Local Government New Zealand (LGNZ) last week presented to the Health Select Committee on the Water Services Bill, raising serious concerns about a flood of costs for ratepayers if councils are forced to take over failing private water supplies.

Central Otago District Council has several private water supplies which it could be forced to take over, such the Ripponvale Community Water Scheme. 

Presenting to the Committee, LGNZ President Stuart Crosby says that while the sector supports the intent of the Bill, having advocated for clear drinking water standards and strong enforcement of those standards since 2015, there was the potential for a huge passing of costs onto councils, as the Bill would force councils to take over private water networks that fail to meet the standard.

A water network, as defined in the Bill, is any two or more households that share a drinking water supply.  

Networks that fall under the new regulatory regime would have to meet stringent water testing requirements and compile and regularly update a technical water services plan.

The Water Services Bill places increased requirements on private suppliers to meet similar standards of management, monitoring and reporting, and quality of water supplied as councils, and carries financial penalties for failure to meet the legislated requirements.

“We’ve been asking for clear drinking water standards and strong regulation since before the Havelock North contamination, so we’re pleased to see this Bill deliver them, but unfortunately it overreaches by creating a situation where ratepayers will have to pick up the cost private water suppliers can’t meet the drinking water standards,” Stuart says. 

Modelling from both the Government and LGNZ shows that councils are already in line for significant costs to make sure their drinking-water facilities meet the drinking water standards. 

The unfunded mandate presented by the new Bill could make that even more difficult if councils are put on the hook for the private, non-council supplies that serve between 800,000 and a million New Zealanders.

“Councils have limited resources which need to be focused on community-owned and operated supplies in the first instance,” Stuart says.

“Small suppliers won’t be encouraged to bring their supplies up to the required standard, knowing that the wider community will eventually be forced to pick up the tab.  

“What you also might see is the issue of small, low socio-economic ratepayer bases subsidising the drinking and wastewater costs of relatively well-off people who move into remote areas to enjoy the lifestyle.”

LGNZ also raised the issue the new bill would exacerbate the housing shortage, as councils would be highly cautious when assessing developments which include their own community water networks.

“It’s a bit like the current joint and several liability setting that councils suffer in building consenting – councils face a disproportionate risk that forces them to be them to be very careful when assessing any further private networks, because if the supply can’t meet the standards, through no fault of the council, ratepayers will be on the liable.”

“The Government needs to be clear on whether it wants to enable small schemes and communities going forward, or whether it wants to limit growth to where council-owned networks exist,” Stuart says.