Our plans for water

Parliament has recently repealed the previous Three Waters legislation, which would have seen new water entities created.

The new Government has now introduced its ‘Local Water Done Well’ approach which is its plan for water management. It says the principles of this approach are:

• Introducing greater central government oversight, economic and quality regulation.
• Fit-for-purpose service delivery models and financing tools, such as improving the current council-controlled organisation model and developing a new class of financially separate council-owned organisations.
• Setting rules for water services and infrastructure investment.
• Ensuring water services are financially sustainable. Financial sustainability means revenue sufficiency, balance sheet separation, ring-fencing and funding for growth.

The Government has confirmed that councils will keep ownership of water assets. It has also said councils are able to form regional groupings with other councils (to get the benefits of size) to create Council-Controlled Organisations. Grouping together would mean that infrastructure improvements will be able to be funded separately from councils main borrowing channels. Local councils have had very early conversations and have agreed to consider options both as individual councils, as a region or a sub-region.

All councils agree that any model needs to improve how we operate and deliver services for the better, seeing improvements and innovations. Conversations will continue with Mayors and Chief Executives over the coming months, and more information will be available to communities likely later this year.

The recent changes mean we’ve planned and budgeted work for water for the next decade in our draft long-term plan.

New drinking water quality assurance rules

Our water comes from both the Turitea Dam in the Tararua Ranges and a number of bores around our city.

New drinking water quality assurance rules will require us to add reservoirs or ultraviolet (UV) treatment to some of our bores. This is to guarantee the treatment is effective. We’ve switched off two bores while we do work over the coming year to ensure they meet the new standards.

You can read more about these changes at taumataarowai.govt.nz

Growth areas need water

As we grow our city with more homes and businesses, we need to make sure we have enough water to meet demand. This will require us to build pipes to areas of development, pump stations to move the drinking or waste water around our city from homes and businesses, stormwater management for heavy rain, and in some instances we may need to build new water bores to supply growing areas like Milson and Kelvin Grove/Whakarongo.

Mitigating climate change

Doing everything we can to reduce the impact of large rainfall events for our city is essential.

Over the coming decade, we will be doing more work on this front. This will include things like installing larger underground pipes, creating wetland type environments and maintaining our streams. We’ll also be working closely with developers to ensure new developments are well designed to cope with more intense rainfall events in the future.

Our current consent for how we treat and discharge wastewater (the water that goes down the drains inside your home or business) expires in the coming years.

We’re required to apply for a new consent the treatment and discharg r for the next 30 years. Horizons Regional Council is currently processing our consent application, which will see some of the highest quality treated wastewater in New Zealand be discharged to a combination of the Manawatū River and land. It will go to the river when it is in high flow, typically in winter, and to land in summer. This ensures the best outcome for our awa (river). We’ve spent the past five years investigating and determining this option, working with our community and stakeholders every step of the way.

The cost for this project is made up of things like: the consenting process and investigations and reports, buying or leasing land (we need up to 700 hectares), installing water pipes from our treatment plant to the land site, irrigation equipment, building a new discharge location at the river, upgrading and installing new technology and processes at the treatment plant and much more.

Currently, we have a very high level cost estimate of up to $647M. We will get more certainty on this as we work through the detail design during the consenting phase.

That’s an eye-watering amount for everyone involved. It’s so much money that we can’t borrow enough to fund it through normal council borrowing mechanisms.

We’re not the first council to be in this position with a large infrastructure project, and we certainly won’t be the last.

The foresight of our Elected Members means we were somewhat prepared for this outcome. Eighteen months ago we commissioned a report to give us advice about how we could fund Nature Calls if there happened to be a change in government. That means we knew the tools available and
that’s helped save valuable time.

So, what's the plan for now?

We’re proposing to fund Nature Calls through a ‘special purpose vehicle’ as provided for in the Infrastructure Funding and Financing Act. This allows councils to fund specific projects through a government agency, Crown Infrastructure Partners. We would apply and, if successful, work with them to come up with the terms of the funding. The external entity would provide the funds to the Council and levy ratepayers annually (over a term such as 30 years). The levy would show as a separate line on the Council's rates bill. We’re proposing this would start when construction of the project is due to start.

Council does not have the debt capacity to fund this programme itself, and we will need to keep borrowing money for other things like transport and property based projects. Using this type of funding means that we wouldn't exceed our borrowing limit.

There are some downsides though – our ratepayers would still need to pay the annual levy for this debt and it will be significant.

Early estimates are that the levy could be $1,000 per year, for at least 30 years, on top of rates

This tool is used by other councils already. Tauranga is using it to fund some transport projects, and Wellington has also used it for a large wastewater project. However, ours is for a much larger amount of money.

It is still early days, and we will need to have conversations with Crown Infrastructure Partners to work out the terms of how this could work.

We will be consulting with ratepayers about these terms, including the levy charge. We’ll also look at the options to reduce the amount needed to borrow. This could include things like getting government funding or talking to businesses or other organisations who currently manage their own wastewater treatment and discharge, to consider joining us.

It’s likely we could use this model over time for other projects too, like some of our growth areas to help fund the roading and water infrastructure that’s needed.

If Council is unable to proceed with funding Nature Calls by debt provided through an IFF arrangement, an alternative funding source(s) would need to be identified or the programme would unlikely be able to proceed in its current form. Alternative funding sources could include a government subsidy. We’d be exploring this anyway with the proposed IFF arrangement to reduce the impact on ratepayers. Other funding sources could include a public-private partnership, where a private company finances, builds, and potentially operates the infrastructure, charging Council (and ratepayers) over a period of time.

What happens when the government finalises its plan for water?

Once we know more about the government’s approach to water we can adapt our plans.

For as long as we are looking after our community’s water, you can be assured that we will continue to provide the great water services you’ve come to expect from us. That includes maintaining our infrastructure and ensuring our water meets all health standards.

And, we will continue to keep you informed every step of the way.

Read more about the history of Nature Calls