Someone should tell the Taxpayer’s Union.
Some Local Councils are planning to put rates up by double digit figures next year. And the Government is planning on exempting them from discussing this with ratepayers.
Local Government Simeon Brown is to blame. He has written to Local Councils and told them that he will relax consultation and audit requirements so they basically do not have to talk about how much they may have to put rates up if National fails to find an alternative for Labour’s Three Waters reforms.
From Jonathan Milne at Newsroom:
Newsroom has obtained a letter from Local Government Minister Simeon Brown, telling mayors he’ll relax consultation and audit requirements so they can lock in their long-term rates and spending plans.
He says the Government will retain the strong emphasis on complying with water quality rules and investment in infrastructure – but delivering that will be councils’ responsibility, rather than the role of the 10 big council-owned regional water corporations proposed by the previous government.
For the first time, he’s revealed the structure through which the Government hopes to finance water and wastewater infrastructure: by developing “a new class of financially separate council-owned organisation”.
That implies a legislated structure to separate the debts of the new council-owned organisation from council balance sheets, so it won’t constrain the ability of councils to borrow to finance other core infrastructure like roads and libraries.
He’s told mayors that a key principle will be ensuring water services are financially sustainable. “Financial sustainability means revenue sufficiency, balance sheet separation, ring-fencing and funding for growth.”
The background is that much of the country’s water infrastructure is shot. Water supplies that poison residents, sewerage spills and leaky pipes are far too prevalent.
National understood this. That is why in 2017 it set up the Three Waters review and started the work that would result in the formation of Taumata Arowai, the water services regulator. Taumata Arowai’s role was to regulate water quality but the more complex aspect of the job which was resourcing the repairing and upgrading infrastructure that was not fit for purpose was to be addressed another day.
Labour realised that Local Government could not and would not afford to pay for the necessary changes. Its proposal, five water entities to own construction and fund infrastructure would mean that the work could be performed by borrowing and more cheaply because of sca,e. But National and its supporters ran a full court press opposition to the proposal mainly on the basis that Maori were given some say in the appointment of boards and the setting of general direction and the dog whistle worked.
But National has a big problem on its hands.
Basically after Three Waters was ditched by the Government there was a rather gaping hole in future plans. A number of Councils are facing significant investment requirements to make sure that the water they supply does not poison any locals.
And they are now being policed heavily by Taumata Arowai. A perusal of its recent press releases indicate that over the past few months it has issued a compliance order on the Clutha District Council to take steps to improve water quality, written to 13 Councils and two Government Departments requiring the installation of a bacteria barrier or residual disinfection of water by the end of 2024, released a list of 27 councils that operate 84 drinking water supplies lacking a treatment barrier preventing protozoa from contaminating the water requiring a confirmed and funded plan by mid 2024, and issued a compliance order on Queenstown Lakes District Council requiring it to maintain a boil water notice until treatment for protozoa are in place or a safe source of drinking water can be confirmed.
The Queenstown Lakes District Council provides an example of what will be required. The estimated cost of the membrane barrier required is $30 million. And there are other treatment plants that also require upgrades. Given Council’s annual income is $171 million I think you can see the problem.
All Councils were formulating their future funding plans presuming that having to fund water infrastructure would be taken off their balance sheets and vested in the new entities which would then be able to borrow at levels that Councils tend to shy away from. And they had already started to spend the money that the Government had made available. Auckland Council for instance has already spent the $127 million of Better Off Funding that it received. Under National’s plans will it have to pay the money back?
This is all hitting the proverbial because Councils are right now finalising draft plans for consultation with their communities and are wondering how to include plans to drastically increase rates and water charges so that the work that was going to be funded by borrowing now has to be funded up front.
And double digit rates increases during a cost of living crisis is not a good look.
So it seems that Brown thinks he has a neat and elegant solution, exempt Councils from having to consult on proposals involving water.
National’s election promise was to set strict rules for water quality and investment in infrastructure and to require Councils to “demonstrate a clear plan to deliver ongoing investment in water infrastructure. Those plans will need to be approved by the Minister of Local Government.”
The strict rules for water quality are already being enforced by Taumata Arowai. About funding National said:
National’s plan supports greater access for councils to long-term borrowing, which is an appropriate way to fund long-life water infrastructure. One way to improve access to borrowing would be for neighbouring councils to form Regional Council Controlled Organisations. Ultimately, it is up to the councils but we would envisage it is likely a number of regional groups will emerge to deliver better water services.
The plan is wishful thinking. For a Council that is managing its water infrastructure adequately why would it team up with a Council that is a cot case?
This is a problem of National’s making and its solution will not work.
Stand by for double digit rates rises in many parts of the Country. And you can blame National and its supporters for this.
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