Source: Radio New Zealand
Local Government Minister Simon Watts. RNZ / Samuel Rillstone
Building water infrastructure over the next decade will be a “mammoth challenge” according to Local Government Minister Simon Watts.
Speaking to Morning Report, Watts said one of the key points the government wanted to achieve with Local Water Done Well reform “is making sure that the entities that deliver these water services are in an essence match fit, are financially sustainable and they have the ability to deliver.”
Watts also said there are “significant challenges around infrastructure investment deficit.”
On Thursday, Independent Infrastructure Commission – Te Waihanga, chief executive Geoff Cooper told Morning Report there’s been huge under-investment in the water system, particularly in the 1980s and 1990s.
“The number that we have here from the water service delivery plans is about $49 billion over the next 10 years.
“To put that into perspective, that’s about on par with what New Zealand has spent on water services in the 125 years since 1885,” Cooper said.
Watts highlighted one challenge with estimating the costs for the infrastructure in some areas is due to the pipes being 50-to-80-years-old.
Watts also said there are issues with forecasting costs, but said it was likely to be “in the region of $4 billion per annum over the next 10 years.”
“WaterCare [currently] spends $4 million per day on infrastructure investment.”
When asked who will be paying for the infrastructure, Watts said it will come from ratepayers “first and foremost”.
Watts said the government is changing the way the new water entities are funded and financed.
“What I mean by that is, we’re making sure that these assets last for a long time, 50, 100 years in some cases. We want to make sure that the borrowings of these entities match the asset life, and that hasn’t been the case in the past.”
Watts said the government “has flesh in the game,” because it is “putting in place a structure that works for communities”, and more regions could see water charging.
“Some parts of the country do pay water charges, Auckland, for example, and the regulator is looking across the country and going, well, you know, at the end of the day, we do need to be considering water charges because, you know, it is a cost of infrastructure.”
Watts acknowledged some councils will be paying for the infrastructure using debt, but said this wasn’t always a bad thing.
“Having debt is not a bad thing in the context of how we build this infrastructure. The challenge is we have to fund and finance the massive deficit of infrastructure we have inherited.
“It’s not fair that only today’s population fund for something 100 years from today.”
Watts stressed the importance of the water entities throughout the country being “financially sustainable… that the revenue that these entities collect covers their costs, and they have enough income to be able to pay their debt.”
Watts said this wasn’t the case under the prior model, and the “independent Commerce Commission will make that assessment [on financial sustainability], not some politician.”
Watts acknowledged in some parts of New Zealand, the infrastructure deficit is bigger than other areas.
“But we’ve got a model that can deliver the reform required and the infrastructure investment. It’s going to be hard and challenging, but we’re already making some good steps.”
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
