Infrastructure crisis looming large for our country’s councils
Saturday, 3 February 2024
Routine sewage overflows, annual water restrictions, collapsing culverts and pipes, there is no escaping the fact that New Zealand is facing an infrastructure crisis.
After decades of neglect, when keeping local government property rates lowtook precedence over maintenance of vital networks, the reality of what lies ahead is now being felt by every council up and down the country. And those in Taranaki are no exception.
And it’s the services underground, the drinking water, wastewater, and storm water assets that we can’t see which are faring the worst.
Infrastructure NZ boss Nick Leggart believes the country needs to spend $30 billion a year for the next 30 years to overcome our infrastructure deficit.
Right now, that’s close to $5500 per Kiwi, per year.
That frightening figure prompted Local Government New Zealand to louden its call for better funding models that don’t rely almost entirely on ratepayers.
While many households were happy to pay thousands of dollars annually for the likes of power, there was widespread reluctance to pay continued rates rises despite such property taxes covering a multitude of services like the Three Waters, local roads and public transport, libraries, swimming pools and rubbish collection.
For LGNZ president Sam Broughton, it is simply not sustainable to rely so heavily on household and business rates to pay for the growing infrastructure crisis while funding essential services.
Stratford mayor Neil Volzke, the head of Taranaki’s mayoral forum, believed just about every council was facing “a perfect storm” when it came to rising infrastructure costs.
“The current funding model we have in place is not sustainable and is desperately in need of change,” he said.
“We need to come up with some new funding mechanisms that will enable us to invest in the level that is required.”
Put plainly, councils need different ways to raise money to run their communities that avoids them continually tapping ratepayers on the shoulder to pay more and more.
Adding to council uncertainty about the future was just what was going to happen after the Coalition Government moved to repel Three Waters legislation.
Volzke, like all the mayors in the region, supports a move to set up a Taranaki water entity, something he believed the new Government would support.
“However, there is still a lot of work to be done and a lot of detail to be worked out whether that is viable,” he said.
“The fundamental issue is that across the country, councils need a massive injection of capital in three waters infrastructure and that means a lot of borrowed money and it also means someone has to be willing to pay for it.
“At the end of the day it’s the consumer who pays for it.”
New Plymouth mayor Neil Holdom has become universally known for the infrastructure lobbying he has done during his two previous terms, something he has no intention on quitting on as he works through his third period in charge.
He knows the reality of what lies ahead, but is determined to not make it another generation’s problem to face.
Holdom was horrified when he first came into office that council was not even doing any maintenance or inspections on storm water assets.
“I think people were only paying about $600 annually for their water services and someone boasted to me that they were the cheapest in the country and I reminded that person that it was not something to be proud of,” he said.
“It was like saying you’d spent less on maintaining your car than anyone else.”
The first part of the solution to New Plymouth’s infrastructure crisis was passing nearly $250 million through the last long-term plan budget for water infrastructure, including a hefty bill for the introduction of water meters.
The second part of the solution has started, as Holdom and elected councillors go through the next long-term plan process.
Not surprisingly, a focus remains very much on continuing the water infrastructure work that’s started, especially if New Plymouth wants to avoid following in the likes of Wellington’s puddle of problems when it comes to water infrastructure.
“I don’t think we are on top of things and we are very much playing catch-up,” Holdom insists.
The uncomfortable truth Holdom wants ratepayers to realise is the annual cost of delivering water, waste water and storm water, coupled with essential renewals and maintenance for each household, would be around the $3000 mark.
“At the moment the average household is paying about $1200, so those prices are going to double over the next decade,” Holdom says.
“That’s just to deal with what we have now. We’ve also got this issue of growth.”
Government predictions put that growth at about one million more people in the next 10 years for the country, of which about 1-2% - up to 20,000 people - were expected to find their way to Taranaki.
“There is a huge amount of work that needs to be done and what we are trying to achieve is to do it as efficiently as we can,” he says.
He estimates it would be 12 to 15 years before council caught up with all necessary renewals if Central Government did not step in with a better funding model.
Holdom believes a Taranaki water co-operative could burst into reality reasonably quickly, with the Commerce Commission setting the price households pay for their usage.
“I think it’s going to be an ongoing journey of cost until we get to a steady state because with households paying around the $1200 mark now, there’s things we are not paying for that need to be done but we can’t because of financial constraints.”
“The more work we are doing, the more work we are finding we need to do.”
While he believed council was taking prudent steps to address the multitude of issues it faces, Holdom believes the district’s key infrastructure was like most of the country - right on the edge.
That was illustrated at the main waste water treatment plant where heavy rain caused an overflow into the Waiwhakaiho River on Sunday and resulted in warning signs going up at the two most popular swimming beaches in the district.
Unfortunately for the district, it’s not an uncommon occurrence.
“The bit that worries me, and the team are working on it, is near the bottom of Te Henui River where the pump station is.
“At peak there, I think it’s 700 litres a second of raw sewage goes through a pump station. If that system fails, there’s no storage there, and if that breaks it would be days or weeks to fix.
“Ask yourself, what does three weeks of raw sewage at the bottom of Te Henui look like for our district?”
Holdom believes ratepayers know the extent of how much work needs to be done, they were just never told about the true state of the district’s infrastructure because so many years were spent trying to keep rates down.
He points to the important role water meters could play in the district.
While only 70% of the New Plymouth water meter installation costs have been met through the last three years of the long-term plan, the remainder should be included in the next budget.
It will be a game changer for identifying unintentional loss, Holdom says.
“We got a note the other day that the team found a property in Okato that was losing 35,000 litres a day,” he says.
Another major infrastructure focal point for the district is the new sewage system for Urenui and Onaero that has a budgeted price tag of $38m for around 500 permanent residents - $76,000 per person.
Just where council lands on other major infrastructure projects will be decided when the next long-term plan is signed off in the middle of the year.
The mayor wants the focus on Three Waters infrastructure to remain, while he also wants more money spent on the council’s transport sector.
“Road construction inflation has gone through the roof in the last three years, so if we didn’t significantly lift rates to cover transport, our local roading network would be going backwards,” he says.
“And we’ve seen what has happened with our state highway network, because it’s just a shambles.
“What I’d like to think is by the end of the long-term plan (being adopted) our community has indicated they are prepared to invest more into infrastructure and they are supportive about setting up a Taranaki water CCO (council controlled organisation).”
The latter would also be a focus for South Taranaki and its mayor, Phil Nixon, who says Three Waters infrastructure would be a major focus, as it was in its last long-term plan when it committed $135m towards it.
Nixon also called for a better funding model as councils grapple with what was in front of them.
“When it comes to roading infrastructure, and water infrastructure, we need to look at better ways at doing it,” he said.
“We can’t just be asking the Government for hand-out all the time, but they have to come to the party a bit more.”