From the Mayor

By Martin Connelly

Water services have been a political football for some time. We associate “Three Waters” with the last Labour government, but it had been started by the John Key government, following the Havelock North deaths and carried on by the next two governments. 

Now that National is back in power “Three Waters” has been replaced by “Local Water Done Well” (LWDW). It can be a bit hard to describe LWDW in simple terms. 

Under recently-passed legislation, local councils have less than a year to develop plans to manage and fund water services, to the point where they are financially sustainable and government-approved.

Although not legally required, it has become obvious that the only way for most councils to ensure financial sustainability, is to set up Council-Controlled Organisations (CCOs) to operate those water services. This is because a CCO will be able to borrow money more favourably than a council.

For those not familiar with CCOs, they are entities set up to conduct activities on behalf of councils.

They are governed, managed and operated at arm’s-length from councils through an independent board of directors. 

Our water services are currently managed by a CCO called Wellington Water.

This CCO is owned by the four Wellington Cities and us. The shareholding councils appoint a board of directors who then appoint a CEO.

Our Council has been exploring two different types of CCO to deliver future water services in the South Wairarapa. One would involve four shareholding councils, ourselves, plus Carterton, Masterton and the Tararua Councils. The other CCO we are considering is one that would include all the councils in the Greater Wellington Region plus the Horowhenua District.

We will soon need to decide which of those options we prefer. This will be a difficult decision to make for two reasons. One is that while we might wish to join with the other local councils and with the Tararua District Council, what happens if one of them opts for something else? The other difficulty is that we don’t have the full information we would like to have to make such a momentous decision.

Sticking with the Status Quo is not possible, as Wellington Water will cease to exist very shortly. I am aware that some councils are considering a “go it alone” option. However, if all three Wairarapa Councils thought this way then, to get favourable borrowing provisions, there would need to be three separate CCOs with their own boards and chief executives. This is totally impractical, and it is almost certain that the Minister of Local Government would use his legal powers to veto such an option.

You may ask “How does any of this make future water provision financially sustainable?” 

To answer that you need to understand that in many councils, ratepayers subsidise water users. If all ratepayers are also water service users, this hardly matters. However, in the South Wairarapa large numbers of rate payers do not use town water supplies. 

In future the new Water Companies will get their income only from people connected to their services. This will mean that water users will be paying the full cost of meeting those services, costs that will include servicing additional loans needed to upgrade water infrastructure. 

A recent report estimated that on average, throughout the Wellington Region, the cost of water services (currently around $1,700 a year) will become $3,000 to $4,000 a year. 

This is a massive increase that has been described by a fellow Mayor in these terms: “It will be ugly.” I can only agree.

Before any final decisions get made your Council will be consulting you to find out your views on the options being considered.