Briefing to the Incoming Minister

Briefing for the Incoming Minister November 2023

If the water is healthy, the land is healthy, the people are healthy.

Ka ora te wai, ka ora te whenua, ka ora ngā tāngata.

Water New Zealand (Water NZ) is a national not-for-profit organisation which promotes the sustainable management and development of the water environment, and particularly drinking water, wastewater and stormwater. Water NZ is the country’s largest water industry body, providing leadership and support in the water sector through advocacy, collaboration and professional development.

Its ~3,100 members are drawn from all areas of the water management industry including regional councils and territorial authorities, consultants, suppliers, government agencies, academia and scientists.

We are industry experts, providing independent technical advice and advocacy, workforce training, and delivering and enabling knowledge sharing across the sector.

We are the “go-to” advisor for water sector.

Water – Future Focussed New Zealand has a significant water infrastructure deficit, and the current 67 Council led delivery model is not fit for purpose. Without consolidation, water services delivery and environmental outcomes will continue to decline.

Water NZ supports water reform that will ensure effective management of water services delivery and infrastructure, so communities have access to safe, reliable, and affordable drinking water and wastewater and stormwater services that meet their environmental and cultural expectations.

What would good look like?

• • • • • • • • •

Significant investment in water infrastructure, enabled through balance sheet separation.

The current deficit has been decades in the making. Sustained investment is required to address it.

Arrangements which avoid an investment hiatus, and enable a well-defined, committed, and funded pipeline of work.

Greater coordination across Government - a Minister for Water.

Strong regulation, compliance, monitoring and enforcement promoting a balance between water, the environment, and people.

Proactive climate change mitigation, resilience, and adaptation – across policy and communities.

Initiating no regrets actions.

Support for education and training (professional and the trades).

A Government Policy Statement which enables the Toward 2050: Transformation vision for the water sector.

Water New Zealand’s approach We work closely with members and the wider water community to ensure a sustainable, long-term approach to water management.

We are not involved in the politics of water reform. Water NZ has, and will, focus on technical excellence in the delivery of safe and environmentally appropriate water infrastructure and services. Our advocacy approach is outcome based and has focused on ensuring the legislation and transition is workable to this end.

New Zealand has a significant water infrastructure deficit The consequence of New Zealand’s water infrastructure deficit is evident across the country.

• • • • • •

Water supplies that are not safe to drink, and affordability inequities.

High level of water loss across the country.

Extensive wet weather wastewater overflows.

Non-compliant wastewater treatment plants.

Unswimmable rivers and beaches, declining freshwater and ecological health.

Increasing frequency of flood inundation of homes and businesses.

We need to invest in water services, and the water community needs certainty Councils across the country are facing acute financial pressure in continuing to provide water services.

Without significant funding water services delivery and environmental outcomes will continue to decline, and nationally the cost-of-services paid by ratepayers will increase further.

Certainty of the future direction is vital. Investment in renewals and improvements in levels of service is expected to drop as councils do not know whether future planned and necessary investment will be borne by ratepayers, or by consumers under an alternate entity model.

Prolonged uncertainty risks the workforce and significant players in the New Zealand market turning their attention to Australia, to maintain their current employment levels, where there is certainty, funding, and significant drivers for investment (decarbonisation and water security).

A smaller number of water services providers are required to address the challenges facing the country’s water infrastructure The current 67 Council led delivery model is no longer fit for purpose.

Without consolidation, water services delivery and environmental outcomes will continue to decline. Voluntary consolidation has been attempted previously (refer, Wellington councils 2015, Waikato councils in 2016).

If this is preferred, it will be important to ensure no council misses out (becomes an “orphan”) due to historic under investment or significant future environmental compliance challenges.

The proposed transition dates for the entities - from July 2024 to October 2026 - provide certainty to staff, contractors and consultants, councils and ratepayers. If there are to be changes this must be communicated early, and clearly, with clarity on investment timing and funding.

A Minister with oversight of water Water services operate within a multi-faceted, non-cohesive regulatory framework (figure 1). Water, as a “sector”, is not visible across government – across national resilience strategy development, emergency management, climate change mitigation and public and environmental health.

To ensure greater coordination and consistent policy making across Government, we recommend a Minister for Water is established.

Water services regulation is critical to strengthen three waters services Strong regulation, compliance, monitoring and enforcement by Taumata Arowai (the water services regulator), the Commerce Commission (the economic regulator) and Regional Councils (the environmental regulator) will: • Necessitate significant and economically efficient investment in water infrastructure, systems, and processes.

• Ensure drinking water, across the country, complies with drinking water standards.

• Significantly improve the environmental performance of wastewater and stormwater networks.

• Lift the capability and capacity of the water workforce.

• Ensure consumer interests are listened to and understood.

To achieve this, the regulators need to be appropriately funded, and have access to appropriate expertise.

No regrets actions should be undertaken Addressing inefficiencies inherent in the status quo will result in productivity gains. No regrets actions must build on initiatives undertaken by the National Transition Unit within the Department of Internal Affairs: • Establish nationally consistent policy, design standards, and guidance for asset management data, planning, and procurement.

• Fund workforce capability and training. Offer competitive compensation and benefits, and clear career pathways to attract the diverse skills needed.

• Support digital solutions and smart technologies to inform decisions.

• Implement the incident and emergency management framework developed to improve national coordination, representation, and preparedness for events.

Proactive climate change adaptation and mitigation Drinking water, wastewater and stormwater infrastructure is already vulnerable to a broad range of climate change impacts.

Water security and availability and cascading risks from serious flooding will be a key consideration for New Zealand as it seeks to protect and grow its communities in the face of imminent climate change impacts.

Land use and development decisions must consider future water availability and avoiding building on flood plains or protecting overland flow paths.

A balance is needed between water, the environment, and people Water NZ’s vision is “Ka ora te wai, ka ora te whenua, ka ora ngā tāngata”, “If the water is healthy, the land is healthy, the people are healthy”. Fundamentally, drinking water, wastewater and stormwater are all part of one water cycle, whether enclosed in pipes or on the surface.

Te Mana o te Wai is about restoring and preserving the balance between water, the environment, and people. Water NZ considers it appropriate that all parties with powers, functions and duties under the Water Services Act 2021 are required to give effect to Te Mana o te Wai. Having Te Mana o te Wai at the core of water services enables a stronger and healthier relationship with water which is essential to life.

Working in partnership with mana whenua, and communities to share their knowledge and make intergenerational decisions, respects and honours Te Mana o te Wai, Te Tiriti o Waitangi/Treaty of Waitangi and helps to ensure better long-term decisions and outcomes.

We look forward to working with you.

Our goals around safe, clean, and healthy water are aligned with your government’s policies and objectives. As the leadership organisation for the three waters sector, we are in a strong position to support you engage and communicate with our members as we continue the reform process, and required transformation.

We look forward to an ongoing professional and productive relationship during your term of government. The appendix provides further details around the problems, and mechanisms available to address them.

Gillian Blythe Chief Executive, Water New Zealand E: gillian.blythe@waternz.org.nz M: +64 21 388 469

MINISTRY OF ENVIRONMENT

MINISTRY OF ENVIRONMENT

MINISTRY OF ENVIRONMENT

TAUMATA AROWAI

DEP. OF INTERNAL AFFAIRS

MINISTRY OF HEALTH

REGIONAL COUNCILS

TAUMATA AROWAI

REGIONAL COUNCILS

REGULATOR

Wastewater

Drinking

Freshwater

OVERSIGHT

POLICY

MINISTRY OF ENVIRONMENT

TAUMATA AROWAI

REGIONAL COUNCILS

Stormwater

COMMERCE COMMISSION

MINISTRY OF BUSINESS INNOVATION & EMPLOYMENT

MINISTRY OF BUSINESS INNOVATION & EMPLOYMENT

MINISTRY OF BUSINESS INNOVATION & EMPLOYMENT

MINISTRY OF BUSINESS INNOVATION & EMPLOYMENT

Consumer Protection

COMMERCE COMMISSION

Economic Regulation

Roles and responsibilities across water Figure 1:

Appendix - Water Industry Problems and Mechanisms to Address

Problem

How to address

Mechanism and Policy instrument

Councils unable to fully fund asset management plans, unaffordable rates increases, especially in smaller or declining populations

Balance sheet separation and accessing efficiencies through economies of scale

Water service providers with financial and operational autonomy, and ability to borrow in their own rights

Under investment is evident as high levels of water loss, wastewater overflows, degraded waterbody health

We need significant and sustainable investment in water infrastructure

Lack of forward work programme certainty for supply chain

Security in the supply chain to invest in resources to support the water sector infrastructure investment

Scrutiny and compliance enforcement from water regulators; Taumata Arowai, Commerce Commission + Regional Councils Consistent approach to asset management and funding and financing plans nationally

Decisions not based on data or evidence

Require accurate data to enable confident directions making for investment in water infrastructure

Consistent asset data standards and methodologies

Conventional, transactional procurement

Introducing good modern procurement processes

Consistent approach to maximise larger scale procurement opportunities across sector

Standardised approach to conditions, compliance and enforcement of water quality rules and plans Nationally consistent policy, standards, metadata, business models and operating platforms New national direction for infrastructure which includes guidance on regional spatial strategies and nationally consistent rules and standards for infrastructure

Taumata Arowai

Smart Buyer

Planning and Standards We have had inconsistent application of regulation and policies Multiple, differing codes of practice across water services resulting in increased cost of delivery Getting a resource consent for infrastructure projects is complex, becoming more costly, takes longer to complete and requires more resources Education and Capability Staff retention in councils (and sector / late to transition WSE)

Certainty, competitive compensation and benefits

National Engineering Design Standards [See webinar, and industry engagement] RMA reforms and the National Planning Framework.

Taumata Arowai

Transition dates for the other nine entities- beyond entity A -

We have significant skills and capability gaps Environment and climate We have degraded waterbody and ecological health Increasing frequency and severity of flood inundation of homes and businesses and Weaknesses in national water sector emergency management systems, coordination, tools, leadership and relationships Vulnerability of drinking water supplies to drought, water loss and water availability People and Community Low understanding of risks, costs and benefits of different water service delivery options (and low trust in providers) ‘Water literacy’ is low. The is poor understanding or knowledge about water sources, water management and water-related issues Levels of service do not match investment or community expectations Digitally enabled Water service providers are not taking advantage of digital solutions and smart technologies

leveraging economies of scale and efficiency gains of 10 WSE Competitive compensation and benefits clear career pathways and training opportunities

are agreed sooner rather than later Support of education and training

Standardised approach and funding to water quality (DWS and FW) rules compliance and enforcement Planning and design frameworks minimise vulnerability to hazards Recognise the importance of crisis leadership skills, operational experience, CDEM training and relationships in emergency management Land use and development decisions must consider future water availability, use and efficiency

An integrated, catchmentbased approach to managing water

Information on water services is transparent, timely and understood.

Ensure affordability for households Communities and tangata whenua have strong relationships and engagement with water services entities to drive decisions based on their particular needs Communities receive an agreed and consistent minimum level of service for water services across the country Common platforms, data standards, and protocols for sharing of water-related datasets across agencies provide a single source of truth to inform decisions

Infrastructure and community resilience and adaptation policy and regimes Consistent incident and emergency management procedures and plans (see draft Guidelines) RMA reforms and the National Planning Framework Taumata Arowai Consumer Protection regulation

Te Mana o te Wai Statements Community Priority Statements

Standardised level of service and performance measures

More data-driven urban water management approaches such as real-time control (RTC) Scale and efficiency gains of the WSE for best practice ICT and /or shared services for ICT

Lack of information for customers

Te Mana o te Wai Water has not been treated as, or recognised as, a taonga The whakapapa, life force and customary rights of water have been, and continue to be, degraded and infringed

Utilising real-time digital technology to automate, delivery services in an efficient, user friendly and cost effective manner

Consumer protection regulation

Increase understanding of “if water is healthy, land is healthy, and people are healthy” Working in partnership with tangata whenua, iwi / hapū / runanga

The inclusion of Te Mana o Te Wai in water services powers, functions and duties Co-management

Figure 2 Toward 2050: Transformation vision for the water

sector.