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WAITOMO mayor John Robertson is warning ratepayers will be made responsible for three waters’ debt under new legislation.
The proposal is contained in the Water Services Legislation Bill, which is open for submission until February 12. The bill addresses three key questions unanswered since 2021, John said.
The question about security that would be offered to lenders to the four water service entities, the way water services will be priced; and how the bill clarifies the way the new water entities will collect revenue from consumers.
The bill also enables water service entities to require local authorities collect their charges – at least until 2029.
For security, the bill proposes lenders will secure their debt through a property rating mechanism.
“Should a water entity get into financial difficulty and a receiver be appointed, the receiver would be able to bill local authority ratepayers a uniform charge to recover the entity’s debt,” he said.
“By shifting the risk to property owners in this way, the Crown avoids the need to offer a guarantee to lenders.
“Surely ratepayers who have no ownership interest in these very large water services entities, do not elect their governing body, and have no sway over the business decisions that they make, should not be exposed to debt recovery by receivers.”
The bill’s approach to pricing also raised questions for John.
“The minister always promised Three Waters reform would deliver improved “equity” for consumers,” he said.
“Rural New Zealand has taken this to mean that publicly provided drinking and wastewater services would be extended to towns and villages that do not have them, and that to deal with issues of cost and affordability, cross subsidisation would occur.”
Larger towns and cities where economies of scale for water services could be secured would pay more to cover the higher costs of servicing smaller communities.
“Under this bill, cross subsidisation is not a given. Small towns and villages may not secure the assistance they thought they were being promised.
“Cross subsidisation will be up to the whim of a minister providing directions through a government policy statement, or up to the discretion of the entity’s decision makers.”
The way water services will be priced is also addressed in the bill. Pricing decisions will be made by the water service entities.
The bill directs them to promote “the efficient use of resources” and to charge groups of consumers differently only if “the costs of providing services to those groups is different.”
“These provisions should leave the entities in no doubt that their pricing of water services to consumers should be on a beneficiary pays basis,” John said.
“This direction is then followed by an average price enabling provision, a clause stating that the entities ‘may’ charge geographically averaged prices for water services.
“This is a less than satisfactory process. Local authority ratepayers should not be left on the hook subsidising the administration costs of these water service entities.”
John plans to present his thoughts in a submission on the bill.
Local Government Minister Nanaia Mahuta said when the Water Services Economic Efficiency and Consumer Protection Bill and Water Services Legislation Bill were introduced to Parliament in December that they were an important step in addressing a fundamental cost of living issue that would affect all New Zealanders for decades to come if left unfixed.
The Water Services Legislation Bill built upon the Water Services Entities Act and set out detailed functions and powers of the new entities, what they were required to do, the tools they needed for their work and arrangements for the transition to the new system, Nanaia said.
“It establishes relationships between entities and consumers to enable greater transparency around pricing and charging and sets out protection measures for vulnerable consumers including an extension of the current rates rebates scheme to cover water charges,” she said.
“This is a cost of living issue. Households cannot afford to see their water bills and rates spiral out of control. Evidence shows this will happen without reform.
Keeping a lid on rates rises is imperative, as households, businesses, communities and councils around the country face cost of living challenges.
“These Bills set out a detailed framework for water reform developed by decades of discussions and more than two years of concentrated work by Government, local government, mana whenua and industry partners.“
Commerce and Consumer Affairs Minister David Clark said the Water Services Economic Efficiency and Consumer Protection Bill would ensure the future water infrastructure system provided greater service quality and consumer rights protection to all New Zealanders.
The Consumer Advocacy Council will be able to advocate on behalf of water services consumers. The Commerce Commission will oversee protections for New Zealanders, through a newly established Water Services Commissioner who will focus on ensuring the transparency of water entities’ operations, he said.
