Water Services Bill puts ratepayers on the hook for failing private supplies

Local Government New Zealand (LGNZ) has today 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.

Presenting to the Committee, LGNZ President Stuart Crosby said 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.

“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.

Modelling from both the Government and LGNZ shows that councils are already be 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,” continued Mr Crosby.

“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 have also raised the issue that the new bill would exacerbate the housing shortage, as councils would be highly cautious when assessment developments that 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.”