The future of water service delivery

Councils’ ability to provide quality water services that meet the growing demands of their communities is under significant pressure. The challenges facing councils include:

• Pipes, pumps and plants are reaching end of life after many were built during a boom between the 1950s and 1970s. It’s costing more to maintain these assets as they age, and councils need to find significant funding to replace them,
• Safety standards and environmental protection requirements are increasing,
• The amount of investment needed to build new infrastructure is increasing as our population grows, and
• We need to build resilience to natural hazards and a changing climate into our networks.

Awareness of the challenges has been increasing for many years but was emphasised by the 2016 Havelock North water contamination incident.

Between 2018 and 2023, the then Labour government launched and developed the ‘Three Waters Reform Programme’ (later the ‘Water Services Reforms’). This would have seen waters services, currently delivered by 67 different councils across Aotearoa, brought under 10 regional entities owned by local councils on behalf of the public. Napier City Council began preparation for the transition to Tairāwhiti/Hawke’s Bay ‘Entity F’ in 2022 and 2023.

Following the 2023 General Election, the new coalition government is unwinding progress made towards the 10-entity model. Instead, National’s Local Water Done Well policy will be implemented, including:

• Establishing a regulator to oversee water infrastructure, ensuring sustainability, fair pricing, and quality standards,
• Implementing new financial rules, requiring self-funding water services, revenue to cover maintenance, and sufficient borrowing for growth, and
• Within a year of repealing the 10-entity model, requiring councils to submit alternative service delivery models to the Minister for approval. There is flexibility for councils to choose a model and governance structure that works best for them.

Much of the detail around Local Water Done Well is yet to be announced. More clarity is likely in February/March of 2024 as the government progresses the repeal as part of its 100-day plan.

Regardless of the post-election shift, the reasons for moving to a new operating model still exist. Affordability challenges are getting more critical as the response and recovery costs incurred following Cyclone Gabrielle have pushed Hawke’s Bay councils closer towards the maximum amount of money they can borrow.

Hawke’s Bay councils are currently revisiting the regional model scoped in 2019/2020. This review identified that coming together to create an asset-owning Council Controlled Organisation (CCO) would be the best way to meet the challenges faced by individual councils. Councils are taking another look at these findings to assess whether a CCO is still the best option for Hawke’s Bay communities given three years have passed and following Cyclone Gabrielle.

Until decisions are made about next steps, Napier City Council will continue to provide drinking water, wastewater and stormwater services to our residents.