Water Summit

Speech - Water Summit

Hon Nanaia Mahuta – Minister of Local Government

Thank you very much to all of the attendees and speakers who have come to be part of this Water Summit today and tomorrow.

I would like to take the opportunity to thank Local Government New Zealand, Water New Zealand, and the Institute of Public Works Engineering Australasia (IPWEA) for organising this event.

Our Government sees the three waters system as critical for the health, well-being, and prosperity of our communities.  However, this system faces some significant challenges.

Over the next two day speakers will talk about these challenges in detail.  Hon Lyn Stevens QC will talk about the findings of the Havelock North Inquiry.  Helen Wyn and Malcolm Alexander will talk about the funding challenges.

We will also hear about possible solutions. Mr Marcus Rink will talk about the United Kingdom’s arrangements for regulation.  We will hear from a number of speakers about different models for service delivery - from Wellington Water and Watercare in New Zealand to the Tasmanian model from Mike Brewster.  I want to thank our overseas guests for coming here and sharing their expertise.

In working toward solutions, what is clear is that this is a conversation we need to have together.  Neither central nor local government can address these challenges alone.

The conversation we will have over the next two days is essential to the journey we are about to take. If we engage in the right conversation with a strategic view in mind we may reach our destination in good order.

The three waters system as a whole is one of New Zealand’s critical sectors.  It provides the fundamental building blocks for our towns, communities and cities.

We all need high quality, reliable drinking water and wastewater services.  Our towns, roads and public spaces are not liveable without stormwater services.   Our environment depends upon water infrastructure services these services, particularly our streams, rivers and beaches –future proofing of wastewater and stormwater is at the core of this.

The challenges facing drinking water, the environmental challenges, and the need to move to a new regulatory system are significant which is why we are here today.

The findings of the Havelock North Inquiry have been a sobering reminder of how, for the sake of our communities, we must make sure that drinking water services are high quality and safe.  The drinking water in our cities is, by and large, world class.  However, too many areas in New Zealand do not meet drinking water standards, and as our communities get smaller, the level of compliance drops to 25 per cent.

The Inquiry has made significant recommendations – both to overhaul regulation, and also to change how services are provided. This is an important conversation that we must have. We need a step change to minimise the risk of a repeat of the tragic outcome of Havelock North happening again.

The Department of Internal Affairs commissioned a report from Beca on the costs to upgrade drinking water infrastructure to meet key recommendations made by the Inquiry.  This report is available on the Three Waters Review website.

Helen Wyn from the Department is going to speak about Beca’s report in more detail.  What I would like to emphasise to you now is that this report shows that the costs are highest for our smallest communities.  Our small towns and provincial areas have fallen behind, and the cost of upgrading their drinking water infrastructure will effectively be unaffordable for many of them.

It is clear from this work that the small communities cannot do it alone.

It is also clear that three waters services are facing significant environmental challenges in many areas across the country.

The Ministry for the Environment’s report Our Fresh Water 2017 shows that in urban areas, freshwater quality is significantly worse both for E. coli and nitrate concentrations than in rural farming areas.

The reasons are closely linked with wastewater and stormwater systems.  Many wastewater and stormwater networks were built decades ago and have very long term resource consents.  These are legacy issues, which we are now having to deal with as those consents come up for renewal.

Councils have just finished consulting with their communities about their long-term plans.  Many are considering how to fund infrastructure upgrades to meet freshwater objectives under the National Policy Statement for Freshwater Management.  Many are considering how to meet community expectations about wastewater overflows into streams or at beaches.

These are challenges everywhere – in our cities, towns, and rural areas.  In Auckland, for example, the Council has consulted on a targeted rate in its long-term plan to fund water infrastructure to clean up the city's harbours and beaches.

It will not be possible to improve freshwater quality, particularly in urban areas, without tackling waters infrastructure.

There are also significant challenges in the regulation of the three waters that we need to consider also.

The Havelock North Inquiry has called for significant reform of drinking water regulation.  This includes a move to a dedicated drinking water regulator and much better monitoring, reporting, compliance and enforcement.  The Inquiry has said that affordability should no longer be a reason for failing to meet drinking water standards.

The Three Waters Review, led by the Department of Internal Affairs, has found that regulation across the three waters system is inconsistent and patchy.

• There are low levels of compliance, monitoring and enforcement across the system – particularly for environmental monitoring.
• There is inadequate oversight and connections between key parts of the system.
• Information about three waters services is often not transparent, and does not promote accountability or improvement.
• Many consumers have to dig deep into annual reports to find out what is happening in their area.

We need to have a conversation about what a new regulatory system might look like.  Changes to regulation – whether they involve better reporting, oversight, compliance, or transparency – have the potential to have significant funding implications for local government, which is largely responsible for three waters services.

As a country we are facing some tough questions relating to three waters services.  For example:

• How do we achieve our housing aspirations and meet the increasing demand for water infrastructure driven by urban growth?
• How can we ensure communities and visitors everywhere have access to safe and high quality drinking water?
• How can communities with small or declining rating bases fund renewals of ageing infrastructure?  Or cope with the pressure placed on water services by tourists? 
• How can we meet community expectations and improve environmental outcomes – particularly for the quality of our freshwater and beaches?  How can we ensure that wastewater and stormwater is properly treated? 
• How do we respond to climate change?

These are all questions that we need to answer.   Many councils have been investing heavily in their water infrastructure, and deserve to be recognised for that.  However, the challenges we are facing as a nation are too great for individual councils, communities, or the government to tackle alone.

The biggest question is whether we are brave enough to move away from the status quo and be open to do things differently for the good of the country and all our communities.
The problems are system-wide.  The solutions will require system-wide, collaborative change.  Central government and local government will need to work together to find solutions that are appropriate for communities everywhere.

We will also need to consider how our larger urban populations can help the smaller towns and provincial areas, and how to spread resources, expertise and technology across the country.

We need to look at both regulation and service delivery arrangements if we are going to achieve system-wide improvements.  Just targeting one side of the ledger will not be enough.

For regulation, we will be looking at options that improve public health, environment, and economic regulation for each of the three waters.  We are looking overseas for examples of what has worked elsewhere.  The solutions will however need to work for a New Zealand context.  We can learn from other countries, but solutions need to be founded in our own context.

For service delivery, we will be focusing on two key areas – capability and funding.

• Capability – will be looking for ways to lift capability and capacity everywhere.  This is one of the biggest challenges facing our country.  One of the key findings of the Three Waters Review was that many communities are struggling to attract and retain the highly specialist technical skills necessary to run water infrastructure and manage assets.
• Here we are talking about people – the Drinking Water Assessors, the Council staff, the engineers and others who work “on the ground” throughout New Zealand.  Many of you are here today.  You are our most valuable asset, and I want to acknowledge that.  We want to foster your specialist technical skills, and find ways to deliver you career paths so you have security, collegiality, and progression.    New Zealand is a small country, and water infrastructure skills and technology need to be nurtured and rewarded.
• Funding – we will be looking at options to meet the significant funding challenges that exist across the system.  The infrastructure upgrades that are required are significant.  In their 2015 long-term plans, local authorities had planned to spend $12.8 billion of capital on three waters infrastructure.

We also need to face the reality that these funding challenges are a feature of the three waters system.  Climate change and population growth alone mean that, even if we address the challenges in front of us now, significant funding pressures will continue to arise for decades to come.

The key to success here will be to deliver a sustainable funding model.  We need to move to a way of funding three waters services that gives all of New Zealand a world class system, both now and in the years to come. 

The Havelock North Inquiry recommended aggregated, dedicated water providers, and this is something we’re exploring.  This would be one way to lift capability and provide a more sustainable funding model, and it has been something that many overseas countries have adopted with very good results.

There are no predetermined solutions, however.  There are a range of different options within this proposal, and we want to have an open conversation about how a solution like this might work.

There are some bottom lines for the Government that I want to be very clear about.  All options will ensure continued public ownership of existing infrastructure assets.

We also need to investigate the full range of ways that we can ensure that local authorities and communities continue to be involved in whatever model we choose.

I would like to hear from local government in particular about this matter.  A critical part of successful change will be determining how local government continues to be involved in the governance of water assets, and what the links are with broader council planning.  We also need to have an open discussion about how local communities continue to be involved in services in their area.   Responsive local service delivery will also be an important part of success.

I recognise that many councils will be concerned about what might happen if they have less of a role in water service delivery. We need to start thinking about what they might do instead. Again, I want us to be talking openly about this over the coming months.

We will continue to work closely with the sector.  I have already met with the National Council of Local Government New Zealand and had a productive session.  There will be many more opportunities for engagement over the coming months.

I want to thank the sector for taking up this opportunity.  Central government, local government and the water industry all need to provide leadership in this area.

We have a real opportunity before us.  With the right conversations, and the willingness to work together, we have the potential to achieve solutions that will be of lasting benefit for our communities and the country as a whole.

We have set up a reference group with LGNZ that will meet for the first time in a few weeks and then regularly after this.

Water New Zealand have been working with the DIA in a highly productive way and I want to thank all levels of Water New Zealand for that.

There will also be engagement with iwi and Māori over the coming months, as tangata whenua have a strong interest in this area.

From central government, I have convened a large group of Ministers with a broad range of interests in water infrastructure to lead this work.  These Ministers are all invested in this.  Many of the Government’s priorities are dependent on a well-functioning three waters system.

For timing, I want to emphasise that we are still at the conceptual policy stage. There are no predetermined solutions, and lots of work still needs to happen to identify and develop options.

Ministers are due to report back to Cabinet later this year on high-level options. The decisions may be hard ones, but we will work with you openly and transparently as we make them.  Following these decisions, there will be further opportunities for engagement as we begin to work on the detail.

Thank you once again to all of you for taking part in this Water Summit.

I am happy to take questions.