Council voices concerns in submission to the Three Waters Bill
Buller District Council (BDC) will consider at this week's ordinary council meeting its submission to central government’s Water Services Legislation Bill and the Water Services Economic Efficiency and Consumer Protection Bill.
The Water Services Legislation Bill and the Water Services Economic Efficiency and Consumer Protection Bill forms part of a group of bills to reform New Zealand’s drinking-water, wastewater and stormwaters services – the Three Waters Reform.
Buller Mayor Jamie Cleine says: “We have serious concerns and oppose the council-controlled organisation (CCO) transfer to the entity under the proposed structure. We wanted to highlight some key issues that we believe will have a particularly negative impact on our council as well as our CCO Westreef Services (WSL).
The new Water Services Entities Act 2022 sets out that CCOs are included in the transitional provisions of the Act and that “the transfer of staff, assets and other matters would apply to those CCO’s in the same way as they apply to Councils”.
Buller Holdings Limited chief executive officer Craig Scanlon says: “This direction was a surprise to us. Our understanding was that only council assets and staff would transfer to the new water services entity (WSE) and that service providers such as WSL would remain outside the scope.”
Currently WSL employs approximately 21 full time staff (including Reefton) and two casual staff to service Buller’s three waters infrastructure, making up around 22% of their 93 full time equivalent workforce.
Mayor Jamie Cleine says: “If the bill goes through, we fear that it will reduce WSL’s ability to be resilient and respond to emergencies as they currently utilise staff across all of their departments to meet the increased demand during emergency events like the recent flooding events. This leaves a lack of capacity and no clarity around what happens in the case of emergencies under the new structure.”
WSL is one of the key players in maintaining Buller’s water infrastructure holding the water utilities maintenance contract for the coming 9.5 years. The contract includes the operations and maintenance of Buller District Council’s three waters utility assets encompassing drinking water, wastewater and storm water.
Mayor Jamie Cleine says:” The effect on revenues and profit for WSL and Buller Holdings Ltd would be substantial as providing water services to residents in Buller contributes a significant proportion of revenue and profit. Ultimately, the loss of the water services aspect will affect financial distributions to Council and leave WestReef and ratepayers worse off financially.”
As a CCO, WestReef provides a dividend back to Council, which offsets rates for Buller ratepayers. Current estimates are that the loss of three waters work could reduce the dividend by $300,000 per year. This would mean Council would either have to reduce services or increase rates by 2-3% to cover this shortfall and maintain existing levels of service.
Mayor Jamie Cleine says: “The potential loss of revenue to our CCO is massive for council given we have a small ratepayers base and limited other external income streams.
Council’s response suggests that the existing three waters service contract between the Council and WSL should be honoured by the to the new water entity, with the CCO remaining in Council ownership and the altered / amended contract remaining under the existing terms and conditions.
Mayor Jamie Cleine says: “In our eyes, WSL should be allowed to continue to service and maintain the district's water infrastructure according to the existing contract using its current staff and resources.”
The submission outlines that this approach gives the new entity access to local knowledge about the water services infrastructure in Buller. It also enables WSL to keep its staff, equipment and capability to provide other services to council, third parties, and respond to emergencies.
Buller Mayor Jamie Cleine says: “We would like that central governments looks at the impact of the bill in each region on a “case by case’ basis.
We are extremely concerned about applying a blanket approach and the transferring of CCOs to the new entity. The impact it will have on the council, the community, and the financial viability of Buller Holdings as well as our council is quite concerning.”
Both bills were introduced to parliament on the 8 December 2022, had the first reading on 13 December 2022 and are currently with the Select Committee (Finance & Expenditure). The bills are currently in the amendment stage before the second reading.
Mayor Jamie Cleine says: "We are aware that this is quite an emotive topic and Three Waters reform is a complex and controversial issue. With this submission we hope to bring in our local knowledge, voice our deep concerns, and seek further information and clarification.”
If endorsed by council the submission will be submitted to parliament this week. A response from central government is expected in May. If the bill goes through the changes will come into effect on the 1 July 2024.
This is council’s second submission on the Water Services Entities Bill.
Background
The government is proposing changes to the way our drinking-water, stormwater, and wastewater services are delivered through the Three Waters Reform.
The Three Waters Reform was originally triggered by the 2016 campylobacteriosis outbreak in Havelock North. This event led to the introduction of new legislation and a new national regulator for water services called Taumata Arowai. This organisation will have responsibility for overseeing and enforcing new drinking water regulations and providing oversight of the environment from the impacts of wastewater and stormwater.
Currently most three waters assets and services in New Zealand are owned and delivered by local councils and are paid for by rates. The government is proposing that three water services move from the 67 councils, who currently manage these, into four large entities.
The proposed reform would see Buller District become part of Entity D that covers most of the South Island.
If you would like to access more information about the Three Water Reform please visit Council’s website.
Notes to the reader
Buller Holdings Limited was set up in September 2007 as a council controlled trading organisation with the purpose of providing a commercial focus in the governance and management of the council’s commercial assets.
Buller Holdings Limited was set up with WestReef Services Limited as its only subsidiary. Buller Recreation Limited (T/A The Pulse Energy Centre) was purchased from the Buller District Council in 2009.
The Buller District Council is the sole shareholder of Buller Holdings Limited.
-ENDS-
For more information please contact:
Buller District Mayor
Jamie Cleine
Jamie.cleine@bdc.govt.nz