Waikato waters or help from Hamilton - which will keep the rates down?

Friday, 11 October 2024

Waikato District residents could be paying 3.8% of their income towards water services by 2035.

Waikato District ratepayers could be paying almost 4% of their income, or nearly $8000 towards water rates by 2035 unless changes are made.

Numbers from a Matamata-Piako District Council report show that Waikato District households are paying an average of 1.8% of their income towards water services.

That number could shoot up to 3.8% in the next ten years.

But it could be worse next door. While Waikato District ratepayers are currently paying around $2,310 for water services on an average household income of $129,602, in 2035 ratepayers could be paying $7,921.

This is high in comparison to Matamata-Piako District Council’s predicted water rates, dropping from paying 1.5% of the average household income (around $1,539 on an income of $106,012) to paying 1.3%.

Waikato District Council has been looking at options to implement Local Waters Done Well, whilst keeping their financial position in mind.

A workshop for the council on Wednesday closely examined each option for water services in the next long term plan.

The information was provided by commercial law firm Simpson and Grierson, and presented by Padraig McNamara, a Simpson and Grierson local government and resource management lawyer.

Waikato District Council, like all councils, need to decide on a Local Water Done Well option before September 2025, and implement it by 2028.

McNamara presented to council three options for implementing Local Water Done Well: an internal business unit or division of council, a single council CCO, or a shared CCO.

The three options the council have been considering are an internal council controlled organisation (CCO), a shared CCO with Hamilton City Council, or committing to Waikato Waters Done Well, a shared water services entity between ten Waikato councils.

Each option presents individual challenges and opportunities, said McNamara.

“Whatever delivery model you go down, things are going to look very different from next year onwards,” McNamara said.

“And that’s because of what the government is calling minimum requirements that apply across all delivery models.”

These figures show the percentage of household income ratepayers are contributing towards water services on average, and what that percentage could become in the next decade.

While council is already subject to environmental regulation and rules regarding drinking water quality, McNamara said the minimum requirements would mean they will also be subject to economic regulation through the commerce commission.

This will mean that decisions regarding investments may have to be overseen by the commission. Regulation around drinking water quality will also increase.

Other minimum requirements will include protections and restrictions against privatisation, and requirements to meet financial sustainability obligations.

McNamara compared the benefits and downsides of an internal operation versus a multi-council CCO. The main difference between the two being the scale of the operation.

A single council CCO or an internal business unit would lack the benefits of scale, McNamara said. These benefits not only include potential financial savings, but also greater access to expertise.

“You cannot expect to attract the same calibre of staff if you’ve got an outfit of ten people, as opposed to an outfit of 100 people running the water business,” McNamara said.

Lack of expertise would be another issue under an internal business unit, as councillors would not have a single focus on waters. There is also a risk of politics influencing decisions.

“However, expertise can be gained through subcommittees, and acquiring outside assistance,” McNamara said.

While a multi-council CCO would mean a single focus on waters and the benefits of scale, McNamara said things can start to get tricky when establishing a statement of expectations.

A two-council CCO could be easier to manage, but more councils could present too much input, making establishing the statement of expectations into a lengthy process.

Waikato Waters Done Well, which Waikato District Council has made a non-binding agreement to support, originally planned to include ten Waikato councils.

These were Hamilton City Council, Waipa District Council, Waikato District Council, Matamata-Piako District Council, Thames-Coromandel District Council, South Waikato District Council, Ōtorohanga District Council, Waitomo District Council, Hauraki District Council, and Waikato Regional Council.

The majority of the councils have made some form of a commitment to the plan, but Hamilton City Council decided that the joint entity would not meet their needs.

Waikato District Council has also made a non-binding agreement with Hamilton City Council to co-design a water services CCO for just the two councils.