Water and transport contracts - Government has got it right

The Government’s proposals to improve the way water and roading projects are tendered is a long overdue move.

Lifting the current restriction of not being able to let a water tender for more than 15 years will enable much better contracts for local authorities. The current restriction that was put in place by the previous government was in response to the Papakura arrangement for water and wastewater operations, but stymied all contracts – particularly those for the construction of major wastewater plants. These types of plants are major capital investments and have long lives – so can be particularly suitable for long term construction and operation contracts. These types of options need to be available to councils as in some cases they can get a much better deal.

The talk of privatisation is scare mongering – there is no prospect of permanent changes of ownership – the councils and ratepayers interests can be readily looked after in the contract conditions.

These changes have a lot in common with the proposed changes to the Land Transport Management Act announced by Steven Joyce relating to tolling and public private partnerships.

Currently toll road proposals, which will often be a public private partnership, require the approval of affected communities. Due to the NIMBY syndrome (not in my backyard) this effectively vetoes all toll roads. By doing this the needs of the road users are completely overridden. Also the inability to toll existing adjacent roads and the ability for regional councils to reduce traffic flows undermines toll revenue.

These current provisions in the Act make any toll road and public private partnership for roading in New Zealand a very risky proposition.
Improving the way that councils can contract for water and wastewater and the way that Government can contract for new roads will assist in getting better value for money from the public purse.

ENDS

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