Newsroom has modelling suggesting 10 smaller regional water corporation will cost communities billions more than the Govt's previous reform model. Jonathan Milne talks with seven key mayors about that trade-off.
Analysis: Forty-two. That's how many more councils will gain a seat at the table of the water corporations that manages the drinking water and wastewater plants their communities own. Those additional seats will be mirrored by more seats for iwi.
It's an improvement to local voice that's being welcomed by mayors in the two regions that have been the biggest champions of regional water authorities – Hawke's Bay and Taranaki.
Newsroom has spoken with all those mayors; if Local Government Minister Kieran McAnulty's changes to the Three Waters reforms win over just those seven councils, that will be enough to tip support in the Govt's favour.
READ MORE: * Jo Moir: Ratepayers pay more for water so councillors can sit at the table * Jonathan Milne: Water reforms cost more than just money * Et voilà! Here's something someone else prepared a little earlier * Credit agency warns NZers are blind to 'astronomical costs'
But the greater local oversight comes at a cost – "a price worth paying", those seven mayors say.
Councils will lose $1.5b in "better off" funding that former PM Jacinda Ardern had promised them, as a sweetener to buy into the water reforms. That money was to have been spent on housing, jobs, and just occasionally on water infrastructure; now it will remain on the books of the new water corporations from which the Govt had cheekily proposed to pinch most of it.
That was always a dodgy deal, the mayors acknowledge, but those millions would nonetheless have helped them balance their books.
Households, too, will pay more than they would have, thanks to yesterday's so-called "affordable water infrastructure" changes. That's up to $2b a year more by 2054, at a very rough estimate.
Newsroom has been supplied new forecasts prepared for Internal Affairs by Scottish consultants. These compare how much water users will have to pay in the years through to 2054, counted in 2022 dollars and updated from previous forecasts to factor in high rates of construction inflation.
To be clear, nobody would bet the farm on these numbers; some councils think they're shonky. They're rough models based on 2020 infrastructure plans – but they're probably the best we've got.
They show that in smaller districts, without any water reforms, the cost to the average household of water infrastructure would soar over 30 years. In 2054, Clutha households would be liable for an average $22,080 in 2054. The forecasts are almost as eye-watering for households in the Far North ($16,280), Waitomo ($21,500), Stratford ($19,670), Tararua ($19,130), Wairoa ($20,860), Kaikoura ($20,460), Grey District ($21,230) and Waitaki ($19,570).
The move to 10 entities, the Govt boasted yesterday, would mean that the average annual household cost rises no higher than $4,430 in 2054 (in Taranaki and Otago/Southland).
But ... there's more. Figures that were not press released yesterday calculate how much more households would have paid if the Government had proceeded with its previous plan, of four supra-regional water corporations.
The average household costs for Auckland and Northland remain the same at $1,460 in 2054, as that entity will remain the same size. But by these inflation-adjusted numbers, households in Waikato, Bay of Plenty, Taranaki, Whanganui and Manawatū would have faced average charges of $2,130 in 2054 – that's half what they will pay under the 10 corporation model.
It's the same for households in Gisborne, Hawke's Bay, Wellington and the top of the South Island, who would have paid only $2,030 with the bigger corporations. And those in the rest of the South Island would have paid an average $2,340.
The blunt truth is, we'll all be paying a lot more for our water infrastructure in 30 years' time than we are now.
But cost efficiencies mean the increase would have been less steep if New Zealand had proceeded with the original four entity model; the water charge hikes will be far steeper thanks to yesterday's changes. Either solution is cheaper than sticking with the unsustainable status quo under which each of 67 councils manages their own water infrastructure.
Writing at Newsroom today, political editor Jo Moir questions whether ratepayers would have agreed to such a pricy trade-off, if it had been properly explained to them at last year's local elections. "While local government and democracy has a place in decision making, it shouldn’t come at the expense of water and rates costing people thousands more dollars, especially in a crippling economic environment," she argues.
But the seven mayors in the swing regions insist it's a price worth paying, for greater local voice. Both Hawke's Bay and Taranaki have been working for more than three years on regional water models.
Central Hawke's Bay District mayor Alex Walker says they've consulted their community. "Our community understood, when we talked to them about the Hawke's Bay model, that it would cost them a little bit more – but it would be at a structure that they had more oversight of and they were okay with that. So there was an understanding in the community about that tension."
Stratford mayor Neil Volzke agrees. "I think the trade-off is worthwhile," he says. "There may be some cost associated, but the fact that we'll have a guaranteed seat on the representation group and a Taranaki-based organisation for us – I think that's worth the extra cost."
Update coming shortly: Three pieces of sloppy language in yesterday's ministerial announcement are potentially misleading to those confused by affordability and co-governance in the Three Waters reforms.
