Nelson’s lukewarm response to Tasman over water

Tasman council must amalgamate with Nelson if the district wants cheaper water bills for its residents, the city's mayor says.

Under new legislation passed last week, councils have one year to develop plans on how they plan to deliver water services affordably for their residents.

The coalition Government’s policy, Local Water Done Well, allows councils to join forces and create a council-controlled organisation (CCO) to deliver water infrastructure.

But Nelson Mayor Nick Smith said the city's water infrastructure is “better than any other council’s” and he didn't support establishing a regional water CCO with Tasman.

“Unless it was part of a broader local government reform, there's no benefit for Nelson.”

Tasman's mayor acknowledged the council could end up alone, but said it was “still too early” to know what the best option might be.

Smith said he would only be “open” to establishing a water services CCO for the region if the councils amalgamated.

“If we are serious about delivering best value for money for ratepayers in both Nelson and Tasman, and delivering the very best form of local government for the region, then the right answer is a single Nelson Tasman council.”

Figures from the Department of Internal Affairs show that in 2051, at today’s prices, Tasman households would spend $6760 per year under the current single-council-led approach, while Nelson households would be faced with bills of $2330.

Smith credits Nelson’s better performance to a consistent council policy of doing the “necessary renewals that you need to do to keep your network in good shape” despite the impact on rates.

Under a combined Te Tauihu approach to water service delivery, which included Marlborough as well, households would instead pay $3150.

“I can see how that is very attractive to Tasman, because it effectively halves their costs. But it's equally true that it pushes Nelson's cost up by $800 per household,” Smith said.

There is already close cooperation between Nelson and Tasman in many areas, such as civil defence, public transport, and even in some areas of three waters services, such as sewerage.

But Smith said Nelson bears most of the financial cost for supporting the regional economic development agency, arts institutions like the Suter Art Gallery, and in events funding.

“You can't pick to do stuff together in some areas where it's financially beneficial to Tasman and ignore the areas where Nelson's doing a disproportionate share.”

Smith had several other concerns of a joint water CCO, such as the viability of both councils if they lost responsibility for water services or having appropriate governance oversight in the “clunky and expensive” approaches to joint services.

Under Government changes, water CCOs can now borrow up to 500 per cent of their operating revenues – up to twice that of councils – from the Local Government Funding Agency, which offers cheaper rates than borrowing from a bank.

That change is meant to enable councils to better manage debt and make essential infrastructure investments without significant rate hikes.

Such a tweak might be beneficial in Tasman where borrowing for two new wastewater treatment plants alone, currently slated to cost a total of $180 million, will push the council above its rate cap in the 2032/33 financial year.

Throw in $40 million for water upgrades for the Waimea Plains, and $6 million for the small Dovedale water supply, all the other water projects, as well as the council’s share of debt from the almost-$200 million Waimea Community Dam, and Tasman’s water looks increasingly expensive.

Unlike the former Government's Affordable Waters policy, Local Water Done Well doesn’t require councils to shift their water services infrastructure to a CCO and there has been some concern that councils with large infrastructure bills might be left out of regional agreements.

Tasman Mayor Tim King acknowledged that there was a risk that the district might be left adrift.

But while the council was looking into a regional water CCO, it was “still too early” to know what the most financially sustainable option might be for the district.

Changes being made by the Government, and others that have been signalled, to water services legislation and regulations could make a “significant difference” in the final costs of the district’s planned water upgrades, King said.

“I suspect that a combination of all of the changes that are being suggested will mean that, around the country, probably more councils are likely to come to the conclusion that it is sustainable to remain as they are.”

Tasman is already having “very high level” conversations about joining forces in water services delivery with Nelson, Marlborough, and Buller.

But King was quick to point out that a joint approach wasn’t only about saving money and provided several other benefits such as making it easier to attract and retain good staff, and creating efficiencies in procurements and contracts across a larger area.

“There may be a whole lot of activities that don't necessarily mean that one or other is having to cross-subsidize another district.”

King has said in the past that he has concerns about amalgamation with Nelson, particularly regarding a decrease in rural representation.

Amalgamation was rejected by Tasman voters in a 2012 poll.