Help near for councils, as water changes loom

Councils are screaming for financial help from central Government. The problem is, David Williams reports, they might get it sooner than they think.

Having a stagnant population isn’t all bad, Westland Mayor Bruce Smith maintains.

“No Kentucky Fried Chicken in our towns, no McDonald’s – and long may they stay away – but our growth comes from the growth in tourism numbers.”

Smith is the first-term mayor of a 360-kilometre-long stretch of the South Island’s rugged West Coast, home to 8800 people. The dynamics brought on by tourism are becoming impossible to deal with.

Take a town like Punakaiki, home to the famous Pancake Rocks. It’s got 300 ratepayers, but, Smith says, it gets about 5000 visitors a day. It needs about $3 million of work to bring its infrastructure, like drinking water and sewerage systems, up to scratch. “They can’t do it,” Smiths says of the local residents.

More tourists are on the way to the West Coast. Smith says he had a call recently from a tourism company that wanted to bring 100 18-seater buses to Westland in the 2019 summer season, but they can’t find anywhere to stay. “We’re hundreds of beds short,” he says.

It’s a similar problem up in the Buller District. Mayor Garry Howard says his ratepayers will pay $1000 each for the supply of drinking water alone. That’s before the cost of dealing with wastewater and stormwater.

So it’s not just the infrastructure costs that are crippling small communities, it’s the ongoing operational expense as well. Government money is helping to build public toilets for tourists on the West Coast, and then these small communities are having to pay for the upkeep.

“We can’t do it alone,” Smith tells Newsroom. “We need a share of the income that we produce. Tourism’s worth $350 million of GDP now to Westland, it’s worth over $500 million to the Coast. The GST on that is whatever it is – I guess it’s a pretty huge amount – so there’s quite an impact on Government books of the cash that’s coming in from the activities that we’ve got operating with tourism. Some of that cash has got to come back.”

Help is on the way

The current Government and the previous one have recognised the problem, and set aside millions of dollars to help councils with infrastructure spending, mainly in high-tourist areas with small rating bases. But in the wake of the inquiry into the Havelock North water contamination scandal, the signs are that a big shake-up is on the way, as central government considers stepping in and enforcing drinking water standards.

As Local Government Minister Nanaia Mahuta reminded council leaders attending the Local Government New Zealand conference in Christchurch yesterday, the inquiry said affordability should no longer be a reason for substandard drinking water.

Mahuta is careful to say nothing’s set in stone and the conversation’s just starting – and she points out that, strictly speaking, the issue is in the court of her Cabinet colleague, Health Minister David Clark. But she’s becoming more strident in her statements about what’s being considered in the drinking water review.

It seems a near certainty the Government will create an independent drinking water regulator, as recommended by the inquiry. Not to do so, Mahuta says, might endanger public health. The establishment of larger dedicated water providers – utilities governed by boards – is also being actively considered.

She didn’t rule out mandatory chlorination for councils with failing water infrastructure. That would be a particularly thorny issue in Christchurch.

While the approach has been “softly, softly” so far, the minister said the conversation now was “whether or not the system shift will happen on a voluntary basis”.

It’s “absolutely” her intention for stronger drinking water regulations to be introduced to Parliament before the next election. And she wants any changes regarding drinking water to be paired with regulations covering wastewater and stormwater too – the so-called three waters.

Mahuta says the costs of predicted wastewater infrastucture spending “start freaking me out a bit”. And that’s when she brandishes language that will send shivers down the spine of opponents of the late Prime Minister Sir Robert Muldoon.

“It’s the wastewater/stormwater costs that might start to really urge us to think big around the nature of the solution that’s required.”

Local Government Minister Nanaia Mahuta speaks at the Local Government New Zealand conference in Christchurch. Photo: David Williams

On Sunday, Local Government New Zealand (LGNZ) announced, with the New Zealand Initiative, it was pursuing something called the Localism Project. It calls for decentralisation of powers and funding to councils, with a final report due in March 2020.

Jarringly, it comes just as central government is trying to centralise, partially at least, the water services that councils are responsible for. It also overlaps with the Government’s three waters review, the Productivity Commission’s own inquiry into local government funding, and consideration of potential GST relief for councils by a tax review.

Worse, Mahuta was blindsided by Sunday’s announcement. She politely told conference delegates she wasn’t closed to the idea, but dismissed a broad discussion about decentralisation as an “abstract conversation”. She also warned that there were risks of “no serious response” from central government without a “specific conversation”.

Dunedin Mayor Dave Cull, the president of LGNZ, agreed the minister seemed uninterested in a wider discussion. “Probably we’ll be saying to the minister, look, we can’t just put these in water-tight compartments. There has to be at some level a broader conversation.”

He adds: “My impression is that the minister wants to bring the water conversation to a head relatively quickly, so some aspects of it will be quite quick, and some of it, I think, particularly the other ramifications around localism may go on for quite some time.”

“I think it’s a chicken and egg problem.” – Oliver Hartwich

Newsroom Pro’s Bernard Hickey argues it will take improvements to governance and accountability for the public to accept councils being given tax revenues or the power to tax to fund expensive local infrastructure.

One of the architects of Project Localism, New Zealand Initiative executive director Oliver Hartwich, agrees. “I think Bernard’s got a point,” he says. “At the moment, many people are concerned that we don’t have the councils we need to make this happen.

“But I think it’s a chicken and egg problem. We have the councillors that this kind of strange system of governance deserves.”

Giving more powers, and money, to councils – for example, to run schools and police departments – will make it more attractive for people become involved in local politics, he says. “And then you attract a much higher calibre of people into those sorts of positions.”

To illustrate issues of oversight over local councils, Smith’s Westland council is one that’s been under scrutiny. The Auditor-General’s office is investigating potential conflicts of interest in emergency works to the Franz Josef wastewater plant. There was also a high-profile contract awarded for a $7 million water treatment plant upgrade to a company headed by an Auckland cake-decorator.

Smith brushes off the “cake contract” issue, telling Newsroom: “There was never a contract let. It never went to council.”

Contract ‘awarded’

But a Westland council press statement from February last year announced a contract had been “awarded” to controversial firm Techno Economic Services (NZ). And the council agenda paper from the previous month showed the council considered the tender approval behind closed doors. (The deal was cancelled a year ago. The council said at the time the company’s parent company, TES India, had engineering and consulting expertise. The council operations manager who oversaw the tender, Vivek Goel, quit and was being investigated by the Serious Fraud Office.)

Smith says there’s already close oversight of external funding, such as the monitoring of Government infrastructure grants by the Department of Internal Affairs and the Business Ministry. “They don’t just write you out a cheque and drop it in the tin.”

Will the West Coast get the money it needs? Smith says he’s got great faith in New Zealand First leader Winston Peters, the acting prime minister, and the regional economic development minister Shane Jones, to deliver for the regions.

Smith favours a slow approach to projects considered for the Government’s provincial growth fund. Throwing money at projects doesn’t always achieve the desired result, he says.

And then, despite his backing for more decision-making powers by councils, and the call for his council to get a share of the tax take, Smith concludes by casting doubt on councils’ ability to expand beyond providing core services.

“Most councils that get involved in economic development stuff it up,” he says. “We’ve got to back the guys that are successful and know what they’re doing. We shouldn’t have a bunch of elected representatives saying, ‘Oh, this is a good idea, let’s throw $5 million into this and it’ll work’ – because it’ll be a complete cock-up.”

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