Nelson Mayor Nick Smith has called on the Government to leave Council-owned business Nelmac out of its Three Waters transfer plans at a select committee hearing this morning (Monday 13 March 2023) in Wellington.

Mayor Nick outlined Nelmac's crucial role as Nelson City Council's first responder in crises events.

“Nelmac, with it’s multiskilled, large workforce played a key role in the response to the August 2022 weather event. That response would be compromised if the company is divided in the way currently proposed by Government.”

Under the reform, Nelmac’s water division may be transferred from the company to Water Services Entity C. This would lead to a 30% reduction in revenue compared with the business’ current turnover and put a question mark over its future viability.

“Without its water division, Nelmac would go from providing Nelson City Council with a $500,000 annual distribution to making losses of $300,000 annually,” Mayor Nick says.

“An annual capital injection from Nelson City Council would be required.”

In the Water Services Entities Act 2022, the relevant staff, assets, property, contracts and liabilities of a local government organisation may transfer to a water services entity. A local government organisation includes council-controlled trading organisations (CCTOs) such as Nelmac.

Mayor Nick was in the capital with Council Chief Executive Lindsay McKenzie and Nelmac Chief Executive Jane Sheard to present a supplementary submission to Parliament’s Finance and Expenditure Committee on the Water Services Legislation Bill. The bill provides an opportunity to exempt Nelmac and companies like it from the broad reach of the Water Services Entities Act.

“Our nation is currently grappling with the challenges left by Cyclone Gabrielle and the last thing Parliament should be doing is acquiescing to changes that would make future responses to such events worse,” Mayor Nick says.

Last week, Nelson City councillors approved the development of the supplementary submission after hearing that the proposed transfer of Nelmac’s water division to Water Services Entity C on 1 July 2024 would affect the overall financial viability and sustainability of the company.

“We expected the contracts with Nelmac would be transferred to the water services entity but not its water services assets and staff,” Mayor Nick says.

“Council had assumed Nelmac would contract to the water services entity on the same terms.”

The injustice of the proposed transfer of Nelmac’s water division is highlighted by considering other councils, such as Tasman District Council whose water services are provided by Downer.

“Nelmac is caught by the Water Services Entities Act and Downer is not," says Mayor Nick.

"There is no rationale for this that we can see. Even if the Three Waters Reform is to proceed, dismembering Nelmac and other similar council-contracting companies around New Zealand will compromise the reform and make matters worse.

“My immediate priority is to persuade the Government to take proposals to remove Nelmac’s water services contracting business off the table. My longer-term goal is to have the broader Three Waters Reforms reconsidered because of the negative impact on Nelson.”
 

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