The users of 11 mixed-use rural water (wai tuawhenua) schemes in the Clutha District of South Otago are being asked if they want to take over ownership of the schemes.
New Zealand’s 70 mixed-use rural water service entities will by default become one of the four water entities under the proposed Three Waters reform, unless they opt out.
“They will automatically become part of a water entity but part of the process they can go through is deciding if they want to leave and become private,” Bryan Cadogan, mayor of Clutha District, said.
Users of the Clutha schemes have been asked if they want ownership, but a new study cautions that passing ownership to the new proposed entities will mean lower financial and operating costs than privatisation.
That joint study was between the Department of Internal Affairs (DIA), the Clutha District Council and farmers involved in the council’s mixed-use rural water schemes.
It concluded that while community (hapori) ownership offers greater local knowledge and control by users, costs would be significantly higher, individual liability would be high, and operational challenges difficult to meet at individual scheme scale.
Cadogan welcomed the report, saying it differentiates the 70 mixed-use water schemes from other schemes and provides options for those who rely on them for their businesses.
“The private rural-one water schemes, of which there are 75,000, are now all out and the 70 rural mixed-use water schemes – which probably have a township supply attached – now have the option of going through the process and deciding if they want to stay [within the water service entities] or leave,” he said.
The report found that ownership by one of the four proposed water services entities would allow for greater operational capability and capacity, greater ability to access sufficient capital for future investment, economic regulation and consumer protection.
The report acknowledges that under the government’s proposed governance arrangements for water, there is a chance of less influence from those currently involved in running the schemes and the risk of uncertainty around future pricing and service levels, until funding and pricing plans are produced.
Independent management consulting firm Morrison Low was commissioned to undertake an assessment, which provided guidance but no recommendations.
Cadogan said the study will help users make a decision about whether to seek ownership of these schemes, but also help clarify for the government how water services entities might involve farmers in their future management.
The executive director of the Three Waters programme for the DIA, Hamiora Bowkett, said he supports the conclusions of the Morrison Low report that ownership and operation of mixed-use rural schemes by water services entities will result in lower financial and operating costs for users.
“We also accept the need for ongoing farmer input to the management and operation of the schemes given that their primary purpose is to support farming activity,” he said.
