The Government thinks that we have a water crisis and that $110 billion is going to be needed to fix the crisis:
The cost of fixing New Zealand’s beleaguered water systems could amount to $110 billion over the next 30 to 40 years, according to the Department of Internal Affairs.
That leaves an enormous hole for councils to fill. According to research by the department, councils have been spending just $1.5b a year on water pipes, or $45b over the next 30 years.
Without urgent reform, Internal Affairs estimates household water costs could almost double in cities and treble in rural areas.
The figures come from research commissioned by Internal Affairs, which has been put in charge of Local Government Minister Nanaia Mahuta’s attempt to clean up New Zealand’s strained three waters infrastructure.
The department is currently crunching the numbers on what it calls the “most comprehensive data collection on three waters assets and service delivery ever undertaken in New Zealand”.
However, officials have made some early observations on data provided by councils that suggests investment of around $50b to $90b could be needed to “maintain and enhance infrastructure, and meet requirements of growth”.
The figure rises to $110b over 30 to 40 years once maintenance and renewals of existing infrastructure are factored in.
Stuff
Any way you look at that, it is a whole lot of cabbage.
But here’s the thing, these councils have charged us water rates since Adam was a boy and, especially in Auckland, our water rates include reticulation. On top of that, pipes are an asset to the council which would have been depreciated over the years. Depreciation is a way of accounting for the cost of replacing an asset over time. Depreciation is also offset against income (rates revenue) for tax purposes.
So councils have accounted for the degradation of these assets, charged us fixed charges to maintain the assets and also charged us usage costs over time.
It is criminal negligence that they haven’t scheduled appropriate maintenance, repairs and replacement processes for so long that their “assets” have degraded to such an extent that there is a very, very large bill to fix it all.
At the same time as they were failing to prepare for the future, the very same councils have been profligate with their spending on non-essential services and nice-to-have boondoggles. Instead of doing the basics very, very well they are now softening us up for massive rates hikes to pay for their multi-generational incompetence.
The very worst thing that has exacerbated the problem was the local body reforms of 1989, further compounded by the review of Local Government Act in 2001. That review recommended to the Cabinet that councils be given a “power of general competence”, allowing them to choose the activities they undertake and how they should undertake them. Those reforms allowed councils to embark on wasteful projects, funded by irresponsible borrowing.
In essence the fox was put in charge of the hen house and proceeded to chow down on egg omelettes until the chickens stopped laying, and then chicken burgers until the chickens were all gone.
Both of those reforms were conducted by the Labour Party, and now they are proposing more reforms, to “fix” the problems caused by their original reforms.
Well, I say No!
Not until there is serious and meaningful reform of councils and a legislative correction removing “general competence” and putting tight restrictions on what councils should be doing as core tasks for the rates they receive.
Based on Labour’s past performance with local government reform, I’d say there is stuff all chance of them succeeding at the third attempt.
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