Webinar questions
Why is option 1 our preferred option?
It meets most of our priorities, including retaining direct control and allowing local needs to be prioritised. The costs are lower for our residents and ratepayers in the short-medium term.
Why does the estimated cost for Option 2 decrease in 2054 versus Option 1 which increases?
In the longer term, the larger 4 Council option is projected to achieve economies of scale through things such as procurement arrangements and better co-ordination of work across the broader region. From 2047, it is estimated these gains will allow the 4 Council option to deliver a slightly lower average household cost than the in-house business unit.
What’s the estimated cost and time to establish a CCO with the three other councils? How would establishment costs be apportioned across the participating councils?
The set-up costs for Option 2 are estimated to be $14.2 million with additional annual operating costs of $15.3 million (see page 30 of the Consultation document). It would be up to the Board of the new entity to decide how costs would be apportioned and recovered from customers.
Did we consider setting up a standalone Kāpiti-only entity so we could access the higher borrowing limits available under Local Water Done Well?
Yes, a Kapiti only CCO was considered but was discounted due to the significantly higher set up (estimated $6.1 million) and ongoing operating costs (estimated $4.8 million per annum) compared with Option 1 (nil set up and $1.2 million per annum operating costs).
Furthermore, we don’t need the higher level of borrowing available through a CCO as our assets are in reasonable condition and we can sustainably manage our debt with available limits.
With a growing population how will we ensure there's enough water supply? And is a dam still planned for the future?
Any future water service provider would need to plan for the future water supply demands and to plan for growth. This would include future water sources and demand management strategies.
For more than a decade we’ve invested significantly in water supply. This includes introducing water metering in 2014 that reduced water consumption by more than 26 percent and New Zealand’s first river recharge scheme that takes water from the Waikanae River and tops up with groundwater. We also have two new reservoirs in Ōtaki, one of which will be operational mid-this year.
We purchased land in 2012 behind the Nikau Valley’s hills as a dam site but our river recharge scheme and water metering mean the community will not need to invest in the new dam for up to another 50 years.
What would happen under each option to water charges and property rates?
Under Option 1 (keeping services in-house) you may not see much of a change as rates are already ring-fenced and targeted for water services.
Under Option 2 (The Four) all your water charges would be removed from your Council water and property rates invoices and billed to you by the new entity in the future. While water services rates will no longer appear on your property rates invoices, you will be paying water services charges to the new entity.
Non-water rates would continue to be charged by Council, and remain unchanged under either option.
Any changes to our financial strategy for reducing debt or future rates would be for the council to consider and consult with the community on as part of the 2027/28 Long-term Plan.
Under both options a new long-term planning document, a Water Services Strategy, would need to be prepared separate to the Councils Long Term Planning.
When do we harmonise the pricing?
This would be up to the Board of the new entity to determine. The financial modelling considered a range of possibilities. The breakeven point for Kāpiti is projected to be 2047 if we were to be no worse off.
Have we considered the challenges of the other councils we might join up with?
Each council’s Long-term Plan with its proposed investments and costs were pulled into the financial modelling and are part of the assumptions.
How would our existing iwi relationship and iwi guardianships of water work in a new entity?
Ensuring iwi aspirations and concepts such as the application of ‘te mana o te wai’ is complicated even at a local level. This would be amplified in a larger arrangement and would be worked through with iwi. Whatever happens, we will continue to work closely with our iwi partners.
Can we leverage the substantial work done by the previous governments Three Waters Programme to establish a CCO?
We would certainly expect to leverage work done previously where this information was relevant and available. All Councils have access to a repository of information with the Department of Internal Affairs that was developed during the previous three waters reform programme.
What will happen to ‘levels of service’ under both options?
Service levels are essentially the performance goals of the Council for an activity. For water service delivery this relates to our ability to provide what our customers expect from us in terms of the availability of safe water at the turn of a tap and managing our wastewater, our ability to fix problems in a timely way, and compliance with regulations and standards. Council is committed to ongoing maintenance and improving the service under all scenarios but would have more direct influence over this under our preferred option of retaining the services in-house.
Will the proposed 10 years of rates increases in the LTP 2024-34 still go ahead if the water entity takes over?
The new water arrangements are not expected to come into effect until 2027/28 to meet the Government’s deadlines. Any changes to rates would be for the council to consider and consult with the community as part of its future LTP deliberations.
Is water fully cost recovered now, and will costs be fully recovered under both options?
Yes and yes. Currently, rates are set to cover the cost of these services. You’ll find them in the targeted rates for wastewater and stormwater in your property rates invoice, and in your water rates invoice for the amount of water you actually use.
What influence will KCDC have over the new water services organisation Board under Option 2?
The exact way it would work is yet to be determined, but it’s likely we would be part of a shareholding council but would not have direct control over the day to day operations.
How would the Board of a new entity be appointed?
That would need to be considered in the Constitution. DIA has suggested a model with a shareholding council appointing the board (p25 of the consultation document).
How do we compare to the Scottish experience where they have much larger entities to achieve economies of scale?
We commissioned a report to review the comparison with the Scottish system. It found several flaws in the comparison, including that New Zealand water services and geography are very different to Scotland, and much lower economies of scale are realistically achievable for New Zealand water services. You can read more in the Castalia Report under the Discounted options section of our Have Your Say page on Local Water Done Well.
Could The Four be cheaper than The One with all consequential rates changes taken into account?
Water charges are projected to be higher for The Four (Option 2) until 2047. Non-water rates would remain unchanged under both options.