There is a whole load of reform coming down the pipeline from central government at the moment. Its hard to keep on top of it all – Resource Management Act, environmental standards, drinking water standards, housing and development, and of course three waters reform.
The ‘three waters’ are: drinking water, waste water (mostly sewerage) and storm water. In the Whakatāne district these are provided by the district council. In most cases the costs are equalised – spread evenly across all the people who get them, no matter where they live, so everyone pays about the same for about the same service.
Like most places, the Whakatāne district is facing some big bills in the near future. Even though the Department of Internal Affairs (DIA) rates the council’s performance on water as very good, most of our 3 waters schemes will not comply with changing environmental standards, or community expectations. It is this that is driving the bulk of the 6.9% rate rise this year.
Part of the problem is that some previous councils tried to keep rates down by not putting aside the money that would be needed, loading the problem on to the future. The question is whether our communities can now afford the bill. Regardless of whether you agree with the proposed changes or not (and I am personally not yet decided) it is important to understand the problem.
What is proposed?
These government proposals are not the final word (although they are getting firmer). They have said that councils have until 1st October to get our heads around the proposals and give feedback. An amended proposal will come out after that, with opportunities for the community to have a say before any final decisions are made. At this stage the council has not decided whether to be in or out of the reform.
The proposal is for 4 new water services providers to take over from the 67 councils that now own and run most of the water services. Whakatāne would be part of a water services entity that includes the Waikato region and goes south to a line stretching from around Waihau Bay to Whanganui.
This publicly owned entity would be big enough to be able to borrow capital, at a very low cost, to cover the work needed. In addition it would be able to plan across the whole network, and invest in specialist training and upskilling in a way that most councils cannot.
It would have market power to cut procurement costs and have the internal systems to handle what will be an increasingly complex compliance environment. It is smaller communities that would benefit the most from this, as the big cities already have some scale.
There has been a bit of misinformation about the ownership of these proposed entities. To be clear, they will be owned by local authorities. Those councils, along with mana whenua, will have representation on an oversight group, which will set the expectations for the entity. An appointments panel will make appointments to the independent board, based on competency, and the board will govern the entity. Any surpluses will be invested in the network, not distributed to councils.
The government has said there will be legislation to protect these new providers from privatisation. One proposal is that either a referendum or a 75% majority vote in parliament would be needed to do so. One of the reasons I support strong Māori oversight is that this is probably one of the best protections against privatisation of critical strategic assets like these.
The government has said that these large entities will need to engage with and respond to local communities with their specific needs. They will also have to work with local councils so that their water investments align with councils development plans for future population growth.
So will we be better off? As far as jobs go, the government has said that the new providers cannot run everything from head office. They will need to retain staff on the ground and in fact are talking about increasing staff. So the current proposal won’t take skilled people from our community.
As for water bills, the government is looking at an economic regulator along the lines of the Electricity Authority, to make sure that costs and investments are transparent and reasonable. Like everything else, though, water bills will no doubt keep going up. The DIA has estimated that over the next 30 years, average water bills in our district will go up a few hundred dollars with these reforms. Without the reform they estimate almost $5000 over the same period. Those savings probably come partly from big urban areas cross subsidising smaller communities.
Our council is checking over those figures to see if they hold true. The devil, as they say, is in the details. We need to examine these proposals very carefully to make sure that the substance is as good as the sizzle.
Finally, the government has said that no community will be worse off because of the reforms. The water assets will come off council books and go to the new water services provider. Councils will be compensated for the debt they hold for those assets, but not the equity. The claim is that many assets are overvalued when you look at the actual state of repair, and that there is more liability than asset.
The government will also provide around $22.6 million to Whakatāne District to help us shift to a sustainable and low carbon economy and provide the infrastructure needed for housing growth and development. These are critical issues for our community right now.
The council has not yet made any decision on whether to opt in or out of these reforms, and I am personally undecided. We are still working through the details of what is proposed. We also need to provide an opportunity for our communities to have a say. Having said that, it is not clear that we will have a choice. For small communities to get the benefits of scale, the government needs everyone, including the cities, to be part of it.
What is important right now is that we all understand what is actually being proposed and make our assessment based on facts. For more detail on the reform proposals, the Department of Internal Affairs website is a good start.
(Published in the Whakatāne Beacon 13/8/21)
Monkeywrenching 