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Councils Advised To Consider Water Company

Media Release – 28 April 2014

Councils Advised To Consider Water Company

An independent report to the Waikato Mayoral Forum has recommended three Waikato councils investigate establishing a jointly-owned limited liability company to manage their water infrastructure.

The report from three independent consultants was presented to the forum today. It recommends that Waipa District, Waikato District and Hamilton City councils undertake a detailed business case on forming a council-controlled organisation (CCO) to manage water.

The publicly-available report also recommends that if any CCO goes ahead, it incorporate a centre of excellence to support all Waikato councils on water issues. A similar centre of excellence for roading has already been established by the Mayoral Forum.

Forum chair Allan Sanson, also mayor of Waikato District, said all three councils were “a long way” from making any decision on a CCO. But it was agreed today that the report would go back to each council for discussion. Decisions on whether or not they would be part of commissioning a business case would be made by all three councils independently.

“We’ve received an independent report from experts in the field. Each council will now consider whether it goes to the next step and is part of commissioning work that will provide us with a far greater level of detail. That’s up to individual councils,” Mr Sanson said.

“Earlier reports have indicated there are $3 - $4 million across the region in short-term savings to be had by working smarter.

“But this report is not just about short-term cost savings, it’s much more complex than that. It’s about building better planning and decision-making capacity, optimising capital and developing a Waikato solution to the specific challenges faced across our region.”

The report’s lead consultant Peter Winefield said the government had made it “as clear as a bell” that councils must change the way they deliver major infrastructure services, particularly water. Coming legislation would encourage more collaboration between councils and would require them to review the way they deliver infrastructure services every three years, he said.

Councils would also be required to develop a 30-year infrastructure strategy, taking into account growth, levels of services needed, major capital expenditure and how that expenditure would be funded.

He said the big advantages of establishing a CCO would not be in short-term savings, but in the ability for councils to manage their assets and the implications of growth in the medium to long-term.

“A specialist, publicly-owned water organisation means you can build capacity around strategic planning for assets, optimise capital expenditure and minimise operational costs for ratepayers. “Having a centre of excellence built into that will also provide a resource for smaller councils to tap into for specialist services and that’s hugely valuable. There’s nothing to stop other councils joining any CCO in the future if that’s what was best for their community.”

Mr Winefield said growth was one of the main drivers behind the recommendation to investigate a CCO for just Waipa and Waikato districts, and Hamilton city.
“Those three councils are geographically aligned and have a number of things in common – including growth. Nearly all of the growth in the region – 92 per cent – is focused in these three council areas.

“That means they face different challenges in terms of the capital they will need to spend on water issues in the future. It’s predicted that over the next 10 years, more than 60 per cent of the total regional water spend – $495 million – will come from those three councils alone.”

Mr Sanson said Hamilton, Waipa and Waikato councils already worked together using a “low-level shared services model” on water conservation, chemical sampling and trade waste services.

“But the report advises that this model is not suitable to meet the significant challenges ahead – including the growth challenges. And previous reports have also indicated, like this one, that savings simply could not be achieved under the current council structures,” he said.

All three councils were likely to hold workshops during May to give elected officials time to go through the report and discuss its findings directly with the independent consultants. Decisions on whether or not to go to the next stage – commissioning a detailed business case – would need to go to full public council meetings, probably in June or July of this year.

The full report is available online at www.mpdc.govt.nz/index.php/councillors-mayor/waikato-mayoral-forum.


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