Financial independence crucial for sustainable water funding

Infrastructure New Zealand advocacy and strategy lead Martina Moroney says that maintaining the current systems, where councils are left to oversee a steady deterioration of their water infrastructure, is not a feasible option.

“If the current situation is left to continue, New Zealanders will face significant social, economic and environmental costs along with ongoing risks to public health,” Moroney says.

She says Infrastructure New Zealand wants to see the Government provide clarity around its water reform programme and the replacement for the Three Waters legislation as soon as possible.

“Ultimately, it will be important to achieve economies of scale through mergers and shared service arrangements,” she says.

“However, whatever water service entities are eventually established, the Government must ensure balance sheet separation from councils, and that appropriate funding mechanisms and access to borrowing is available to the new entities to renew existing network infrastructure and adequately maintain new infrastructure.”

Moroney says that financial independence, or debt headroom, will be crucial to the new water entities’ success.

She says this is because it will allow them to borrow to fund the significant backlog in asset renewal and replacement, while allowing for repayment to be made over the life of these long-term assets.

“In the meantime, it is likely that central Government will need to consider credit wrapping council water services and providing bridging funding until the new entities are established and self-sufficient,” Moroney concludes.