authority providing the administration services.
Participation in each scheme was not compulsory, but infrastructure design had to allow for future connections as ownership changed, subdivisions occurred and land use changed. The original emphasis of the government initiative was to improve agricultural and horticultural water supplies, in particular their resilience to drought, to protect and enhance income and stock welfare.
Potable water quality, for human drinking and washing purposes, was not the major consideration at the outset, although most schemes met the drinking water standards of the time, and were chlorinated. As the schemes evolved and more subdivisions occurred, largely as the result of "lifestyle blocks" becoming popular, potable water supply has become more important.
Whanganui had four of these schemes. Nukumaru, which was the first to form, was transferred to South Taranaki district after the local government reforms of 1991. The Maxwell scheme covers the nearly 5000ha between Nukumaru and Okehu Stream. A scheme covering the fertile plains of the Westmere and lower Brunswick areas northwest of but bounding Whanganui City was formed in 1987 using bores locally, but was then merged with the Whanganui water supply infrastructure, using water from its Kai iwi bores, which pass through the Westmere scheme boundaries.
The Fordell water scheme, which was the final scheme of its type in the Whanganui District, included the Fordell village with about 50 residential properties, school, hotel, garage, hall and swimming pool; even though the main beneficiaries of the scheme were the 60 farms between Reid's Hill and Durie Hill.
Most supply pipes were laid along road reserves but a number of lines cross properties, but without formal legal easements, only the agreement of the then landowners. Likewise, the original pump/spring sites, the reservoir sites and the new bore and headworks are sited on private land with a nominal "peppercorn" lease agreement to protect their status.
Committees were formed to run the schemes using an incorporated-society structure, while the scheme assets were vested with the Wanganui and Waitotora county councils.
They later amalgamated, and then with the Whanganui District Council after the 1991 local body amalgamation reforms. Whanganui District Council's water services unit now manages the scheme using its staff and contractors. The three schemes would now have a replacement value close to $20 million.
Rather than using the incorporated society, public and landowner participation is now only through the district council's annual plan process, and is considered inferior to the hands-on approach of the users' community committees.
Wider questions for future stock/farm water schemes
The Three Waters reform process appears to concentrate on water quality, even though it deals with water quantity in each of the three networks. There is an increasing need for agricultural water given the climate variability, climate change, exclusion of stock from natural water supplies and apparent disregard for rights to access water under Section 17 of the RMA.
This implies that community schemes, like those above, will be required more widely and in greater numbers, to ensure that agricultural and horticultural production can continue at existing performance levels. Will the proposed entities be the right vehicle to deliver agricultural water in a non-urban environment?
The model suggested for NZ is based on a Scottish one, and seems to rely on superior management processes and natural monopoly attributes to drive down the cost of delivering water to consumers. There does seem to be a parallel to existing businesses in New Zealand, such as our supermarket duopoly, airline duopoly, building supply wholesalers, wholesale electricity market and power distribution services; where large businesses dominate the much smaller and less organised suppliers to them, to force down their input costs.
Their generally captive customers are then forced to pay the prices deemed "fair" by the Commerce Commission. There certainly doesn't appear to be a "silver bullet" in the Scottish model, which only eliminates the local government inertia and management deficiencies from the equation.
In Whanganui, we would be amalgamated with all local bodies south of Auckland, and excluding the East Coast and Rangitikei District southwards, presumably run from Waikato or Tauranga.
The next question is one of trust and oversight. The current local body system is not flash, but at least a consumer or ratepayer can complain to the staff, the CEO or their elected representatives about an issue. But as we see in our two large telcos, or our large energy suppliers, or our lines companies, there appears to be an inverse relationship to their size when dealing with customers.
This seems to correlate to the number of layers of bureaucracy between the CEO and the person we communicate with. Is this the reason that the Government thinks the ideal size of an entity is 600,000 to 800,000 people? Rest assured farmers will not hesitate to take direct action if there is too much inertia if there is a water problem. This could be solved by local committees or contact people that local consumers trust.
With the Three Waters reform debate occurring, how would a scheme like the Maxwell or Fordell schemes be developed and managed now? Despite calls from agriculture leaders and primary industry-good organisations such as Dairy NZ and Beef + Lamb NZ for better stock water on farms, and improvements to rural potable water supplies by government, could a new Scheme be built tomorrow?
1. Could it be built under the proposed Three Waters regional entity?
2. Could it be maintained and operated under the proposed Three Waters regional entity?
3. Could water users have meaningful interaction and "meaningful consultation" when user charges are proposed or changed? Potentially, a regional entity could have more than a million other customers as well as the Maxwell rural water scheme.
4. Can a user group like the Maxwell scheme have input into future management issues as well as running costs/water charges when the water supplier will be a "natural monopoly" provider? It will be uneconomic to set up a parallel or alternative provider.
5. How will the "trust" aspect of entity assets being hosted on private land (like pumps, bores and water lines) be handled?
6. What assurance is that a new entity will be more efficient at running these more bespoke rural schemes? Already farmers have concerns at the costs incurred when repairs are needed and loss of institutional knowledge when staff leave.
7. Could a scheme be divested from the local council and returned to the users, who would then need to take over administration and day-to-day maintenance? Loan raising for upgrades or enlarging the serviced area might prove difficult, unless it could be secured by a council charge against property rates. We note the WDC Rural Halls appeared to be divested quite easily by then-Mayor Michael Laws.
Federated Farmers sees the urban three waters services in Whanganui, with their size and debt (at about $100 million from renewing them), as a substantial component of the total council "business".
Given the generally adequate standard of the three networks, it is hard to see how divesting them will help Whanganui ratepayers reduce their targeted rates in the future.
We made this point in the 2021 LTP submissions process.
Of course, if the new entity is as efficient as it is touted it could be, Whanganui could opt to utilise the new entity to maintain, plan and administer the local three waters while still having ownership and control of those assets.
• Tim Matthews is an executive member of Whanganui Federated Farmers