Submission on the Local Government (Water Services) Bill

We provided a submission to the Finance and Expenditure Committee on the Local Government (Water Services) Bill.

21 February 2025

Committee Secretariat
Finance and Expenditure Committee
Parliament Buildings
WELLINGTON

Tēnā koe

SUBMISSION ON THE LOCAL GOVERNMENT (WATER SERVICES) BILL

Thank you for the opportunity to comment on the Local Government (Water Services) Bill (the Bill).

The Controller and Auditor-General is an independent Officer of Parliament. In that role, I am responsible for giving Parliament and the public assurance that public organisations are operating and accounting for their financial and service performance in keeping with Parliament’s intentions and public expectations.

The management of the country’s water resources is of deep significance and concern to New Zealanders. People expect the water from their taps to be clean and safe, and for their wastewater and stormwater systems to work effectively and not pollute our environment. New Zealand faces a significant infrastructure challenge with the water services that are currently provided by local authorities. The Bill intends to set up a framework for local government to provide water services in a flexible, cost-effective, financially sustainable, and accountable manner.

In order for these reforms to be successful, it is critical that communities are provided with clear and reliable information about the services to be delivered and given an opportunity to engage in decision-making processes. It is also important that providers of water services report back to communities about their performance. This is the lens through which I have considered the Bill.

Under the current regime, these planning, performance and reporting requirements are contained in a long-term plan that covers 10 years (updated every three years), an annual plan (which includes an updated annual budget), and an annual report (which includes performance information).

Under these arrangements, councils must provide their communities with reliable and clear information about the matters proposed to be included in a long-term plan and the costs and funding of these. This ensures that the people in each community can engage in their council’s decision-making process.

The Bill creates five different water services delivery models that councils can choose from (essentially either a council provider or four different models of water organisations). Water services are removed from councils’ long-term plans, annual plans and annual reports and will instead be covered in a water services strategy, annual budget and annual report.

The process for preparing a water services strategy differs depending on whether it is prepared by a council or a water organisation. A council is required to consult its community on a summary of the strategy. A water organisation is not, removing a mechanism for communities to directly engage with the decisions the water services organisation makes about water services.

Instead, the Bill requires water organisations to include information in their strategy about how they propose to obtain feedback from consumers in relation to the water services provided to them. The Bill relies on the Commerce Commission to monitor, through information disclosures, how consumers are treated by water services providers.

The Bill also proposes independent audit requirements that are much reduced than those in the current regime. My office has had responsibility for auditing long-term plan consultation documents as well as long-term plans since 2006. Parliament gave the Auditor-General this role to provide assurance to the community that these plans about essential services are based on reasonable and supportable information. The proposed changes remove audit requirements in relation to any engagement process with the community, and the content of a water services strategy itself will only be audited if requested. The Bill, as currently drafted, is also unclear about what performance information in end-of-year annual reports must be audited.

I am concerned that, when taken together, these changes mean that there is significantly less opportunity for the community to engage in the decision-making processes about the delivery of essential water services. Further, the level of independent assurance over any information provided to those communities is significantly weakened. In my view what is proposed is a major reduction in public accountability for an essential public service.

The Bill is complex and technical. It raises more detailed questions of workability and clarity in relation to the planning, reporting, and independent assurance requirements for the different delivery models. I have attached a table that contains my full submission on those particular aspects of the Bill I am concerned about. Addressing these, in my view, is essential to avoid reducing accountability to the community for the provision of these vital services.

Thank you for the opportunity to make a submission on this Bill. As my Office does with our other submissions on legislative proposals, we will publish this submission on our website in due course.

Nāku noa, nā

John Ryan
Controller and Auditor-General