Bigger May Be Better: Late Advice Shake-Up Forces Councils To Re-Think Water Reform Plans

Saturday, 24 May 2025, 3:33 pm
Article: Moana Ellis - Local Democracy Reporter

Plans for the future of water services in the Whanganui, Rangitīkei and Ruapehu districts are in disarray after late advice from government agencies.

The district’s three councils have been weighing options for drinking water, wastewater and stormwater reform after identifying and consulting on a joint water services entity as their preferred model.

But the eleventh-hour advice is shaking up proposals by smaller councils to continue providing standalone services or with small clusters of neighbours in joint models.

In the central districts, councils are scrambling to re-open talks on forming bigger regional collectives.

At a meeting on Thursday, Rangitīkei District Council confirmed its preference to establish a multi-council water services council-controlled organisation (WS-CCO) under the Government’s Local Water Done Well reforms.

The three-council proposal remains on the table, but Rangitīkei unanimously resolved to progress “newly ignited conversations” with Palmerston North City Council and Horowhenua District Council.

The surprise move comes after new guidelines from the Department of Internal Affairs, the Local Government Funding Agency and the Commerce Commission on achieving economy of scale and financial sustainability requirements.

Rangitīkei mayor Andy Watson said the Rangitīkei, Ruapehu, and Whanganui councils were newly approached in early May about collaborating with the Palmerston North and Horowhenua councils to form a larger entity.

A key element of the new guidance was that a WS-CCO servicing 50,000 connections would achieve the greatest cost efficiencies for bill payers.

“The understanding that 50,000 connections would unlock greater savings for all those involved has absolutely contributed to other councils re-entering discussions about a wider model,” Watson said.

A three-council entity with Rangitīkei, Ruapehu and Whanganui councils would service about 31,000 connections.

Rangitīkei consulted with residents in March on three models for the future of water services delivery:

• A multi-CCO with Whanganui and Ruapehu district councils (the preferred model).

• Keeping the status quo – in-house delivery.

• A multi-CCO with as many councils in the Manawatū-Whanganui region as possible.

At the time, the third option was not viable because other councils had indicated they preferred alternative models.

Following the latest advice, talks have re-opened on a wider regional approach.

Rangitīkei was now awaiting the decisions of its potential partners, Watson said.

Staff would finalise the Water Services Delivery Plan by September 3.

“We will inform Rangitīkei residents as soon as the final grouping of councils is clear,” Watson said.

“This is one of the biggest decisions councils will make for their communities in decades.”

A decision in Whanganui was deferred on Tuesday to an extraordinary council meeting in early July.

Mayor Andrew Tripe said four viable delivery options remained on the table: a multi-CCO with Ruapehu and Rangitīkei, a Whanganui District Council CCO, a multi-CCO with as many councils as possible, and an in-house business unit.

Most community feedback showed residents felt Whanganui had invested well in its water assets and did not want to “cross-subsidise” other councils.

“However, we are looking at a joint council proposal which could include a non-harmonised model, ring-fencing costs for each council but giving the benefits of scale – otherwise known as Local Pricing.”

The council was continuing to back a three-council model as the best level of scale to achieve cost benefits, but Tripe said the possibility of achieving “greater scale” would be investigated.

Under Local Pricing, residents within each district would be charged on the same basis as currently, but any savings were shared.

“All three councils’ customers in this case benefit from these savings, while paying costs that relate only to the delivery of services in their district. So customers pay less than they would have if councils were to go on their own.”

The cost benefits could be around $18,000 per Whanganui connection over 30 years, or $588 a year.

“Local Pricing may also offer further savings to Whanganui if there is a greater scale, something which requires further investigation."

Tripe said councils took their preferred options to consultation before the new guidelines were received.

“It is pertinent that we consider them now, as considerations such as public liability and ring-fencing of assets, even with an in-house model, do come at a cost.

“The adoption of a water services delivery plan for our district is one of the most significant changes to local government in decades,” Tripe said.

“It is vital that we do not rush this process.”

On Wednesday, Ruapehu district councillors decided to ditch a standalone option in favour of the three-council CCO and investigating a wider regional entity to reach the 50,000-connection threshold.

The decision brings potential collaboration with Waikato back to the table.

The Ruapehu council will engage with its community on the new information and options available. No new preferred option will be offered.

The council will meet on 25 June to make a final decision.

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