FNDC to join cross-council water organisation
Far North District Council has agreed to work with other councils to create a Northland-wide Council Controlled Organisation (CCO) to deliver drinking water and wastewater services from 2027.
The decision to establish the CCO was made during the council meeting held last week at Kaikohe and followed similar decisions by Whangarei and Kaipara district councils. These followed a recommendation to form a CCO made by the Northland Local Water Done Well Working Group, which is made up of elected members from each council, council staff and an independent advisor David Hawkins.
Before making the 31 July decision to become part of the CCO, Far North District councillors discussed the proposal at length. It was noted that the Government had been clear that councils opting to keep water services in-house (as Far North District Council had initially planned to do) would be very closely scrutinised and that their Water Services Delivery Plans may not be accepted. All councils in New Zealand must provide a Water Services Delivery Plan to the Government by 3 September.
During the discussion, it was stated that misgivings about the proposal had been reduced by the legislation’s focus on compliance. This made it clear that smaller Far North communities, such as Rāwene and Hihi, would not be “left behind” by a larger, regional organisation. Predicted savings for ratepayers under a CCO model were also discussed. According to the report to council, Far North ratepayers could see a 150 per cent reduction in average water rates in 10 years under a ‘harmonised’ CCO model, compared to keeping water, wastewater and stormwater services in-house.
Under the current model, water services are charged on a scheme-by-scheme basis. A harmonised approach would see all customers across the region charged the same for water services. No agreement has yet been made on regional or ‘harmonised’ pricing. This will be reviewed by the CCO within three years.
Both Kaipara and Whangarei district councils have said that working together via a CCO will help ensure all of Northland can meet the increased compliance requirements under Local Water Done Well and address growth across the region, while ensuring charges are fair for residents and ratepayers of each district. Advantages of the CCO model include cost efficiencies through shared resources, reduced duplication and economies of scale over time, improved borrowing capacity, enhanced resilience through a larger shared workforce, improved ability to deliver large-scale capital programmes and respond to legislative changes, as well as a commercially focused board of directors and management team. However, it is recognised that each council comes to the CCO from different starting points in terms of water assets, debt levels and infrastructure investment needs. Member councils have agreed to a model that will see financials ring-fenced for each district and have non-harmonised water charges to start with, meaning water charges are different for residents in each district. It is expected that during its first three years, the CCO will identify and prioritise some of the critical issues each district is facing and then be in a position to review its approach to finances and water charges.
The proposal includes defined “offramps” that enable any one of the participating councils to withdraw from the arrangement to create a CCO if consensus cannot be reached on key matters. These might include agreement on the CCO constitution, asset strategy, shareholding structure, and decision-making framework among others.
Stormwater assets would remain with each council in terms of decision making and costs, but a shared service arrangement could be made with the CCO for operations.
More information about Local Water Done Well can be found below:
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