Privately owned rural water supplies should be able to keep managing themselves, rather than handing over to the Three Waters entities, a working group has recommended.
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By 2028, rural suppliers will be required to abide by the stronger standards being brought in by the water regulator set up in March last year, Taumata Arowai.
The Rural Supplies Technical working group was set up by the government to advise on how the water system reforms would handle rural supply schemes, and has made 30 recommendations.
Privately owned rural suppliers number in the tens of thousands, and the group urged the government to allow these to continue under their current management.
The three waters reforms do not impact single household supplies and were not designed to apply to privately owned suppliers, but the government set up the working group to consider how they would be affected.
Clutha mayor Bryan Cadogan, who chaired the working group, said these would not be covered by the service delivery reforms, and would have several years before needing to register with Taumata Arowai as a supplier.
"We recommend that Taumata Arowai provide practical and cost-effective ways for schemes to comply that recognises their uniqueness, and closely involves rural stakeholders in designing and implementing regulatory requirements."
Most of the roughly 100 council-owned rural schemes should be taken over by the new water service entities, the group advised, as councils would no longer have the capacity to manage them.
However, some would be critical to farming needs and if their users could continue operating it without support from councils or water services, they should be able to exempt themselves.
The group noted many rural schemes had been set up by local farmers, and while they were generally owned by local farmers some had been transferred to councils, and for some the ownership was unclear or undocumented.
The group said the regulator should take a proportionate and risk-based approach to the regulation of privately owned supplies.
In a statement, councils advocacy group Local Government New Zealand (LGNZ)'s president Stuart Crosby said it was clear one size did not fit all when it came to rural communities' water.
"In these communities, water is used for stock and irrigation as well as household drinking water, creating unique issues for rural users," he said.
"That's why it was so important to see the group recommend a process where council-owned schemes that are mostly used for stock or irrigation could go back to community ownership."
The group also recommended rural suppliers should not be forced to chlorinate their water.
Marae and papakāinga have suffered from historical inequities in water access. The group said more work was needed, including consultation between the new entities and Māori, to resolve these concerns.
Stuart said misinformation about the reforms had been behind much of the confusion in rural communities.
"LGNZ wants the Minister for Local Government, Nanaia Mahuta, to be getting out there and meeting our rural communities to reassure them that private supplies aren't being transferred to the new entities and answer any questions they may have."
Recommendations:
- 1. All rural drinking water supplies owned by councils should transfer to the water services entities
- 2. The group supports the strong protections against privatisation provided for in the Water Services Entities Bill
- 3. Some mixed-use rural water supplies should be able to transfer into user ownership, rather than ownership by water services entities
- 4. Recommendation 3 should apply to supplies after consultation with technical and regulatory experts, the water service entity, confirmation by an independent panel, and a referendum of users
- 5. Factors to consider should include how critical the supply is for drinking, how many customers are served, the predominant uses, and financial ability to ensure safe drinking water is supplied
- 6. Mixed-use rural supply users will be kept fully informed of the consequences of transferring ownership during the referendum
- 7. A disputes resolution mechanism will handle ownership transfers
- 8. The referendums will need a 75 percent majority to succeed
- 9. Where ownership is unclear, case-by-case consideration and negotiation should be applied
- 10. There should be no cross-subsidies between three waters services i.e. drinking water, wastewater or stormwater services. Rural service users should generally not be subsidising urban service users
- 11. Pricing and funding should be consulted on before the new three waters entities begin operations in July 2024, and before volumetric pricing is introduced to new areas
- 12. Water services entities should have discretion over fair pricing and charging
- 13. Geographic price averaging should be limited to same service and similar classes of user, so averaging between agricultural and domestic use does not occur
- 14. Where communities have sought different levels of water servicing, there should be exemptions to geographic averaging
- 15. Price increases should be incremental to reduce price shocks (this is already part of government planning)
- 16. The recommendations of the Representation, Governance and Accountability working group should be taken up by the government
- 17. The 50/50 co-governance provisions at the regional representative group should be maintained
- 18. Specific rural supply scheme governance arrangements for those schemes transferred to the water services entities should be discussed between communities and the entities, and possibly provided for in entity constitutions or agreements
- 19. Water services entities should consider current arrangements related to management of the mixed-use rural supplies that transfer to them
- 20. Water services entities should consider contractual support for mixed-use rural supplies
- 21. Where possible, local staff and contractors should handle operations and management of mixed-use rural supplies
- 22. The resolution of rural marae and papakāinga drinking and waste water supply and affordability should be get ongoing support from water service entities
- 23. Water service entities should prioritise assessment of marae and papakāinga, including how to give effect to Te Mana o te Wai
- 24. Develop a coordinated work programme to address geospatial information gaps relating to marae and papakāinga
- 25. As soon as practical, establish an additional working group to consider the issues around rural marae and papakāinga
- 26. Regulatory proposals from Internal Affairs (DIA), Taumata Arowai and Ministry for the Environment should be given further consideration
- 27. Taumata Arowai should develop options for compliance for rural and small drinking water suppliers, as soon as possible
- 28. A clear definition of 'reticulation' should be provided to water suppliers, consumers, and Taumata Arowai
- 29. Taumata Arowai should develop options for exemptions of chlorine in certain drinking water supplies, to reduce the regulatory burden for small and rural suppliers
- 30. DIA and Taumata Arowai should work with the rural sector on analysis of the scope of rural supply concerns