$338 Million In Joined-up Water Savings

The latest report into Waikato water services confirms the region will be better off if councils work together to deliver critical water infrastructure.

The work was commissioned by the Waikato Mayoral Forum – a non-decision-making body – and was presented yesterday. Mayors will now discuss with their councils whether they will take “non-binding steps” towards forming a joint entity to deliver functions like capital works planning and delivery. Over time, they could form a multi-council, “aggregated, fully regulated water services entity”.

The report notes multiple independent reports over more than a decade show water infrastructure would be cheaper if councils joined together and leveraged scale. In June Local Government Minister Simeon Brown confirmed the government was looking for a joined-up approach to three waters delivery, including in the Waikato.

Matamata Piako District Council chief executive Don McLeod, who led the workstream for 10 council chief executives, said each council would now need to consider what the findings mean for their communities and the wider region. Over time, all ratepayers would be better off “financially and non-financially” if councils worked more closely together, rather than continue to go it alone, he said.

“Councils are between a rock and a hard place. Our ratepayers simply cannot afford to pay for the water infrastructure we need to build, yet we must build it. And we are required by law to meet increasing levels of compliance which is only going to get more expensive. The current system is fundamentally broken – our contractors, our staff, the water experts, the ratepayers….are all telling us that. Something must change.”

Over the next 10 years, Waikato councils have budgeted nearly $5 billion for drinking water, stormwater and waste water for capital works. All up, including operating costs, water services will cost more than $7.5 billion. The report says working together could see savings of $338 million over a decade, based on a conservative efficiency target of around 1% per year. Most savings come from combining capital planning works and delivery.

The report also points to increasingly unaffordable water charges under the status quo. By 2035, with no change, average household water charges could range from $1,652 per year in Ōtorohanga to $7,921 per year in the Waikato district.

“We cannot expect ratepayers to stump up with that sort of cash, and not consider more cost-effective ways of providing services. We have a duty to try and do better,” McLeod said.

The report says council waters staff and contractors were under pressure given the ageing workforce, competition from other employers and an environment of ongoing uncertainty. The contracting industry has warned they do not have the staff to build necessary infrastructure.

“Smaller councils in particular, where operations can be highly dependent on a few individuals are at risk of staff recruitment/retention.”

Debt was recognised as challenging for growth councils (Waipā, Waikato, Hamilton) but the reports says, even if councils could deliver waters infrastructure within debt limits, it was unlikely to be affordable for ratepayers. It notes some councils are not complying with regulations and existing resource consents. A third of all resource consents in the region expire by 2030.

The report acknowledged councils cannot make a firm commitment on the final form of any potential regional waters entity until there is more clarity from the government. Legislation will not be introduced into law until mid-2025. However, the report recommends councils negotiate a non-binding agreement, entered into in good faith, and work towards a formalised, joined-up approach.

“Not all councils need a fully aggregated entity now, but it is highly likely all councils and communities will need and benefit from one at some point,” the report said. “However, doing nothing is not a cost-effective option. There is an opportunity now for councils to take a first, sensible step towards unlocking the opportunities of a joined-up approach to water infrastructure.”

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