Economist backs new water services model
One of New Zealand's best-known economists is backing the maths behind a move to shift control of Waitaki's water services and assets to a new company, jointly-formed by four Otago district councils.
With water charges due to come off rates bills from the 2027 financial year because of changes to government regulations, Infometrics chief economist Brad Olsen has voiced strong support for Southern Water Done Well's preferred water services delivery model, saying it offered the "best pathway" to safe, reliable water services and long-term financial benefits for the districts involved.
SWDW's four partner councils — Waitaki, Gore, Central Otago, and Clutha district councils — are consulting on options for the future delivery of water services to meet the government's Local Water Done Well legislation. Their preferred delivery model is a jointly owned council-controlled organisation (CCO) covering all four districts.
The other three options being consulted on are a standalone Waitaki CCO, an in-house business unit, and in the case of WDC only, a joint CCO with Mackenzie, Timaru and Waimate districts.
At a recent meeting of Southern Water Done Well (SWDW) elected politicians and senior staff, Mr Olsen outlined what he felt were the positives of the joint CCO option.
Mr Olsen said one of the "most compelling" advantages was the leap in bargaining power, a media statement issued by the SWDW group said.
Individually, the four councils each represent just 1% to 2% of the South Island's population. However, by forming a jointly owned council controlled organisation, they collectively represent 6.6% of the South Island's population.
"That shift in scale is transformative.
"In a tight infrastructure market, scale gives you options and leverage."
SWDW, through Wellington-based consultants Morrison Low, has modelled all of the options, for water charges in 2027-28 and 2033-34 years in the Waitaki district.
Mr Olsen noted SWDW's deliberately conservative approach to financial modelling for the jointly owned CCO.
While short-term financial gains might be modest, water assets were long-term (20 years+) and by year 20, modelling for other joint water services delivery entities showed potential savings of up to 20% compared with going it alone.
"Even under these conservative assumptions, the numbers still stack up."
The conservative modelling projects 15% to 16% operating and capital efficiencies being achieved over "roughly a decade, which is a similar timeframe to achieve efficiencies as seen in other spaces".
WDC's public consultation on the four options ends today at 5pm.
Water options
Water options considered (prices per year)
Joint ''Southern Water Done Well'' 2027-28 2033-34 Joint council CCO (SWDW) $2168 $2894 Stand-alone CCO $2466 $3754 In-house business unit $2269 $3093
The South Canterbury council's model 2027-28 2033-34 In-house business unit $2041 $2924 Joint council $2269 $3093
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