Roving Reporters... A Trip to meet the South Taranaki District Council about the Government led Water Done Well Initiative

Out and About Roving Reporters…

We ran 2 stories, in November and December last year, about Water Done Well.

Water Done Well is a government initiative which will allow Cross Council Entities (in our case New Plymouth, Stratford and South Taranaki combined) to “Borrow up to 500% of their operating revenue, almost double what they can borrow now” to upgrade water infrastructure.

Currently with the Long Term Plan system they can’t borrow more than 135%.

Our stories came about as Glenn Maclean had written about this on Stuff in October last year, with options available for working collaboratively across the councils.

NPDC was keen to get together with Stratford and Hawera to discuss cost sharing across all 3 regions and had arranged meetings at the NPDC last year to get the ball rolling. (See our post in November 2024).

This prompted several of our team to see what the other councils were thinking about this issue so our Roving Reporters ventured out to meet with the Stratford Mayor and CEO. They had the opportunity to discuss how Stratford are progressing with the proposed new water plans for their region. (See our post in December 2024)

A couple of weeks ago our Roving Reporters ventured out to Hawera to meet with a team from the South Taranaki District Council.

The South Taranaki District Council maintains 10 water treatment plants. (9 have been built, or upgraded, for future growth). In the 2028 financial year the 10^th site, Patea, is due to be upgraded.

The team in Hawera tell us two options have been proposed in discussions about amalgamating the Councils as a Cross Council Entity.

Those options are:

• A regional Model: Establishing a Council Controlled Organisation (CCO). An example of a CCO is the New Plymouth Airport.
• A Stand Alone Council. Each operating as their own entity as the alternative.

• Please note here – the Alliance understands there are 5 options possible for Water Done Well – but not all the options are being discussed. We have more to bring to you about those other options.

The South Taranaki District Council believes that opting for a CCO option will not result in a loss of ownership of the water assets (pipes, treatment plants etc), or result in a loss of control, as decisions will remain with the Councils and all Council participants will have an equal say. This model means the Councils (their council representatives) have all the say with  the decisions.

• Please note - The councils will have equal say – but will the ratepayers have any say ?

The setting up of a CCO for the 3 councils relates to water supply, stormwater management, shared services across the councils, reduced staffing and improved transparency.

The South Taranaki District Council is advocating for water meters for their region to reduce water wastage.

The South Taranaki District Council has a number of questions:

• How will the 3 Councils structure the CCO ? (The only model, of 5, that all 3 councils are looking at).
• How many board members will there be on the CCO ? and how are they to be appointed ?
• How will they make a decision between Councils if they don’t agree ? Will they get a 1/3^rd vote each ?
• What will be the process for appointing a CEO ?
• What will the pay rates be for staff for the new entity ? How will the remuneration be set and will there be a salary cap ?
• What will the contractual obligations be to each council ? How will they achieve full financial visibility and transparency with their operations ? How will they transfer the full assets of all 3 councils into the new CCO ? This includes tools, leased vehicles, workshops, personnel.
• What is the initial cost to set this up ?
• What are the projected ongoing costs ?
• Will there be a debt transfer on current assets for each council ? Meaning where does the debt for each council fall ? Is this just all lumped in to one pot under the new CCO ?
• How will the water rates be set with this new entity ? Will it be set equally across all 3 districts so everyone pays the same ?

The Alliance asks:

• NPDC currently has debt of $364 Million. This debt level will increase significantly with the new water infrastructure which is needed for just New Plymouth. Stratford currently has no debt. Will Hawera be adding debt for their water infrastructure needs ?
• How much debt will a new CCO entity add for the ratepayers of all 3 regions of Taranaki to pay back ?
• If the new CCO is created will the “targeted water rates” line on the back of the rates invoice be removed ? Will all the payments for water be made to the new CCO from that point on ? Or will some water costs still be charged by the Councils ?
• How will the rate charged by the new CCO compare to what is being charged in rates now ?
• If the debt is lumped in to one pot under the new CCO, will all the ratepayers across all three regions take on all the old debt to pay for each other going forward ? Some of these ratepayers have no debt to pay on their water now ?
• If water rates are set equally across all 3 regions does this mean some ratepayers water rates will be less than they would be now and some will be more ? How will this affect the individual ratepayers ?

The debt that can be borrowed for the new water CCO is up to 500% of the value of the water assets (pipes and plants etc). The assets are worth 100’s of millions of dollars across all 3 regions. Significant borrowing is planned with this new CCO.

How much is the rates bill for water really going to be with a new CCO if they decide to implement 20 years of work that should have been done since 2004 in just the next 10 years. They are borrowing for 20 years of work they didn’t do and asking ratepayers, and renters, to foot the bill for all of that now.

We have another point to make with debt. We have covered the NPDC $364 Million debt (March 2025).  We didn’t cover how this is paid back. (There was too much info to put in just one story).

With government type loans, and with many big corporates, it is very common that a lump sum is advanced (known as the principal) and for the term of that loan only interest is paid on the money. At the end of the term the lump sum has to be paid back. These loans are commonly for $10 Million + over 10 years. So for 10 years a council, or CCO, pays just the interest on the loan, and in year 10 they have to come up with the $10 M lump sum which is due.

This may be standard practice for government departments and councils, but we are asking if a new CCO is going to borrow billions of dollars across the region which generation will get those final invoices of the principal amounts in the years they fall due ?

There needs to be a serious conversation about debt levels that this region is considering taking on, there needs to be serious discussions about how the money is funded and there needs to be a serious discussion about which model is the best for the ratepayers.

There are 4 other models that could be used but these 3 councils are not discussing those options on our behalf.

The Councils will have to run a submission process on what options the community prefers. It is very, very important that multiple options are available for the community to consider through that submission process.

PS.

Watch this space, as the Alliance has been doing a bit of digging around about options and costs, and there is a lot to know about how these different structures can have a huge impact on future costs, risks and rates.

We will be bringing you stories which we hope will unravel ALL the options available to us as ratepayers and we’ll update you on the “fine print” of how some of these things will work, and the concerns we have with some of that.