Former CEO of Christchurch City Council, Mike Richardson’s, comments on the proposed structure:
It seems that the most recent Government paper has very tenuous logic in reaching its conclusion that four agencies should be the preferred model. I believe the following comments are all appropriate to a more analytical consideration.
1. The Review continually talks of the “three waters” as a single system. They are not. While at a global level there is a hydrological cycle that is not true at the local level. A system by definition must be self- contained and not subject to externalities. For instance, surface water run-off in urban areas is significantly influenced by land use policy and the pattern and nature of development and its non-porous surfaces. In Manawatu for instance the Mt. Taylor subdivision is restricted to a rural water supply in order that there is water tank capacity to manage significant volumes of rainfall without placing demands on the storm water network. The storm water network itself is based on swales rather than pipes and uses retention basins. This integration of land use and infrastructure can surely be best achieved at the local level.
2. Similarly there are many instances in which water supply and effluent disposal should not be perceived as a single system. Examples include:
- Water taken from one catchment and discharged as effluent into a different one.
- When ground water is used for drinking the water extracted has often been in the ground water system for decades and suggesting it is in a direct relationship to effluent discharge is simply mistaken. A much more important link is likely to be historic farm management practices.
- Discharges to coastal water do not form part of a local water system.
Christchurch illustrates both of the latter characteristics. Councillors will well know the issues arising from use of ground water. It used to be said that some of the city’s drinking water had been in the ground for a hundred years – allowing for some exaggeration there is certainly no short-term linkage between any land use or catchment management policies and the quality of Christchurch drinking water.
The lack of connectivity of the three systems in Christchurch is more than an academic point. If the Three Waters functioned as a single (closed) system in the city then decisions on one of them would influence the others and this might be particularly significant especially with regard to environmental outcomes.
From an operational point of view there are very few synergies between them. Water supply is pressurized, uses many submersible pumps and narrow pipes; as argued drainage links to planning and amenity related functions; sewerage uses large diameter pipes, requires pumping stations but is a low pressure system; sewage treatment is essentially a biological rather than an engineering process.
For operational purposes councils that manage water supply and sewerage together need to take great care to avoid any cross contamination from the latter to the former – protocols such as separate plant, separate field personnel snd even separate depots. From an operational perspective the synergies often prove illusory.
Saline intrusion in the bores to the east of the city has always been carefully monitored at a number of sites, but this is an issue specific to Christchurch and in no sense could be seen as benefiting from the eider economies of scale claimed for the proposed model.
3. Several Acts used by local government allow a proportion of off-site (as well as all on-site) infrastructure costs to be collected from developers. This must be best managed at the local level.
4. One of the many characteristics of the effects-based model underpinning the RMA is that it prevents ‘old fashioned’ town planning which would zone land on the basis of a range of factors including the costs it would impose on existing infrastructure. Addressing this through the RMA review will allow the future to see a stronger linkage between infrastructure costs and land use planning provided it is done at the local level.
5. Public policy in many cases has an objective of ensuring access for all to the same level of service. One of the criteria used in evaluating models in the review is an objective of uniform pricing for water services. Is this reasonable? If services cost significantly more in one locality than another it is certainly contentious to suggest that this not be reflected in the price of water services. Equalising pricing distorts optimal land use decisions.
I assume that with the requirement to treat the city’s water and earthquake reconstruction the differential has been reduced but data in the year 2000 showed that the cost of water per connection in Christchurch was less than a third of that in Auckland and very significantly below any other local authority at that time. The reliance on ground water and the reality that the city’s water supply was effectively a loosely linked network of local supplies based on the use of many bores necessarily gives the city a cost advantage over most councils that require lengthy pipe runs from rivers and often the expense of reservoirs and other bulk storage. Current comparative data should be of interest.
6. More generally the network implications of hill country versus flat; low-lying coastal localities verses others; urban verses rural; dry versus wet climates; availability of groundwater and other factors will inevitably lead to different cost structures. Should charging for services be equalized?
7. The finding that smaller councils have inadequate specialized resources misses the fact that such councils have long been encouraged to use consultants who will have as much expertise as large public agencies. In so far as they don’t do so this is almost certainly a funding issue – which matter has been addressed above. As has been stated, local government needs additional funding sources to meet the rising demands being constantly placed upon it. Focusing on underinvestment in a service area such as the waters misses the fundamental point that the current financing model for the sector is not fit for purpose.
8. Shared services arrangements (such as that with Rangitikei District Council) have been less utilized than many observers hoped. It might be profitable to examine what might make them more common in the area of water services.
9. Local government is founded on what is known as ‘the subsidiarity principle’ and the concept of community of function and identity operating at differing spatial levels. The Local Government Act reinforces this by allowing one community to adopt differing levels of service from that of its neighbour. To give an example, the quality of drinking water must of course be nationally mandated but a community may choose to pay more for a supply that will not be restricted in a time of drought while another may prefer to accept water restrictions in return for a lower cost of supply. I have experience of such decisions leading to very different costs of service. This is surely the type of issue that can only be resolved at a local, community, level.
10. There is no community of interest in the four-agency model proposed. It has no apparent logic and is simply argued as superior on the basis of alleged economies of scale. If the Government is determined to remove the services from the control of councils there might be greater logic in establishing separate entities based on Auckland, Wellington Region (minus Wairarapa) and Christchurch (possibly to include parts of Selwyn and Waimakariri) and a single agency for the rest of New Zealand.
To remain true to the principle I established in preparing this submission I have left this suggestion unaltered from my submission to the MDC. I would have seen it as an unnecessary red herring had the submission been first drafted for the CCC!
11. Currently councils are subject to restrictions on the extent of their debt relative to their asset value, this ratio also influences their credit rating and so their cost of borrowing. It is certainly the case that some councils are constrained from raising additional debt to fund the cost of major new investment in water services, but there are others which have little debt relative to the value of their water assets and leverage this as an opportunity to fund debt on other infrastructure or community facilities. If the asset value is struck from the balance sheets of the latter councils it will lead to major financial pressure in other service areas and increased borrowing costs.
12. It is clear under the Treaty of Waitangi that Maori iwi have a particular standing in matters to do with environmental outcomes, including those relating to water quality. These to date have been reflected in the requirements for their engagement in RMA and Local Government Act processes. It is not clear to me what is needed in addition to that in terms of the water services. Why should the infrastructure itself (as distinct to the environmental outcomes) be seen as requiring ‘co-governance’ under any of the interpretation of the Treaty?
As a manager and management consultant of some experience and (at one time) regard I would observe that restructuring a function or activity and setting up new organisations far too often stems from a desire to be seen to be active. Claims of benefits flowing from it will be untested for some years and meanwhile can be stridently claimed and pointed to as a success. The paucity of logic and poor process in this case have all the hallmarks of such activity lacking substance.
Conclusion & Summary
There are indeed significant issues for local government in the current climate of constantly rising standards. This includes the need for major investment in water infrastructure. Such diagnosis is correct and would be generally shared by the sector. The treatment however should be a review of revenue and debt funding arrangements and / or cost sharing arrangement between local and central government, not restructuring.
The cost reductions claimed for the proposed model are not supported by analysis.
The proposal rides roughshod over a range of subtle relationships in policy for land-use, regulation and various service delivery streams that are established at the local level.
The co-governance proposal does not appear to flow from any interpretation of the crown’s Treaty obligations (local government itself is not part of the crown and so has no such obligations other than those imposed by statute).
Centralisation of decision making away from local government is contrary to the subsidiary principle which is long accepted in liberal democracies. It reduces community identity and autonomy and thereby undermining the sense of autonomy and well-being not only of communities but also the individuals within them.
Gisborne, Manawatu and Nelson, to name only three have no community of interest and very different contexts and challenges for delivery of water services. On the other hand, Whanganui, Rangitikei and Manawatu may well have some similarities.