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What the heck just happened with waters?

  • rodney7317
  • 12 minutes ago
  • 6 min read

Last week, our council voted to join with Tauranga City in a combined council-owned (CCO) company to run our tapwater, wastewater and urban stormwater assets from mid 2027.

It was to be a coordinated vote with Tauranga City expected to vote a similar way on the same day but the City Councillors decided they wanted to hold back and pursue a wider waters company involving (hopefully) other Bay of Plenty councils from 2028.


There have been a few headless chickens running around as if this was a disaster, but it isn’t. There is still basic agreement on where we will end up:

1. An expert, combined water company to run the assets for us (but with council input as owners);

2. A shared goal of working with other Bay of Plenty councils.

The direction of travel is the same. The only difference is the order of events and the timing to get there.


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As anyone following this issue will know, there is a huge hand on our backs from the government pushing us to combine water assets into larger, specialised entities. This makes doing nothing and carrying on as we are pretty much impossible.

The bigger risk for the Western Bay of Plenty District is that, once the waters company mating dance is over, we are left without a partner.


The Tauranga timing may not suit the government’s goals (given it is not a definite agreement to merge into a larger waters entity) but that is for Tauranga City and the government to sort out.

It is NOT a disaster and it is NOT the job of the Western Bay of Plenty to publicly blast its big neighbour, even if its vote makes life a bit more difficult for us.


To put a bit more context around what happened, here are my two speeches at the council table on this issue last week.

As always, these are my notes going in so I am sure to have varied a bit in my delivery (warning: there are a few wet puns in there):


———————


Safe, affordable and environmentally responsible water supplies and disposals - that is what we all want for our whanau, our families.

Unfortunately, the financial factors have come to loom over all of these shared goals.

This council has consulted widely and considered a wealth of information on its way to today’s vote on whether to join a combined water services company.

I’ll start with the rather obvious: we are already joined at the tap with Tauranga City Council (TCC) - through Omokoroa’s wastewater and the Waiāri water supplies in the east, for starters.

This partnership will get even more entrenched over time, as we build many more homes to house our region’s families. We are already looking at cross-border growth in Tauriko south, for example.

Whatever we do today, we will be running our future water networks in conjunction with TCC.

The only question is whether we do that as partners, admittedly a junior partner, or as a supplicant on the outside.

If we stay on our own, TCC has no real responsibility to look after us. If we are inside the CCO, that will have real responsibilities to us - through shareholder agreements, our council’s statements of expectations and through meeting the standards of our rather energetic two new water regulators.

But there are even bigger issues if we go inhouse. Firstly, we fall miles short of the government’s firmly held view that water companies need around 200k connections. We have around 15k.

We’ve talked a lot around this table about the government’s big hand on our back pushing us in the direction of a bigger waters company. It has been very evident throughout and it is getting more explicit as we reach the conclusion of this process.

Quite simply, the government has ensured we cannot afford to go alone. Note that both of New Zealand's major political parties have the same view (they just quibble over the details) so that pressure from Wellington will not change.

At best, even without the Local Government Funding Agency (LGFA) skewing the financial pitch, we would quickly run up against our borrowing limits.

Waters assets are extremely capital heavy - you need to spend many millions on each project and get back the money back from user charges drip, drip, drip over 30 to 50 years. Our draft Water Service Development plan forecasts $360 min in waters capex in coming years.

We might squeak by financially, with sharply increased charges, a fair wind and a dose of luck — but we will be turning our council into a water company, to the detriment of the rest of our communities’ needs.

The biggest non-water issue facing this council is Te Puke’s traffic woes. If we go alone on waters, we will not have the borrowing capacity to fix Te Puke’s roads. Te Puke will need a new swimming pool shortly, but if all our borrowing capacity is taken up with waters — we won’t be able to build it.

It is not just in Te Puke. You can repeat that scenario all over the district as other responsibilities will be put off to do the necessary to maintain our water assets.

Even the waters could be affected if money runs short. This council, has for example, a record of delaying improvements in Waihi Beach stormwater.

And there are significant risks that could absolutely drown us (please excuse the pun) if we go alone. The current Katikati wastewater outfall is rapidly reaching the end of its life, much earlier than expected. But that is not the only issue.

Here is another example. We have around 250 km of asbestos water pipes in our district, about 28% of our water network, which are due for replacement in the next 15 years. These pipes are safe as long as they are stable but, if they deteriorate ahead of schedule, we will need to bring that programme forward very rapidly.

My point in raising this is that there are risks on both sides — we might be able to push back spending in some areas but we may need to bring forward spending in other areas. So we can not count only on calm weather, we have to prepare for storms (especially in stormwater)

If we go alone, we will have precious little wiggle room as our very good assets, mostly installed a few decades ago now, start reaching the end of their lives and need renewing.

Yes, we can blame central government and take the temptation to stick it to them (by declaring we want to go it alone), but here is the thing - they will not even notice the poke.

Frankly, sticking it to the government is NOT a good basis to make a decision.

I do not believe it is good for our ratepayers or responsible governance to try to go it alone.


(Second speech over who to partner with)



We need a partner or partners. I’ve already spoken about the fact that we cannot afford to go alone, unless we want to abandon our other responsibilities to our residents and ratepayers.

I have to admit that finding a partner with spare balance sheet capacity is tempting. Thames-Coromandel District Council is in that position.

However, when you look at the numbers this is a short- to medium-term advantage that, after a few years, balances out.

It is not clear, from the masses of figures that we have seen in recent months, that TCDC brings real financial benefits long-term, beyond a small amount of extra size.

Then there is the question of working with our Tangata Whenua partners. I realise there is a view out there that this issue may be manageable — but I remind you that we need to work with Mana Whenua on an ongoing basis - not leastly to meet our Treaty obligations, as provided for in legislation, but also to respect their defined role in our waters resource consents.

This is a long-term decision. We need to do what is best for all our ratepayers over coming decades. This is a decision that will impact our children, and our grandchildren.

We have heard some talk today about losing control. The key difference between this system and the one of the previous government is that councils will be shareholders with voting rights. As we’ve heard, all the major parties are in favour of bigger water companies.

The law says these CCOs cannot be sold, so stoking a privatisation fear is irresponsible and a red herring.

Today is just one step along that path. It is a big step, but there is much more work to do on due diligence, shareholder agreements and the like.

I am not willing to go further than we need to and, for that reason, I back a joint CCO with Tauranga.

Then we head towards that second-round of aggregations in a more logical fashion, probably looking east.

 
 
 

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© 2022 Authorised by Rodney Joyce,
Unit 3, 46 Marshall Road, Katikati

rodney@szf.co.nz

027 374 7933

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