The Minister of Local Government has made public announcements about the first steps of the rollout of the Local Water Done Well programme of reforms.
The announcement was accompanied by a letter to all Mayors and Regional Council Chairs, and a fact sheet.
Our initial review of these announcements follows.
Our participation in the reforms to date has been around aspects of the service delivery planning (how to assess the sustainability of these) and the information disclosures referred to.
The upcoming Local Government Water Services (Transitional Provisions) Bill will spell out what the obligations around service delivery planning are (what and by when), and will provide a bespoke process for those local authorities wanting to move quickly to establish CCOs under the Local Government Act to do so.
This legislation is expected either later in April or in early May with enactment scheduled by the end of June.
Your service delivery plans (covered below) will be due no later than one year from the date of commencement. Those local authorities that are contemplating taking the 12-month deferral on their long-term plans (LTPs) should note that the deadline for the LTP and service delivery plans are likely to be no more than a couple of weeks apart (if that). And all local authorities should note that the first steps in the 2024 triennial elections will likewise be no more than a week or two after these plans are due.
Service Delivery Planning
So, what is a service delivery plan? A service delivery plan will set out your local authority’s proposed approach to the long-term delivery of each of drinking water, sewage treatment disposal, and stormwater treatment and disposal. The plan will need to demonstrate that services are meeting the applicable health and environmental standards in a financially sustainable way.
As its name implies a service delivery plan will need to traverse the method or methods for delivering water services. These may differ from service to service. For example, your local authority might choose to be part of regional CCO that delivers water and wastewater services while choosing to retain stormwater treatment and disposal ‘in house.’ This addresses one of the major concerns expressed with previous reforms.
It is our understanding that these plans have a planning horizon of ten years, with three years provided in detail. While some local authorities are facing immediate infrastructural challenges, and most are facing a financing challenge now, ten years is not sufficient to make truly informed judgements. Service delivery plans should avoid ‘year four’ and ‘year eleven’ thinking. We would encourage local authorities to align their planning, at minimum, to the infrastructure strategies and associated planning of the upcoming LTP (whenever that might be).
A service delivery plan is a ‘one-off’ legislative requirement i.e. there will be no legislative requirements to do another after 2025.
A service delivery plan is not a section 17A review. We know that there are more than a few local authorities that may be due for a review of some or all of their three water services and will suggest that the upcoming Bill suspends that requirement for water services. (Having said that, a service delivery plan should traverse much of the same ground that local authorities will need to in doing a section 17A review).
The Department will be offering what is referred to as light touch support to local authorities with their service delivery plans. That includes the provision of technical advice and the option of a departmentally provided facilitator – both at your local authority’s expense.
It appears that there will be an obligation to engage with the community, and some legislative clarification of expectations. For example, any engagement will need to present only two options to the community – the status quo and the preferred change option. Those developing combined plans will be able to approach the engagement jointly (through a Joint Committee – and you’ll need to consider practicalities (such as the necessary delegations of authority).
Otherwise, it appears that the choice of when to engage, how long, and using what process will be matters for local authorities to make. Of course, in making these judgements local authorities will need to take the principles of consultation (section 82 of the LGA) into account and observe any requirements they have set out in their significance and engagement policies (are water services assets defined as a strategic asset in your policy). Those local authorities that are contemplating taking the 12-month deferral on their long-term plans will also need to consider how engagement on these and engagement on service delivery plans fit together.
We observe the announcements are silent about co-governance and te Tiriti. Previous statements have indicated that it will be left to local authorities and communities to consider these as part of the service delivery planning process.
What happens if the year’s deadline is not met?
At that point central government will step in using the regulatory backstop powers recommended by (among others) the C4LD grouping. Note that the cost of preparing plans in that instance will be recovered from your local authority.
The Department will be reviewing plans as they are submitted to ensure that these provide for sustainable delivery of service – and is developing tests and criteria to assess these.
What about the financially separate CCOs?
The 5 April announcements noted that Government expects to take policy decisions on the establishment of the financially separate, council owned organisations in mid-year. As we’ve previously noted, financial separation will mean that these organisations are likely to operate in quite a different way from CCOs operating under the Local Government Act.
The Government has also indicated that these organisations may have access to an enhanced range of financing tools. Again, further announcements on this are expected in mid-year.
Next Steps
We expect the Local Government Water Services (Transitional Provisions) Bill will be introduced to Parliament in the next few weeks. We understand that there will be a Select Committee process, but the commitment to enact by the end of June suggests that any submission process will be open for a short time only.
We will be holding a local authority and invited guests only webinar on arrival of the legislation. That will have two purposes – to help with submissions and to help clarify expectations around the service delivery planning.
The Department has committed to providing guidance to support the development of service delivery plans. That is scheduled for July. We will offer to assist with this and provide any additional material of a ‘gap-filling nature’ should there be a need for this.
Please contact Raymond Horan if you have any questions or require support at this time.