‘Scary’ – water regulation costs fall on councils

Councils are rankling under Government proposals that would see them pay large levies at a time when they are already under financial pressure.

The Water Services Authority – Taumata Arowai, the body which regulates water across the country to ensure it’s in line with national standards, currently receives its total yearly budget of $25.3 million from the Government.

However, a new proposal would see the Government cover just 16 per cent of the cost, with the remaining 84 per cent to be paid by water service providers at a rate of $4.14 per person, excluding GST.

The Commerce Commission is also being tasked with ensuring residents get good value for money from their water services.

The commission’s oversight, costed at $6.5 million for the 2025/26 year, is also proposed to be completely funded by local government.

A combination of these two levies would see the most populous region, Auckland, lumped with annual fees of $9,009,525 while the country’s smallest district, Kaikōura, would pay $22,925.

Councils currently deliver water services across much of the country outside of Auckland and Wellington and so they will initially pay the levies.

However, under the Government’s Local Water Done Well policy, it’s expected water service delivery in many areas will shift to new council-controlled organisations which, as the water providers, would then be expected to pay the levies.

In Tasman, elected members from the region’s two councils have balked at their proposed fee of $314,409.

Mayor Tim King said the levies would be challenging, particularly for smaller councils.

“That is a significant component of our waters budget … any cost increases that are not directly related to service delivery and physical infrastructure pose real challenges.”

Richard Kirby, Tasman District Council’s group manager community infrastructure, agreed and described the proposed costs as “scary”.

Local Government New Zealand president, Mayor Sam Broughton, said he wanted the Government to share costs of the new water regulatory regime.

“Clean, safe drinking water is enjoyed by all New Zealanders as well as the tourists who visit our beautiful country – not just the ratepayers in each community,” Sam said.

Taumata Arowai, responding to questions sent to Minister of Local Government Simeon Brown, said it had been established with the intention of eventually being funded by a levy.

“It is common for regulators to be funded by levies. Levies generally cover regulatory functions that are performed for the benefit of consumers and communities,” a spokesperson for the authority said.

The levy would fund the authority to ensure that water across the country is safe, reliable, and improved.

The spokesperson said that despite additional fees by way of the levies, the Government requires the authority to deliver quality regulation while reducing the cost for drinking water suppliers by improving efficiency.

New wastewater standards and improvements to drinking water quality assurance rules, both currently being developed by Taumata Arowai and due to be consulted on next year, are expected to reduce the financial and regulatory burden on water service providers.

Anticipated amendments to the Water Services Act 2021 will also require the authority to more explicitly address cost as part of its decision-making, the spokesperson added.