Part 1: Introduction

1.1
In this Part, we discuss:

• managing flood risks;
• what we audited;
• what we did not audit;
• how we carried out our audit; and
• the structure of this report.

Managing flood risks

1.2
Flooding is New Zealand's most frequent natural hazard and causes significant social, environmental, and economic costs. According to the Insurance Council of New Zealand, severe weather and flood events resulted in claims costing about $260 million in 2017/18.

1.3
Roles and responsibilities for managing flood risks are divided between central government agencies and councils (regional councils and city and district councils). Businesses and individuals also have a role in managing flood risks – for example, by insuring their home or business and understanding the flood risk to their home.

1.4
Central government agencies help communities to prepare for and recover from large events (civil defence), provide councils with the necessary powers, fund the science system, and provide weather forecasts and warnings. For example, the Ministry for the Environment provides guidance to councils on managing the effects of natural hazards through regional and district plans.

1.5
Regional councils and city and district councils have roles in managing flood risk by controlling land use and through physical works such as building stop banks, and maintaining and clearing channels. Their risk management activities are subject to several Acts.¹

1.6
City and district councils are responsible for managing the stormwater system of drains and pipes. Regional councils are responsible for flood protection activities and managing water catchments.

1.7
In this report, we describe flood risk in terms such as a "one-in-100-year flood". This does not mean that an event will happen only once every hundred years. It means that there is a 1% chance of the event occurring each year.

1.8
When we use the term councils, we mean city and district councils. When we need to include regional councils, we are more specific (regional councils and city and district councils). We have not referred explicitly to unitary councils because they are always included in a general reference to councils (unitary councils have the functions of a regional council as well as a city or district council).

The stormwater system

1.9
A stormwater system is made up of the piped network, natural features such as streams, green infrastructure such as constructed wetlands, and designated overland flow paths (such as roads and parks) (see Figure 1). The main function of a stormwater system is to protect people and property from flooding by diverting or safely dispersing the rainwater that runs off from property, public reserves, and roads. Different parts of the system are designed to handle different intensities of rainfall.

Figure 1
Illustration of the stormwater system

Stormwater systems include places for water to overflow, as well as pipes to carry water away.

Source: Office of the Auditor-General.

1.10
In New Zealand, stormwater systems are managed by, or on behalf of, 67 councils.

1.11
Councils do not typically invest as much in their stormwater systems as they do in their water supply and wastewater networks, with limited exceptions. Urban stormwater systems are often referred to as the "poor cousin" of the three waters (drinking water, wastewater, and stormwater).

What we audited

1.12
We chose to focus on councils' management of stormwater systems because we have concerns that councils are not adequately reinvesting in their stormwater systems to maintain levels of service (in this report, the level of protection the stormwater system provides). If nothing changes, the under-investment will increase the risk of the stormwater system being unable to cope with heavy rain, resulting in the flooding of people's homes and commercial properties.

1.13
Our concerns are based on the gap between the depreciation of stormwater assets and what councils are spending on the renewal of those assets (we discuss forecast depreciation and renewals in paragraphs 5.22-5.28). This indicates that the assets are likely to be wearing out faster than they are being renewed.

1.14
The effects of climate change and urbanisation are also putting increasing pressure on stormwater systems.

1.15
To understand how councils are managing these issues, we audited how Dunedin City Council, Porirua City Council, and Thames-Coromandel District Council (the three councils) manage their stormwater systems to reduce the risk of flooding (see Figure 2).

Figure 2
Location of the three councils we looked at

The councils are far apart geographically and vary in the size of area they are each responsible for.

Source: Office of the Auditor-General.

1.16
We chose these councils to understand the range of challenges councils have in managing their stormwater systems to reduce the risk of flooding. These challenges include understanding the effects of current and future heavy rainfall (including the effect of climate change and urbanisation), affordability issues, and lacking some information about their stormwater assets.

1.17
Of the three councils, two are managing stormwater systems directly (Dunedin City Council and Thames-Coromandel District Council) and the third (Porirua City Council) is outsourcing that work to a council-controlled organisation (Wellington Water Limited²).

1.18
We assessed the three councils':

• understanding of their current and future flood risk;
• process for determining the levels of service for their stormwater systems; and
• management of their stormwater system to deliver the agreed levels of service now and in the future.

What we did not audit

1.19
We did not audit the environmental aspects of stormwater systems. For example, stormwater systems sometimes overflow into the wastewater network and cause significant environmental issues during heavy rainfall.

1.20
We also did not audit:

• any other methods councils use to reduce the risk of flooding, such as controlling land use through district plans;
• the process used to put information about flooding and stormwater on land information memorandums; and
• the adequacy of councils' spending on their stormwater systems.

How we carried out our audit

1.21
We carried out our fieldwork and analysis in early- to mid-2018.

1.22
To carry out our audit, we:

• reviewed documents, including asset management plans, long-term plans, and reports;
• interviewed staff at the three councils, Wellington Water, and the respective regional councils;
• surveyed elected members from the three councils; and
• analysed data from the three councils and financial data for all councils.

Structure of this report

1.23
In Part 2, we discuss the three councils' understanding of their flood risk and use of information about climate change and land-use changes, including urbanisation, to inform their understanding of their future flood risk.

1.24
In Part 3, we examine the information and process councillors of the three councils use to set the levels of service for the stormwater system. We also discuss the information the three councils provide to the community to understand those levels of service and the implications of that.

1.25
In Part 4, we describe the need for good asset information, including condition and performance information. We also talk about how better information will help councils make well-informed and deliberate decisions about the stormwater system.

1.26
In Part 5, we talk about the challenges councils face in asset management planning and delivering their planned capital programme. We also describe the need for councils to work effectively with others to manage flood hazards and the stormwater system.

1: These include the Resource Management Act 1991, the Local Government Act 2002, the Soil Conservation and Rivers Control Act 1941, the Building Act 2004, the River Boards Act 1908, and the Land Drainage Act 1908.

2: Wellington Water Limited was set up in September 2014. It was the result of a merger between Greater Wellington Regional Council's water supply group and Capacity Infrastructure Services. Wellington Water is owned by Hutt City Council, Porirua City Council, Upper Hutt City Council, Wellington City Council, and Greater Wellington Regional Council. The councils are equal shareholders. Wellington Water manages the drinking water, wastewater, and stormwater services of the shareholding councils but does not own the assets used to deliver those services.