What the ‘Three Waters’ changes mean for greater Wellington ratepayers

Thursday, 8 August 2024

The small township of Tokomaru near Palmerston North has had elevated level of lead found in there water supply. The township has being told not to drink tap water

Porirua mayor Anita Baker says without the just-announced reform of Three Waters, she would not have been able to afford to live there in five years.

Local Government Minister Simeon Brown and Commerce and Consumer Affairs Minister Andrew Bayly on Thursday announced a revamped water service delivery model.

New council owned organisations will be able to borrow from the New Zealand Local Government Funding Agency Limited (LGFA) for water services, reducing the cost to councils. Debt limits would also be increased.

Infrastructure New Zealand welcomed the certainty provided by the Government’s announcement of how it would implement Local Water Done Well.

Minister of Local Government Simeon Brown today announced a major shake-up for the way council’s fund water infrastructure.

Policy director Michelle McCormick said it was positive news for ratepayers across the region and would give certainty to councils struggling to fund infrastructure.

She said councils across the region would now be able to take a fresh look at their long term plans, which all include substantial rate increases over the next decade.

For Baker, that might mean she will last another term as mayor. She recently noted the current rate increase of 17.5% would put ratepayers under financial stress and she expected to be voted out of office at the next election.

The increases included in the council’s long term plan were unaffordable and would force some people to sell up, she said.

“It is just appalling … I would not be able to afford to live here. It is just ridiculous and people would not be able to afford it.”

The new entity would provide security for consumers around affordability and give councils and water entities a new tool to pay for infrastructure, Baker said.

Wellington mayor Tory Whanau responded cautiously to today announcement on water.

“The way we provide our water services has to change. This is essential to avoid ongoing failures in our network infrastructure. For us in Porirua we especially want to improve the health of our harbour and coast.

“This announcement will make a real difference, and we should grab it with both hands.'

Wellington mayor Tory Whanau had a more muted response.

“We will need time to understand how the announcement will impact our current plans for a new regional water council owned organisation for Wellington.”

In principle, the ability to borrow more from LGFA would help spread the huge cost of new infrastructure over a longer period, she said.

“However, a lot now rests on the ratings agency’s assessment of the impact this will have on the LGFA. Any downgrade of the LGFA as a result will mean higher borrowing costs and higher rates for residents across the country.”

Whanau noted that their long term plan increased funding for three water infrastructure by 68%, to over $1.8b.

“Under the plan one in every four dollars Wellington City Council spends on capital will go to Three Waters.”

Upper Hutt mayor Wayne Guppy said councils hoping for a pot of gold would be disappointed.

Although the new entity would be able to borrow more money than councils could now, the entity would still be reliant on council funding to repay those loans, he said.

“The reality is that if you have debt, it still has to be paid back. This is certainly not a magic bullet, ratepayers will still have to pay for it.”

Hutt City mayor Campbell Barry described it as “positive news” but agreed with Guppy that ratepayers would ultimately still have to foot the bill.

It was too early to judge what the impact would be on rates, he said. Wellington Water had asked Hutt City for $2.5b over 10 years, which would have resulted in yearly rate increases of 17% to 20%.

The cost of major projects like upgrading the Moa Point Treatment Plant will be spread across multi-generations under Local Water Done Well.

One thing Barry is clear about is that water meters have to be part of the new set-up.

“It is a proven way to find and reduce leaks, lower the cost of supplying water and charge people for what they use.”

Water Infrastructure New Zealand also believes the new structure must be accompanied by the introduction of water meters.

People had to understand the true cost of supplying water and meters would provide a direct long-term revenue stream, McCormick said.

Commerce and Consumer Affairs Minister Andrew Bayly emphasised the new regime would promote better investment into water infrastructure and was good news for councils.

“These changes will ensure water revenues are ring fenced for water services and aren’t siphoned off for other council priorities or pet projects, with little transparency for the ratepayer.”