“The Government’s long-awaited funding boost and water reform agenda is New Zealand’s best chance to create a high performing water sector for New Zealanders,” says Infrastructure NZ CEO Paul Blair.
“The Government has today announced it will provide $761 million of investment to local councils who opt-in to the Government’s wider reform programme.
“The reforms are required because over one million Kiwis do not have access to clean drinking water today, our wastewater systems are degrading the environment and our inability to deliver water services ahead of demand has been a critical handbrake on the release of land for housing.
“We are pleased to see that central government is using financial incentives to effect this change, and believe that funding, accountability and risk-sharing mechanisms that reward local government for alignment with central government goals will be far more effective than the ‘stick’ of additional regulation on already stretched local resources.
“Where we all really need to get to is a small number of publicly-owned specialised water service providers with the scale and capacity to plan, fund, finance and operate increasingly complex water systems.
“Establishing these new regional public water providers as independent entities off individual council balance sheets, will unlock major new water investment needed to meet basic drinking, waste and stormwater standards.
“Debt limits on similar international water companies are around six times revenue, compared to current council restraints equivalent to three times revenue.
“That’s an additional $4.5 billion of investment in new treatment plants, pipes and other critical infrastructure to add to the Government’s $761 million injection, if the Government’s reform process can be realised.
“If reforms can be accelerated, this investment will provide a major economic boost across all parts of New Zealand at the same time as improving public and environmental health.
“As we continue progress towards a modern world class water system, economic regulation will be needed in addition to the Government’s new water quality regulator Taumata Arowai.
“Economic regulation will monitor water charges to compare performance across the country and ensure water entities meet standards, affordably and without gold plating services.
“The form of economic regulation of water will need to be broadened to explicitly address the social, cultural and environmental importance of water to New Zealanders.
“The twin guardians of economic regulation, on one hand, and environmental and drinking water quality regulation, on the other, will provide Kiwis with clear benchmarking of quality outcomes from these water companies, enabling consumers to understand the value they gain from their payments to water companies.
“When it underwent its reform process two decades ago, Scottish Water was able to double its capital expenditure and its customer satisfaction, while lowering water rates by 40% over a decade and a half of reform.
“This is what we can achieve in New Zealand.
“The Government’s announcement today is a very important step to creating a complete water system covering urban and rural, fresh and grey water resources, helping to sustain and improve one of our most important assets,” says Blair.
For further information and comment contact Paul Blair on 021 902 436