Hamilton-Waikato waters establishment costs up more than 20%
Wednesday, 28 May 2025
Ratepayers are facing a 20% higher cost than expected to establish a Hamilton-Waikato waters organisation as the bill hits $7.35 million.
Operating costs of $3.95 million are also outlined in a report to be discussed by city councillors this week and the recommendation is a tick of approval for the new service to run drinking water and waste water.
Stormwater services would be provided to councils under a contract to the CCO, which is due to begin full operations next year.
The city’s economic development committee chairperson Ewan Wilson, who’s previously raised queries over establishment costs and longer term savings from a CCO, said he’ll be asking more questions.
“I don’t understand how we’ve gone from $6 million to $7.3 million.”
Yet mayor Paula Southgate said the higher figure reflected the fact the earlier estimate was based on Hamilton going it alone with a CCO, as well as updated Government requirements.
The report itself stressed a variety of factors for the increase.
“The revised budget differs from the initial estimate of $6 million, taking into account a more advanced understanding of the costs associated with operational technology and digital technology required to stand up the CCO, and a clearer understanding of the other key workstreams and obligations of a water organisation.”
Operating costs of $3.95 million for 2025-26 reflected the need “to develop and consult on a water services strategy, an earlier start to the development of new digital systems than was provided for in the business case, and a focus on progressing major projects through the CCO to secure early design and procurement benefits”.
Establishment costs would be offset by increased efficiencies, the report said. “While some efficiencies [will] be achieved quickly others will be secured over time - most efficiencies are expected from year five onwards.”
Councillors are being asked to OK initial costs related to the CCO’s establishment and operation being funded by city council borrowing with the debt later being transferred to the CCO.
Wilson said on Tuesday he thought the CCO was the best solution out of a “range of imperfect solutions” but remained concerned about the higher establishment costs and hoped to get a formal estimate of potential savings in dollar terms.
On start-up costs he said: “I’m just a little concerned that we haven’t applied all the disciplines that we should to ensure costs are restrained as much as possible.”
He was also worried about the possible inability of the Hamilton and Waikato district councils to control the CCO, particularly when it came to ensuring waters investment to support the city’s growth.
Southgate said the initial $6 million estimate was based on a Hamilton-only CCO and the higher $7.35 million figure also reflected changing Government requirements.
“As time has gone on they have issued more and more detail around what the establishment expectations for these organisations are and we’ve had to meet these.”
Some of the expected cost was due to be offset by a “small” $250,000 grant from the Government.
On savings, Southgate acknowledged “we don’t have any in-depth assessment of the cost savings at this point in time”.
But she said a 2015 Cranleigh report and overseas experience demonstrated significant savings were available.
“All other examples that we have looked at in the past and present have shown significant cost saving benefits from CCOs running waters.”
On what the establishment costs would pay for, Hamilton’s infrastructure and assets general manager Andrew Parsons said they included the likes of extensive changes to digital systems, staff transfers, and legal and contractural costs.
“Work over the past six months means we are now able to provide a more comprehensive and more detailed estimate of costs, and so that’s what we have done.”
Changes to digital systems were where “some of the big costs are”, Parsons said.