NOTE: A full list of linked references is available at the bottom of the page.
While the Government and LGNZ consider that national case for change has been made, each council will ultimately need to decide based on its local context.
Councils do not have a national interest test for their decision making. Councils are required to act in the interests of their communities and the community’s wellbeing (now and into the future), provide opportunities for Māori to contribute to their decision-making processes, ensure prudent stewardship and the efficient and effective use of its resources in the interests of the district or region (including planning effectively for the future management of its assets) and take a sustainable development approach (for example, as per sections 5 and 14 of the Local Government Act 2002).
Council currently delivers three waters as a stand-alone entity with a mix of inhouse staff and a network and operations maintenance contract. Clutha has a Service Delivery Department that looks after all infrastructure. There is a Water and Waste Operations team including four dedicated water roles. Infrastructure Strategy and Capital Delivery teams are shared with other council assets. There are 19 FTE shared across water and other assets including the Group Manager Service Delivery.
CDC’s levels of compliance and levels of service for wastewater are generally low compared to the Otago-Southland region, with five disclosed serious pollution incidents in 2019/20 (one of only three councils in the region to disclose any serious pollution incidents). In addition, 54% of the district’s wastewater receives only primary level treatment, with the majority (99%) being discharged to freshwater receiving environments. This is the largest compliance and level of service issue for the district. CDC has the third highest incidence of wastewater pipe blockages and the highest incidence of stormwater collapses in the Otago and Southland regions.
The required future investment for three waters services in CDC will see three waters debt exceed $90 million by 2031 but because Council will use an internal borrowing regime total Council debt only reaches $80 million. Council’s debt to revenue ratio rises to 145% but remains well below the LGFA threshold. Council is therefore able to debt fund the required level of investment but at that level three waters will start to impact the extent to which other activities and services can use debt.
While over 55% of the drinking water in the district receives complex or multistage treatment, CDC notes that 14 of its drinking water treatment plants are not currently meeting the parasitic protozoal compliance regulations in the Drinking Water Standards.
A key challenge for Council will be in delivering that programme as there will need to be a 300% increase in the amount of three water capital works delivered and for that to be consistently through to 2031.
Our forecasts anticipated that the increased investment requirements, and associated impact on annual operating expenditure may result in three waters charges being as high as $2,549 (uninflated) by 2031. This is a 200% increase on current charges.
Due to differences in the charging mechanisms and cost structure for rural schemes, the impacts on rural water schemes and their customers are not immediately clear. However, we note that rural ratepayers that do not receive wastewater or stormwater services may see their drinking water charges increase by approximately 27% before inflation. Further work would be required to disaggregate the impacts on rural and urban ratepayers.
In respect of the government’s published information our dashboard looks like this:
