Funding for water in the works

Councils face a bill for billions of dollars to start upgrading their systems

The government looks close to announcing a major funding package for councils planning water upgrades after separating those from the $2.6 billion of grants and loans it announced yesterday for “shovelready” infrastructure work.

The projects announced yesterday include some climate-related water projects and catchment works such as stop bank upgrades. But the package doesn’t generally include projects dealing with “the three waters” of fresh water supply, storm water or wastewater treatment.

“In terms of three waters that is on a different track, and one that I hope to have something more to say about in the next few days,” Finance Minister Grant Robertson said.

Councils face a bill for billions of dollars to start upgrading their water systems to meet more stringent health and environmental standards. Last week, Infrastructure Minister Shane Jones said he didn’t want to see Crown money going into those projects until there were better institutional arrangements among councils to share those costs and manage those assets more collectively.

New Plymouth District Council was yesterday granted $37 million — the full cost — of replacing the district’s sewage sludge treatment plant and converting it to run on a mix of natural gas and hydrogen.

But the council had also sought $321 million to upgrade the district’s three waters systems. It has had no news on that application.

Mayor Neil Holdom said the government’s decision to provide funding for water projects makes a lot of sense, given they are preconsented and quite labour intensive.

An infrastructure deficit across much of the country was already straining the balance sheets of some councils, Auckland in particular.

On Tuesday, the New Zealand Local Government Funding Agency hiked the debt ceiling for A-rated council borrowers to 300 per cent of revenue until 2022, freeing up capital for councils to manage out of the covid-19 crisis. The ceiling was previously 250 per cent of revenue.

The new funding announced yesterday is additional to an earlier $12 billion of spending committed to a range of housing, road and rail projects.

In April the government established the Infrastructure Reference Group to work with local councils and businesses to identify a pipeline of $10 million-plus projects that could be activated to help support construction activity and the broader economy during the covid-19 rebuild.

More than 1900 submissions worth $134 billion were received and a short-list of 802 projects was presented to ministers in mid-may.

About 150 projects worth $2.6 billion have been approved in principle and officials are undertaking final due diligence to ensure projects are viable and offer the benefits stated by applicants. Another $400 million is being retained as a contingency.

The funding — a mix of grants and loans — is expected to unlock a total spend of about $5 billion and generate up to 20,000 jobs.

The funds were allocated based on the population and the expected covid impact on regional economies. Projects that support key regional assets, or regional industries, were also favoured.

Otago, where a 10 per cent GDP contraction is forecast, is receiving roughly $260 million, the third largest allocation after Auckland and Canterbury at $500 million and $300 million respectively. Otago is taking a big hit from the loss of international tourism. — Businessdesk

In terms of three waters that is on a different track. Finance Minister Grant Robertson

saying: “The director general has accepted protocol wasn’t being followed; he has accepted responsibility for that and has set about putting it right.”

He delivered this line while Bloomfield was standing behind him.

In my opinion, it is time for Clark to display some pride and dignity and fall on his sword.

If not, this will become an election issue.

Andrew Lattimore Mount Maunganui