Water moves welcomed

New Zealand’s largest water industry representative organisation has welcomed moves announced by the Government to extend the existing time limit on private sector contracts for local authority owned water and wastewater services.

“Extending the existing 15 year limit to 35 years will provide for more flexibility in delivery of water and wastewater services,” said Water New Zealand Chief Executive Murray Gibb today.

“This barrier, inserted in the 2002 Local Government Act, effectively precluded companies from building, owning and operating new water and wastewater treatment plants during the contract period. Under previous legislation this barrier wasn’t there and plants such as the Moa Point wastewater treatment facility in Wellington were able to be built by private operators,” he said.

“The changes, which stop councils controlling the management of privately run water services, while retaining final say on pricing and policy, are sensible.

“Water infrastructure lends itself to being a natural monopoly. As such is best that it ultimately retained be under public control. That said, there is a need for more flexibility to meet community need, and the changes announced by the government will achieve that,” said Mr Gibb.

”While water infrastructure is seriously expensive, it generally has a long service life, so it was not sensible to introduce the 15 year contract limit in the first place.

“It is clear from the delayed implementation of the drinking water standards that the water infrastructure needs of smaller communities cannot be met from their rating bases alone. Deferred infrastructure investment not meeting community need is an issue that has been known for decades.

“Some smaller communities are also struggling to meet increased demand associated with tourist traffic.”

Mr Gibb said Water New Zealand had been told yesterday that private sector interests wanted to enter into public private partnerships with councils, but were effectively precluded from doing so by the existing 15 year time limit.

“Allowing them to become involved in contracts subject to 35 year time limits is a sensible pragmatic initiative,” he said.

ENDS

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