Big bills for water upgrades

Councils in Otago and Southland may face a $1.5 billion collective cost to upgrade water infrastructure in the next 10 years.

And council debt levels are expected to substantially increase across the two regions.

Consultants Morrison Low produced a draft report, titled Cross Regional Current State Assessment, for the Otago-Southland Three Waters office that was tabled at a Gore District Council meeting on Tuesday.

It highlights issues relating to delivery of Three Waters services including potential future affordability, borrowing capacity, large capital works programmes, the need to invest to meet increasing regulatory standards and monitoring, and resource constraints.

Councils will soon have to decide whether they opt into government water reforms or not.

As well as the Essential Freshwater reforms, the Government is also pursuing the Three Waters reform to address ageing critical infrastructure (stormwater, wastewater and sewerage). There are also new rules coming in for national drinking water standards.

Clutha District mayor Bryan Cadogan said the lack of information coming from the Government about the reforms was ‘‘like playing a mystifying card game’’.

‘‘We have to decide whether we’re giving away one-third of a billion dollars worth of assets that we have built and paid for . . . to an entity that we’re not likely to have any say on – so what does that mean for democracy?’’

The Morrison Low report says the Clutha District is facing a cost of $49 million for renewals in the next 10 years. The council was consulting on $278m of core infrastructure upgrades, Cadogan said.

‘‘That would have been an inconceivable figure two or three years ago. You can’t talk about figures like that without there being ramifications.’’

The report predicts that costs, and accordingly rates, for a number of councils are likely to rise substantially if planned investment proceeds.

Queenstown Lakes District mayor Jim Boult said the numbers were substantial, but that was why his council was pushing for the Government to take over Three Waters infrastructure.

With the possible exceptions of the Dunedin City and Southland District councils, none of the other councils appear to have budgeted for increased operating costs associated with new compliance,

regulatory, or monitoring activities, the report says.

Local Government New Zealand regional sector chairman Doug Leader said most councils were operating wastewater plants that would have been consented for at least 30 years, when the Resource Management Act was introduced in 1991.

‘‘With these consents expiring, new consents and new facilities will have to meet new freshwater regulations,’’ he said.

‘‘They are costs that territorial authorities should have been providing for as their consents age. That means they either have money in the bank or a balance sheet structured so that they have the ability to borrow.’’

For the Crown to have an appetite to assist financially with upgrades, it would have an expectation about the governance and management of the asset in the future, Leader said.

‘‘These are challenging times and I would encourage all local authorities to get their heads around what this all means for them and their communities.

‘‘There is only one group that pays and that is the ratepayers.

‘‘To say, ‘We can’t afford it,’ is not an option.’’