Regional CCO

Together, our councils serve 182,700 people and span an area of 14,164 kilometres, which is made up of a number of dense urban areas and more dispersed rural populations. Joining together to deliver water services provides efficiencies and financial benefits that will help keep costs per household down.

By working together, we can also save money and reduce costs over time, including buying supplies in bulk, using shared software and vehicles, and streamlining decision making.

There is already a well-known shortage of specialist resources in the water services delivery sector both in New Zealand and globally. Hawke’s Bay councils have struggled to fill key roles and attract the necessary skills. This gap in strategic capacity has been a contributing factor in councils being unable to deliver on planned capital projects. A larger dedicated water organisation would have a higher chance of attracting and retaining the required skills and expertise into the future.

Councils would work together to set up the organisation, which would start with the tasks of developing a transition plan. That includes appointing a skills-based board of professional directors. This could be done through councils appointing representatives to a joint committee known as a shareholder council, who would be responsible for appointing the board. The shareholding council committee could also create a ‘Statement of Expectations’ to guide the CCO’s priorities, strategic direction, and performance expectations.

Legislation also requires the new water organisation to prepare a water services strategy that would detail its approach to water management. The strategy would be reviewed every three years and relates to a period of at least ten financial years, so it would act like a council long-term plan.

The board of directors would be appointed based on competencies consistent with the needs of the new organisation and specific to water governance. The transition plan would include subject areas such as the expected timelines, mana whenua involvement, scope of delivery services, location, customer experience and staff transitions.

While the councils would be shareholders, the water organisation would operate independently from other council business. This means, unlike how we manage water services currently, no council staff or elected members would be involved in the organisation’s daily decisions. Like council, the community would not be directly involved in decision making, although there would be consultations from time to time.

The organisation would be responsible for planning, funding, building and maintaining water supply, wastewater and stormwater infrastructure, as well as running the day-to-day customer-facing services for those water services. Ownership of water assets (and all associated debt and liabilities) would transfer to the water organisation.

While currently we have to balance our spending on water with other services we manage as councils, this new water organisation would be able to borrow money for water construction (capital costs) separate from council borrowing. This would mean we have greater capacity to invest in other infrastructure and community projects. We would consult and seek feedback on these other services through our Long Term Plan and other community consultations, before committing to any other expenditure.

As these assets are strategic assets belonging to councils, the transfer of each council’s water assets will need to be provided for in each of the relevant Long Term Plans. This would involve a Long Term Plan amendment. In accordance with the LWDW legislation, this consultation covers this requirement.

Indicative modelling shows this to be the most affordable way to deliver water services for our communities in the future. By 2034 Napier residents who are connected to all three waters could expect to pay $300 less per year for water services delivery compared to a council delivered water services model and a standalone Napier CCO model.

The CCO would be responsible for managing and paying for all water services. Ownership of waterrelated assets (and any related debt) would be transferred to the new CCO. This would see Council’s debt/revenue ratio reduce from 156% to 75% by FY34. As well, transferring this debt off our balance sheet does not put Council at risk of breaching our debt covenants in FY31 like the other options of single-council CCO and in-house delivery.