Water regulation a major step forward


It is pleasing that the Government will act to protect and improve drinking, waste and stormwater quality through creation of a dedicated regulator, but further reforms will be needed, says Infrastructure New Zealand Chief Executive Stephen Selwood

The Government will introduce a new Bill which will extend regulatory coverage to all drinking water suppliers. This improvement is long overdue.

And we need to ensure water service providers have the capacity and capability to meet and enforce new standards, as well as ensure resilience of our networks in the face of climate change.

Many New Zealanders will be surprised to know that a large number of drinking water supplies are unmonitored. Most are small but, together, substandard drinking water provision makes around 34,000 people sick in New Zealand each year.

The Government also looks set to expand and enhance regulation of wastewater and stormwater discharges into the environment by introducing national standards, promoting best practice and monitoring and reporting on regional performance.

This decision is equally important and will help improve water quality in rivers and beaches across New Zealand.

But improving water services will come at a cost unless further reforms are made.

Somewhere in the vicinity of $500 million is estimated to be needed to guarantee safe drinking water throughout New Zealand. Spread across the whole country, this works out to a very manageable $36 per household per year in additional costs.

Under current arrangements, however, water services are not equally spread across New Zealand. They are provided by 67 mostly small councils. Some non-compliant council areas will, without wider reform, be faced with much higher charges, while others see no change at all.

This issue is amplified when wastewater and stormwater provision are considered. Tentative estimates exceed $4 billion to bring wastewater alone up to new standards – that’s nearly $1000 per person across New Zealand. Additional operating costs of $100-$200 million per annum will add $117 to household water bills nationwide.

Again, this number sounds manageable for some, but under current arrangements smaller communities will face much higher charges.

Further costs associated with climate change are also emerging.

Local Government New Zealand commissioned research finds that a 0.5 metre sea level will necessitate the replacement of $1.4 billion of three waters infrastructure. At one metre, the number rises to $2.6 billion.

It is not at all clear that councils will be able to meet basic expectations for safe drinking water, a cleaner environment and manage the effects of climate change.

Nor is it clear that regional councils will be able to enforce higher environmental standards. Regional authorities have to date struggled to ensure water discharges into the environment are of an acceptable quality.

However, international experience shows that these essential outcomes can be achieved without sharp increases in charges through economies of scale and improved water management. Consolidated water service provider Scottish Water dramatically improved water service quality while at the same time reducing operating costs across Scotland by 40 per cent by improving strategic and technical capability, better managing capital and adopting new technology.

Add in volumetric pricing and New Zealand can deliver on public expectations for cleaner drinking water and an improved environment without putting excessive pressure on households.

Under current settings, the Government can expect sustained calls from local leaders for more central funding.

But with ownership comes responsibility. If councils want to own and operate networks, they cannot be relying on national taxpayers to subsidise service provision. That’s not what ownership means.

Regulation is a positive step forward but needs to be supported by a plan to lift the capability, capacity and funding needed to improve drinking, waste and storm water management across New Zealand.

We look forward to seeing the next phase of the Government’s water review programme due later this year which is intended to address these critical issues.