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How would the new system work?Ka pēhea te āhua o te pūnaha hou?

Entities Map no reform data

Source: Department of Internal Affairs

The Government is proposing four publicly owned, multi-region entities with a singular focus on delivering safe, reliable and affordable water services to communities.

Each entity’s Regional Representative Group, made up of council and mana whenua representatives would set priorities for these entities and hold them to account. The water entities would have to directly consult with their customers, businesses and residents on their strategic direction, investment priorities and prices and charges.

Here in Hawke’s Bay, ownership of all the water infrastructure and networks that supply your drinking water, wastewater and storm water services would transfer from your council to a new entity (at the moment, called ‘Entity C’, shown here.

Ownership

Government has committed to continued public ownership of water services. The water services entities would be collectively owned by councils.

Entity C would be owned by the 21 councils in the area shown on the map, on behalf of their communities.

Council ownership would be via a non-financial shareholding based on population, with at least one share for every council. Here in Hawke’s Bay, councils’ shareholdings in Entity C would be as shown below.

Ownership shareholding would not give direct influence over decision-making in the new entity.

Each new water services entity would be financially separate from councils.

COUNCIL NON-FINANCIAL SHAREHOLDING IN 'ENTITY C'
Council Shareholding
Central Hawke's Bay District Council One share
Hastings District Council Two shares
Napier City Council Two shares
Wairoa District Council One share

 

Governance, representation and accountability

Local and Community Voices

Source: Department of Internal Affairs

This diagram explains how the new entities would be structured and run. 

Responsibility for co-governance would be provided through a Regional Representative Group (RRG) that would have 12 to 14 members drawn 50/50 from councils and mana whenua. For the ‘Entity C’ RRG, there would be 6 to 7 council members representing the 21 councils in the entity’s service area and 6 to 7 mana whenua representatives representing all iwi across the East Coast of the North Island, the top of the South Island and the Chatham Islands. This means it is possible that Hawke’s Bay’s councils and mana whenua could have no direct representation on Entity C’s RRG. 

The RRG would be able to appoint Regional Advisory Panels (RAP) or committees, with equal representative from mana whenua and councils. The role of a RAP would be to provide advice to the Regional Representative Group (RRG) about how to perform or exercise its duties, functions, and powers. RAPs or committees would be able to feed more localised input to the RRG.  All decisions made by the RRG and RAP must be made by consensus.

The RRG would be co-chaired by one council and one mana whenua representative, appointed by the RRG.

The RRG would appoint an Independent Selection Panel (ISP) to appoint the entity’s Board members and consider the findings of an annual review of board performance carried out by the ISP.

The water services entity would have a competency-based board of between 6 to 10 members who would oversee the day-to-day management of water services, oversee the maintenance and renewal of the water networks and infrastructure and make investment decisions.

The board would be accountable to the RRG and would need to provide a funding and pricing plan and an infrastructure strategy to them at least once every three years.

The board would need to have competence in the delivery of infrastructure and have an understanding of the principles of the Treaty of Waitangi, mātauranga Māori, tikanga Māori, and te ao Māori.

Mana whenua (including any individual, iwi or hapu or group of iwi or hapu) whose rohe or takiwā includes a fresh water body in the entity’s service area would be able to provide the entity with a Te Mana o te Wai statement for water services and the entity would need to provide a plan setting out how it would give effect to Te Mana o te Wai.

 

Here's more detail

Each council’s ownership shareholding in the new entity means the entity is publicly owned.

When it comes to having a say in the entity’s strategic direction, investment priorities and pricing and charging, the Regional Representative Group (RRG) would have responsibility on behalf of all the councils and mana whenua in the service area. 

For the Water Services ‘Entity C’ RRG, there would be 6 to 7 council representatives representing 21 councils and 6 to 7 mana whenua representatives representing all iwi across the East Coast of the North Island, the top of the South Island and the Chatham Islands. This means it is possible that Hawke’s Bay’s councils and mana whenua could have no direct representation on Entity C’s RRG.  

Regional Advisory Panels (RAP) provide advice to the Regional Representative Group (RRG) about how to perform or exercise its duties, functions, and powers. Sub-regional advisory groups or committees would be able to feed more localised input to the RRG.

The water services entity’s Regional Representative Group (RRG) would have responsibility for representing the views of local communities.

For the Water Services ‘Entity C’ RRG, there would be 6 to 7 council representatives representing 21 councils and 6 to 7 mana whenua representatives representing all iwi across the East Coast of the North Island, the top of the South Island and the Chatham Islands. This means it is possible that Hawke’s Bay’s councils and mana whenua could have no direct representation on Entity C’s RRG. 

The water entities would be required to directly consult with their customers, residents and businesses on their investment priorities, prices and charges through their council and through other consumer and community interest forums. 

Public ownership of water services is one reason for establishing the new water services entities in law, and safeguards against future privatisation are also built in through council ownership of the entities. Councils could not sell or transfer their shares for any reason.

As well, for any future privatisation to go ahead, there would need to be a 75% vote in a public referendum. There would also be restrictions on the sale or transfer of assets held by the new entities.

Each council’s water assets, revenue, liabilities (debts) and staff would all transfer to the new water services entity.

Government has announced a funding package to support councils through the transition to the new arrangements and to cover the costs and financial impacts that councils would incur because of the reforms.

The support package is made up of two key components:

  1. A “better-off’ component to enable investment into the future for local government and community well-being, to support the priorities of central and local government; and
  2. A “no-worse-off” component to ensure no council is financially worse off in the short-term following the transfer of their three waters services to the new entities.

Here in Hawke’s Bay, the funding support looks like this.

SUPPORT PACKAGE FUNDING
Council Better-off component No-worse-off component
Central Hawke's Bay District Council $11m $1m
Hastings District Council $35m $5m
Napier City Council $26m $4m
Wairoa District Council $19m $1m
Source: Department of Internal Affairs

The Water Services Entities Bill sets out that new water services entities would be required to reimburse the Crown (Government) for any expenses or capital expenditure incurred in establishing the entities.

The water services entity Board would need to submit a funding and pricing plan to the RRG at least once every three years.

Beyond that, Government has given no indication how water services would be priced.

A water watchdog in the form of an economic regulation regime would require that appropriate investment in three waters services is maintained and that water users pay fair and reasonable prices for them.

The economic regulation regime and consumer protection mechanisms would be introduced through the next stage of legislation.

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