Option 3: Status quo with changes

The need to ring-fence water would cost you more

The new government legislation requires us to ring-fence all money spent on water services. Ring-fencing water finances means separating all water-related revenue and costs from other council services. This helps to ensure the community understands the true cost of their three water services.

Currently, different council services indirectly help fund others. For water services we rely on revenue from other areas of council to meet the legal requirements for borrowing money for large construction projects.

If we had to ring-fence this money, the cost for water would need to increase significantly for our community as the entirety of our water services would need to be funded by users.

Limited borrowing would restrict investment in other council areas too

The new legislation won’t allow us to borrow any additional money for water projects if we keep water services in-house. This means we have to work within our existing borrowing restrictions, which will be tough when there will be so many pressures and regulatory requirements to meet.

In Options 1 and 2, the legislation allows a water organisation to borrow far more money than we currently can to maintain and upgrade infrastructure. Under Option 3, we can’t borrow more. The new legislation does not allow that if it remains as part of in-house council services.

Your water services have strict rules and regulations, and our water infrastructure also needs to be upgraded in a timely manner to prevent water pipes bursting, ensure safe drinking water etc. This means council would need to keep investing in water projects under its current borrowing cap.

With there being a limited amount we could borrow, we wouldn’t have enough money to meet your expectations to maintain and invest in other things. This would mainly affect infrastructure services. You'd see large reductions in the replacement, maintenance and potentially any new infrastructure for:

• transport
• rubbish and recycling
• housing
• cemeteries
• parks
• properties like libraries, museums and theatres.

There’d also likely be an impact on the day-to-day services you receive from Council

Higher water bills and ring-fenced costs would make us concerned about the financial impacts on affordability and our community.

Affordability is front of mind for us and increased costs for you mean we’d need to take a serious look at the other services we provide to see how we can reduce spending in other areas to lessen the impact on you.

We have not looked into this to determine the extent of what that could look like for our community at this stage. Council would need to spend a lot of time considering different changes to service levels and get your feedback if these things were to change on a significant scale.

This option does not meet legal requirements

What we’ve explained may sound unsettling. But we’re not alone here. Most councils are facing the same difficulties with the rising cost of providing water services under current funding models.

The Local Water Done Well legislation requires us to prove financial sustainability for the future.

This option is not affordable for our council or our ratepayers. Our community would face major financial and potential social impacts as a result of changing service levels and reduced investment in other council areas.

This means this option cannot meet the legislative requirements for water services in the future.

We’d also risk not meeting legal requirements for other council services if we reduced investment in other key infrastructure areas.

Lastly, the government would prefer we collaborate with other councils on water services. We don’t know what would happen if we don't follow that direction.

Within 10 years, residential ratepayers could be paying $3,800 per year for water under this option.

This figure drops to $2,700 in 30 years. These costs include an additional levy of at least $1,000 per year for Nature Calls, which would be coming into effect over the next decade.

These numbers are in today’s dollars and don’t include inflation. The potential cost in 10 years is more realistic than the 30-year cost. That’s because we have used our long-term plan to determine the work needed. It’s hard to know what may change in 30 years so that number is less certain.

Council debt levels under this option would be similar to now, however the majority of future borrowing would need to be allocated to water projects. We’d also still need external financing for our Nature Calls project.

In our Long-Term Plan we’ve explained Nature Calls could cost at least $1,000 a year for those connected to our water. This is included in the cost above, to show you the true cost of water services if they stayed with Council.

We would need to significantly reduce borrowing for transport, property, community facilities, parks, rubbish and recycling services. This would impact the current services you receive. Under this option, property owners would be paying far more in rates than now, and receiving fewer services.

Read the independent modelling report for scenarios for water CCOs in Manawatū-Whanganui(PDF, 624KB)

Who owns the water assets?

Council (and therefore ratepayers).

Who makes decisions?

Council. Also subject to regulatory oversight.

Iwi involvement

Status quo.

We currently work closely with our mana whenua, Rangitāne, and have partnership agreements in place. Iwi play a key role in our water areas, specifically including advice, historical insights, strategic direction, and even on-the-ground work in helping with fish counts in our streams. Our relationship helps us contribute towards enhancing the mauri (lifeforce) of our streams and awa (river).

Civil defence response

Status quo.

We will continue to look after our water and our community in an emergency.

Council’s role

Council would continue to have day-to-day involvement in water service delivery and decision-making.

Community involvement in decision-making

Input through the Long-Term Plan and Annual Budget consultation processes.

Water service

Would meet basic legal requirements but limited ability to improve services, for example, higher treatment quality.

Legal compliance

Won't meet legal requirements.

Community affordability

Not affordable for our community.

Social impact

Far higher rates bills will impact our community through a variety of ways.

The loss or reduction of other council services could lead to broader social implications for residents.

Reduced council spending could impact other local businesses and employment.    

Impact on other council services

Maintaining the status quo for water services could severely impact other council services due to the new legislation requiring ring-fencing.

Some services might have to be discontinued, and others would face significant cuts. This would have other major impacts on our community and people's wellbeing. 

Growth and development

Limited funding for water services could slow growth and development in the city, as the necessary water infrastructure in growth areas would need to be funded through other means. 

Climate change mitigation

With the advantage of scale, improved efficiencies and an increase in borrowing capacity, more climate change mitigation could be likely.