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Hawke’s Bay councils receive independent Three Waters Review report

Region well-positioned for discussions with Government on national reform of drinking waste and storm waters service delivery.

The formal receipt of the independent Three Waters Review report (prepared by Morrison Low and their partner WSP) to the five councils of Hawke’s Bay has begun, concluding an eighteen-month process of investigation and detailed analysis.

Concurrently, Government began a process to reform New Zealand’s drinking, waste and storm water (three waters) regulations and the way three waters services are delivered, which has gained momentum in the past two months.

The timing of the Hawke’s Bay report coincides with the four Hawke’s Bay councils opting in to the first phase of discussions with Government on their proposed three waters service delivery reforms. The independent Review findings provide councils with the opportunity to engage with Government on solving the challenges that come from regionalisation of three waters services and their costs. These challenges will be faced by every region in the country participating in the three waters
reform process.

Key findings and recommendations of Hawke’s Bay Three Waters Review report

  • Making no changes to the way our three waters services are delivered is not affordable or sustainable.
  • Meeting the new regulations under current service delivery arrangements poses significant affordability challenges for our region and in particular our smaller councils
  • The Review’s forecast investment in three waters infrastructure across the region to meet new drinking and wastewater standards is estimated to at a minimum double since councils’ 2018-2028 Long Term Plans from $313m to $605m. This does not include costs for future storm water requirements.
  • Five service delivery options were shortlisted and considered against regional investment objectives and cultural principles
  • An asset owning council controlled organisation was the preferred service delivery model as it best met Councils’ investment objectives and the cultural principles developed collaboratively with Councils’ Māori Standing Committees. In particular, the model:
    • Addresses the regional affordability challenge associated with meeting new standards and regulations
    • Is able to concentrate its investment on three waters priorities
    • Delivers the scale required to create strategic capacity and capability
    • Enables a meaningful role for Māori (including co-design and governance)
    • Enables improved operations (risk management, asset management, ability to meet compliance requirements
    • Produces the greatest savings

There are also challenges in adopting a regionalised service delivery model, in particular:

  • Perceived inequity that arises when councils transfer different levels of three waters-related debt and assets of varying condition to an asset owning CCO. Where this happens, some ratepayers may feel that they are inheriting someone else’s problem.
  • Regionalising three waters rates to reduce the costs of three waters services to an affordable level across the Hawke’s Bay means Napier ratepayers may pay more for three waters than they otherwise would (under the enhanced status quo).
  • Moving to a regional service delivery model means that costs for most ratepayers will be lower than the expected future costs, while for some, theirs will be higher. This will be a challenge for every region in New Zealand.

Sandra Hazlehurst, Mayor of Hastings, says: “With the Review completed, Hawke’s Bay has a really good understanding of the scale of change that is needed to ensure three waters services are affordable and sustainable for our communities.”

Alex Walker, Mayor of Central Hawke’s Bay says: “Armed with the information from our own Review, our region is well positioned to continue our conversation with Government, as it reforms New Zealand’s three waters service delivery, and we will keep our communities informed as we move through this process.”

Craig Little, Mayor of Wairoa District says: “The key recommendation of the independent Review is to deliver three waters services via an asset owning council controlled organisation, similar to the model that Government prefers. The Morrison Low report sets out the benefits and challenges of such a model, so we are very well informed for discussions with Government.”

Kirsten Wise, Mayor of Napier says: " “With this information, we can begin discussions with Government to help us keep moving forward towards a long-term affordable solution and a solution to the challenges posed by regionalisation.”

Rex Graham, Chair of Hawke’s Bay Regional Council says: “With the work that we have done, Hawke’s Bay is ahead of any other region of New Zealand. Councils now enter the Government reform process knowing that affordability over the long term and enhanced service delivery are all possible by working together, and we will go into bat for our region.”

Going into the Government reform process, Hawke’s Bay has already done the work to understand the significant challenges:

  • Being able to affordably deliver core three waters infrastructure and services
  • Managing increased demand, as our communities and our economies grow
  • Maintaining the condition and performance of our three waters services
  • Ensuring we have the right capability and capacity
  • Ensuring our three waters services are resilient
  • Managing the environmental impacts of three waters services; and
  • Meeting increasing government standards for risk and compliance.

Background Hawke’s Bay Three Waters Review – where we have come from
The independent Review, commissioned by the chief executives of Wairoa District Council, Napier City Council, Hastings District Council, Central Hawke’s Bay District Council and Hawke’s Bay Regional Council, reflects the five councils’ shared strategic priority for 2019 to 2022 – water safety, security and planning.

Its focus was to complete an assessment of the current state of council drinking water, wastewater and stormwater (three waters) services in Hawke’s Bay, and develop a recommended approach that met with agreed investment objectives and cultural principles to ensure the sustainable delivery of these critical services over the long term, and ahead of expected changes in Government regulations.

The Review identified shared challenges and opportunities, and good strategic reasons for Hawke’s Bay councils to work together for customers and ratepayers, staff and councils, to achieve the best solution for Hawke’s Bay.

The Review identified and assessed service delivery options that could deliver three waters services that are safe, reliable and resilient; affordable and effective and support our urban and rural communities. It also identified the need for future water services that build enduring capacity and capability, and that enables a meaningful role for Māori. Importantly, Hawke’s Bay wants a solution that that has the significance of water at its heart.

Alex Walker says: “What’s clear in the report is that there is no silver bullet and no perfect solution. However, the asset owning CCO delivers clear benefits ahead of other options, with some trade-offs, as you might expect. The challenges to meet the new standards are such that a regional solution is the only viable option, if we want to keep things affordable for our communities over the long term.”

Mayor Sandra Hazlehurst says: “Keeping the delivery of safe drinking water, storm water and waste water affordable for our smaller communities as well our towns and cities could be achieved through a regional model.”

Craig Little says: “A regional service delivery model has considerable merit from an affordability perspective, but it is absolutely crucial that service levels here in Wairoa are not compromised and the jobs and people delivering our three waters services remain local too.”

Kirsten Wise says: "The options in our Review were evaluated against comprehensive investment objectives and cultural principles and the process involved in-depth discussion and engagement with councils’ Māori standing committees. This korero paved the way for a strong cultural case, which we would like to see continue at a national level, in the reform discussions.”

Rex Graham says: “Water is everything in Hawke’s Bay. We will depend on future water services that recognise the significance and importance of water to our regional prosperity.”

For further information:
Toni Goodlass, Three Waters Review Programme Manager, 027 254 6814, comms@hb3waters.nz

NOTES TO EDITORS
Details of Government’s regional funding allocation for three waters stimulus package are available at
https://www.beehive.govt.nz/release/government-announces-allocation-three-waters-fundscouncils

Details of Government’s three waters stimulus announcement from 15 July are available at
https://www.beehive.govt.nz/release/major-investment-safe-drinking-water

Information about the Hawke’s Bay Three Waters Review is available at www.hb3waters.nz.

Details of Government’s funding contribution the Hawke’s Bay Three Waters Review are available at
https://www.hb3waters.nz/latest-news/article/16/h2155m-support-for-hawkes-bay-three-watersservices-reviewh2

8 September 2020

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