A New Chapter for the Region's Water Services

Three visitors came to the club this week with one shared message: the way water services are run in this part of the country is about to change. Mayor Grant Smith opened proceedings with a nod to the wavy tablecloth standing in for a projector screen, saying it was rather appropriate given the topic, and a fair sign of how lean the new organisation intends to be.

Central Districts Water is a new water services organisation owned by three councils: Palmerston North City Council, Horowhenua District Council and Rangitīkei District Council. An iwi advisory group sits alongside the board, representing Rangitāne along with a number of other iwi across the wider region.

The board was appointed roughly three months ago and is chaired by Steve Maharey. Chris Dyhrberg, who has spent a number of years at Palmerston North City Council, has recently been appointed chief executive. The organisation will look after all three waters, meaning drinking water, wastewater and stormwater, from around Tāihape in the north down towards Ōtaki in the south.

Steve began his part of the evening with a story about a rural fire brigade that smashed through fences, drove straight into the middle of a burning paddock and put the fire out. Presented with a reward for their bravery, the fire chief was asked what they would spend it on. Brakes, he said.

One point was made very firmly, and it is worth repeating. Central Districts Water does not take over operations until 1 July next year. Until then, water services remain entirely with the councils, and any faults, leaks or questions should still go to your local council in the usual way. Between now and then the new team is essentially a start up, employing staff, taking over assets and getting the systems in place.

Steve was also clear that this is not privatisation. The company is owned by the three councils, which in turn are owned by the ratepayers who elect them. There is no provision in the legislation for private ownership and no party proposing it, and he said personally he would regard any move out of public ownership as a very poor step.

Three pressures are driving the reform. The first is ageing infrastructure that has not been renewed as quickly as it should have been, despite councils in this region working hard to keep up. The second is a steadily rising bar of regulation, which requires an organisation with the depth to cope with it. The third is growth. Horowhenua is the fastest growing part of the new organisation at somewhere around three percent a year, while Palmerston North sits closer to one percent, although anyone driving out towards Prospect Avenue and beyond would be forgiven for thinking otherwise.

Scale is the key to making it work, Steve said, and not simply for the sake of being bigger. The right scale lets the organisation pool resources, share expertise and, most importantly, borrow over long periods at lower interest rates. Water assets last for decades, and the cost of them is spread across the generations who use them rather than paid for on day one.

The investment programme sits at around $1.4 billion over the next decade, most of it going into renewing and upgrading existing assets rather than building new ones. Those are sobering numbers for communities of this size, particularly in Rangitīkei, where roughly 12,500 people are spread across a very large area.

Council spending on water has tended to be lumpy, with a great deal in one year and very little the next. Smoothing that out over time is one of the things the new organisation is designed to do, which should also help to smooth what households eventually pay. Grant Smith noted that Palmerston North has quietly put a very large sum into underground renewals over the past four years, work that rarely wins any praise. You never get votes for anything under the ground, he said, though shiny things above it are another matter.

Chris Dyhrberg explained that the organisation will eventually employ around 250 people. Under the legislation, the three councils identify the staff who work predominantly on water and, after consultation, transfer them across. Perhaps two thirds of the workforce will arrive that way, with the remaining roles advertised. Depot teams in Marton, Tāihape, Bulls and Foxton will keep working in their own communities, because they know those networks better than anyone.

Workforce shortages across the water sector are significant, and in answer to a question from the floor about apprenticeships, Chris said graduate and cadet schemes are firmly on the agenda. Palmerston North already runs a small trainee pipeline, and having a bit of scale makes such programmes far more achievable than they are for a small council on its own. Grant added that in a combined water organisation people can become genuine specialists, rather than splitting their week between roading, parks and a bit of water.

Nobody was promising cheaper water. Prices are rising and will keep rising for a while yet. What the panel did say is that their projections show costs levelling off rather than climbing steeply, and becoming more affordable over time. Doing nothing was never the cheaper option.

Charging will be based on connections, so households on their own tank and septic system will not be billed for services they do not receive. Stormwater is more complicated, since a whole town can benefit from a network whether or not a particular property is connected to it. Water meters are gradually going in across the region, moving charging towards a user pays basis. Charges across the three districts will be harmonised, but gradually, because doing it overnight would create clear winners and losers.

A member pressed the panel on how they will convince ratepayers that rising bills are not simply the new organisation's doing. Steve agreed it is the central communication challenge, and said the team is already working on it. He pointed to Wellington and Hamilton as cautionary examples, including a water bill and a rates bill that arrived separately and left people baffled. The aim is that by 1 July next year people know the organisation exists, understand the problems it was set up to solve, and can see what it is trying to do.

Members raised road cones and the cost of traffic management, with one member observing that Australia manages similar health and safety outcomes far more efficiently. Grant did not disagree. Another question asked whether the plans allow for a changing climate and more extreme weather. The answer was that regional flood protection and river management matter enormously to this work, and that no district can afford to stand outside the network, given that the Manawatū catchment stretches from the ranges all the way out to the coast.

The panel finished with a request. They are touring the region this year ahead of consultation on their water services strategy, and they asked members to pass on what they had heard. Tell three people, Steve suggested, and ask them to do the same.

Our thanks to Mayor Grant Smith, Steve Maharey and Chris Dyhrberg for a frank and genuinely useful evening on a subject that affects every household in the region, whether or not we think about it when we turn on the tap.