Southern Water Done Well

Hello. A couple of things need to be said here. First, the 43 Councils in New Zealand are going for Joint CCOs. 18 are going In-House (and many of these are metropolitan, or small Councils) and just 3 are going for a Standalone CCO. The idea that 'so many' have chosen to go it alone isn't accurate.

Waitaki also has some significant spend required, and we've got $250 million dollars + of investment that is needed after 2034. When the document claims Gore, Clutha and Central are in dire straits, a lot of the quoted material also highlights Waitaki's similar issues - but this was not included in the document for whatever reason.

And lastly, that's just not true. The December 2024 Morrison Low report was comparing In-House to Otago-Southland CCO options. None of those options are the same as the ones currently being consulted on. In December, the Government also released the Local Goverment (Water Services) Bill which showed the regulatory structure that they're putting in place. This also had to be accounted for in the modelling.

In terms of In-House and Regional (Joint CCO), there is a difference in user charges - Joint CCO is lower! 

We analysed the document this week, and you can read that analysis here: Analysis of Document 

Good morning Vivienne. The rates rebate is set and managed by Central Government, not Waitaki District Council. They will be responsible for any changes to this.

This is a good question, and one that in the document - Page 14 - says.

"Collectively, SWDW councils have been talking with Ngāi Tahu about the role of iwi within a new water services organisation. There’s been no decisions on what that role would look like to date. However, it has been agreed the role should be meaningful but not reach as far as the previous reform."

The Local Water Done Well reforms do not involve co-governance arrangements. However, the precise role has not been established and will be worked out by Councils during the set-up period for all options, subject to the plan being approved by the DIA. 

Before Mr Sweeney published his first piece on Local Water Done Well, he asked the Mayor and Chief Executive some questions.

He was told about the water investment needed; the debt Council would take on and that a higher debt limit wouldn’t work long-term as it will not meet the needed investment in water and other things Council does like roads, parks, libraries etc.

We told him the new regulators, the Water Services Authority and Commerce Commission, wouldn’t let Council defer and delay projects anymore. The Government has given the regulators powers to direct councils what to do including what to invest in and what they need to charge for water.

Mr Sweeney seems to have ignored the answers we gave him and not included these in what he has published. 

He makes a lot of wrong assumptions, and draws dubious conclusions, which are unfortunately misleading people. We can’t go through them all as there are so many, but here’s the really important ones.

His argument relies on the following wrong assumptions:

1.      That the Mayor and Councillors will have the same control over water investment and charges as they have in the past.

This is not true. The regulators will direct councils on what they need to spend money on and how much they should charge. Mr Sweeney was told this was not true before he published. 

2.      That Council is ‘giving away’ water assets

This is not true. A joint-CCO means Council would be a 25% shareholder in the company. If the CCO ended, the assets would still belong to Council.

3.      That Council can just take on more debt.

This is not true. Council could pay for a credit-rating to increase its debt levels to 250% or 280%, of revenue. But it would struggle to deliver water and everything else like roads, libraries, parks.

In February, Mr Sweeney wrote a long article condemning Council for being addicted to debt but is now saying Council needs to take on a lot more debt. 

4.      That Waitaki is not in the same situation as other Councils.

This is not true. We’ve invested in our network, but like most councils, there’s still a lot to do – including compliance for our wastewater plants.

Waitaki District need to invest $206,311,000 in water infrastructure between 2024 and 2034.

We pushed another $258,309,000 of investment in water out to after 2034. That’s to replace pipes, pumps and treatment plants to meet the new standards and because some of the assets are old and at risk of failure soon.

5.      That Council’s hiding something or being misleading

This is not true and Mr Sweeney cannot point to any information that is being hidden because it is not. Our community asked for more information and so Council has published all of the modelling it’s done for all four of the options for the future of water services on our website.

We’ve put information on how the reforms work in the consultation document. We’re holding community meetings, Facebook Lives, answering questions here and elsewhere.

6.      That the preferred option will cost consumers more, not less

This is not true. With local prices, Waitaki pays only for Waitaki, the charges are lower than all the other options. The preferred option of a shared CCO will cost less. Keeping water in the Council will cost more.

We hope this outlines some of the issues with his claims.

The Government’s Local Water Done Well reforms tell Council to change. They know we can’t fix up water without investment, so they’ve given CCO’s the power to take on borrowing up to 500% of their revenue.

We had to work out our options, get them modelled, and present them to you for consultation – which is what we are doing.

We have to give the government a plan on how to do that by September 3.

The plan has to show how we fix up the pipes, pumps and plant – and how we pay for it.

If the Government does not think our plan will deliver the investment in water required (which our analysis shows keeping it in Council will not) the Government can decide what happens to Waitaki’s water.

Kia ora Kurt. Each Council will be an equal contributor to the Council Controlled and owned organisation, as equal shareholding partners. However, when it comes to services and upgrades, there is no price harmonisation - this means that each Council will pay for its own infrastructure and water usage.

The financial modelling for in-house shows both the need for Council to radically increase its debt, and employ more staff, as a result of the additional regulation introduced. It's likely this would not be financially sustainable in the long-term. Our modelling and consult documents outline these issues.

We included it because it was a mandatory option under the legislation, but also to show that there is no 'status-quo' option due to the regulations, and need to separate water services in-house. In February we consulted on a status-quo option, we can now clearly say that does not exist, and that is why the option is there. 

Kia ora. More staff than WDC currently has. If the option was for a Stand-alone CCO just owned by Waitaki, we'd need the same staff - but get none of the efficiency savings, so that's pretty similar to the In-House option. The Joint CCO options mean you'd have one set of staff doing the administration work for four Councils, and bigger purchasing power. 

Hello again Kurt, and thank you for using this Q&A facility.

No, it's not correct that we are giving away water assets. Each Council would transfer them to the Council-Controlled Organisation under Options 2, 3 and 4 and be an equal shareholder of 25% in that CCO. If the CCO dissolved, the assets would return to Council.

There is no privatisation of water assets under Local Water Done Well reforms.

Good morning Kurt! That's correct, but don't start celebrating just yet. Water charges, under all of the options, would be separate from your rates bill. So your rates bill would decrease by $1252.99, but you would receive a separate water bill from either the In House, or CCO, delivering water services.

Good morning! All options proposed require ring-fencing of revenue, but also of budgeting, planning and reporting - so the Commerce Commission can regulate the water industry. At the minute, our waters are planned, budgeted and reported on as part of our usual plans, budgets and reports. That would have to change. Any water services business unit, or CCO, is going to be treated like it is a power company, or an airport, by the regulator. If a CCO option is chosen, it would do its own budgeting, planning and reporting - like our current CCO's do. In-house, it's establishing an entirely separate cycle of budgeting, planning and reporting just for waters - which would require more staff and administration to manage alongside everything else.