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Three Waters Reform Could Cost $185 Billion – Expert Reaction

New independent analysis and modelling predicts up to $185 billion is required in the next 30 years to upgrade our drinking water, stormwater, and sewage infrastructure.

Work is already underway on a proposal to trim the country’s 67 water service providers – owned and managed by councils currently – into a small set of providers. The government says the new analysis confirms the need for major change, both to meet health and environmental needs – and prevent skyrocketing water bills for Kiwi households.

The SMC asked experts to comment.

Dr Mike Joy, Senior Researcher, Institute for Governance and Policy Studies, Victoria University of Wellington, comments:

“The release out on the case for three waters reform from local government minister Hon Nanaia Mahuta unsurprisingly calls for urgent water infrastructure reform.

“The reports are all about infrastructure. However, in the case of drinking water quality, infrastructure to treat water is the ambulance at the bottom of the cliff. I could find no mention in the press release, or associated documents, of the fence at the top of the cliff, which is protecting water at the catchment scale – i.e. safeguarding the sources of the water.

“The briefing document from the Department of Internal Affairs doesn’t mention sources or catchments, neither does the FAQ document or the MBIE report. The Water Infrastructure Commission of Scotland (WICS) final report – economic analysis of water services aggregation mentions groundwater once – but nothing about protecting their sources.

“Missing this crucial ‘fourth water’ – the source water – seems odd. I note that the summary report on the workshops held for the Three Waters Reform Programme, released in March 2021, showed that in polls held during the workshop, taking a catchment view of water ranked as the second most important objective by attendees.

“Finally, I could find no mention of one of the emerging issues for New Zealand, that is nitrogen contamination of drinking water. There was no mention of it, nor just how expensive it is to remove nitrate from water.”

No conflict of interest.

Dr Julia Talbot-Jones, Lecturer, Wellington School of Business and Government, Victoria University of Wellington, comments:

“The need to deliver improvements to New Zealand’s water infrastructure is well understood. New modelling released today estimates that between $120B and $185B in investment will be needed by 2050. This impending deficit drives the proposed ‘three waters’ reforms, which seek to combine drinking water, wastewater, and stormwater management and amalgamate service delivery to improve efficiency and the quality of service delivery across New Zealand.

“Although the latest reports demonstrate the benefits that could accrue through the consolidation of service delivery, for any type of significant policy reform there will be trade-offs across regions and between users. In practice, cross-subsidies will most probably be needed to smooth costs, and this could create winners and losers across between different community interests. The government has clearly taken steps to consult with affected parties, but this process will need to be ongoing as the reforms move through the planning to implementation stages.”

No conflict of interest.

Dr Lokesh Padhye, Department of Civil and Environmental Engineering, University of Auckland, comments:

“This is a much-needed reform for the water sector. It’s a case of better late than never. Consolidating 67 council-owned and managed water service providers into a small number of publicly-owned providers will provide a number of advantages. New Zealand’s three waters (drinking, wastewater, stormwater) infrastructure is ageing fast, and water affordability will become a concern in the coming years, as the report correctly identifies.

“The current fragmented model is also less supportive of much-needed research and development (R&D) in the water sector, especially in the areas of monitoring water quality, emerging contaminants, and innovative and sustainable management solutions. Consolidating the utilities will potentially provide operating efficiencies, improved planning, more capital for R&D, and a step in the right direction towards achieving safety, equity, and sustainability in the water sector.”

No conflict of interest.

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