Agenda of Wellington Water Committee

Wellington Water Committee

Purpose

The Wellington Water Committee ("the Committee") is established to:

· Provide governance oversight of the network infrastructure for the delivery of bulk water, water reticulation, wastewater and stormwater services in the areas of Lower Hutt City, Porirua City, Upper Hutt City and Wellington City ("the four cities");

· Provide governance oversight of Wellington Water Limited; and

· Provide a forum for the representatives of Wellington Water Limited's shareholders (being Wellington Regional Council and the local authorities for the four cities) ("the Shareholders") to meet, discuss and co-ordinate on relevant issues and, through their representatives, exercise their powers.

Status

The Committee is a joint committee of the Lower Hutt City Council, Porirua City Council, Upper Hutt City Council, Wellington City Council and Wellington Regional Council.

Specific responsibilities

The Committee's responsibilities are:

Governance oversight responsibilities

Governance oversight of Wellington Water Limited and of the network infrastructure for the delivery of bulk water, water reticulation, wastewater and stormwater services in the areas of the four cities, including by:

· Receiving and considering the half-yearly and annual reports of Wellington Water Limited;

· Receiving and considering such other information from Wellington Water Limited as the Committee may request on behalf of the Shareholders and/or receive from time to time;

· Undertaking performance and other monitoring of Wellington Water Limited;

· Considering and providing recommendations to the Shareholders on proposals from Wellington Water Limited;

· Providing co-ordinated feedback, and recommendations as needed, on any matters requested by Wellington Water Limited or any Shareholder;

· Providing recommendations to the Shareholders regarding the relevant network infrastructure owned by each Shareholder;

· Providing recommendations to the Shareholders regarding water conservation;

· Agreeing the annual Letter of Expectation to Wellington Water Limited;

· Receiving, considering and providing agreed feedback and recommendations to Wellington Water Limited on its draft statement of intent;

· Receiving, considering and providing recommendations to the Shareholders regarding Wellington Water Limited's final statement of intent.

· Agreeing when Shareholder meetings, or resolutions in lieu of Shareholder meetings, are required, without prejudice to Shareholder and board rights to call meetings under Wellington Water Limited's constitution;

· Seeking and interviewing candidates for Wellington Water Limited's board as needed and approving director appointments and/or removals;

· Approving the remuneration of directors of Wellington Water Limited;

· Monitoring the performance of the board of Wellington Water Limited; and

· Providing recommendations to the Shareholders regarding changes to these terms of reference, the Shareholders' Agreement and the constitution of Wellington Water Limited.

Shareholders' responsibilities

To the extent that each Shareholder delegates its relevant powers to the Committee member it appoints, the Committee will provide a forum for the Shareholders to meet and exercise their powers in relation to Wellington Water Limited.

Membership

The membership of the Committee will total five persons, as follows:

· One member appointed by Hutt City Council;

· One member appointed by Porirua City Council;

· One member appointed by Upper Hutt City Council;

· One member appointed by Wellington City Council; and

· One member appointed by Wellington Regional Council.

[Each appointee must be an elected member of the appointing Shareholder.]

Chairperson

The Chairperson and Deputy Chairperson will be elected by the Committee once all Committee members have been appointed.

Quorum

For a meeting of the Committee to have a quorum, three members, or their appointed alternates, must be present.

Where the Committee is providing a forum for the Shareholders to meet and exercise their powers in relation to Wellington Water Limited, the requirements of Wellington Water Limited's constitution will prevail.

[Note: Clause 11.3 of the company’s constitution provides that Directors shall be appointed and removed by the unanimous resolution of the shareholders. For this matter the quorum is therefore all five members or their alternates.]

Alternates

Each member appointed to the Committee must have an alternate appointed by the relevant Shareholder. The alternate may attend and vote at meetings of the Committee, but only in the event that the primary member is unable to do so.

Decision-making

The Committee will strive to make all decisions by consensus.

In the event that a consensus on a particular matter before the Committee is not able to be reached, each member of the Committee has a deliberative vote. In the situation where there is an equality of votes cast on a matter, the Chairperson does not have a casting vote and therefore the matter subject to the vote is defeated and the status quo is preserved.

Other than for those matters for which the Committee has effective decision-making capacity through these terms of reference, each Shareholder retains its full powers to make its own decisions on matters referred to it by the Committee.

Standing Orders

The Wellington Regional Council's Standing Orders apply, subject to the provisions for meeting quorum and decision making as set out in these terms of reference taking precedence.

Remuneration

Each Shareholder will be responsible for remunerating its representative on the Committee for any costs associated with that person's membership of the Committee.

Administration

Reports to be considered by the Committee may be submitted by any of the Shareholders or Wellington Water Limited.

Duration of the Committee

In accordance with clause 30(7) of Schedule 7 to the Local Government Act 2002, the Committee is not deemed to be discharged following each triennial election.

Appendix

Common delegations

Governance oversight responsibilities

· Each Shareholder will delegate to the Committee the responsibilities and powers necessary to participate in and carry out the Committee's governance oversight responsibilities.

Shareholders' responsibilities

· Each Shareholder will delegate to its appointed Committee member and, in accordance with these terms of reference, that person's alternate, all responsibilities and powers in relation to the agreement of:

o when Shareholder meetings, or resolutions in lieu of Shareholder meetings, are required (without prejudice to Shareholder and Board rights to call meetings under Wellington Water Limited's constitution); and

o the appointment, removal and remuneration of Wellington Water Limited's directors.

Wellington Water Committee

Meeting to be held in the Wellington City Council, Committee Room 1,
101 Wakefield Street, Wellington on

Friday 1 September 2017 commencing at 1.00pm.

ORDER PAPER

Public Business

1. APOLOGIES

2. PUBLIC COMMENT

Generally up to 30 minutes is set aside for public comment (three minutes per speaker on items appearing on the agenda). Speakers may be asked questions on the matters they raise.

3. CONFLICT OF INTEREST DECLARATIONS

4. Minutes

Meeting minutes Wellington Water Committee, 31 May 2017 11

5. Engagement with Councils on the 10 Year Service Plan (17/1264)

Report No. WWC2017/4/111 by Wellington Water Limited 17

6. Company Update Report (17/1261)

Report No. WWC2017/4/112 by Wellington Water Limited 21

7. DRAFT Water Sector Structural Reform (17/1256)

Report No. WWC2017/4/202 by the Chair, Wellington Water Committee 30

8. Final Proposal for a Combined Wairarapa District Council (17/1252)

Memorandum dated 17 August 2017 by the Divisional Manager, Secretariat Services, Hutt City Council 37

9. Information Item

Verbal Updates by the Chair on Regional Visits (17/1254)

10. EXCLUSION OF THE PUBLIC

CHAIR'S RECOMMENDATION:

11. Minutes

31 May 2017

12. Appointment of Company Directors, Wellington Water Limited (17/1246)

13. Wellington Water Limited Board Membership (17/1247)

14. Chair of Wellington Water Limited (17/1245)

The general subject of each matter to be considered while the public is excluded, the reason for passing this resolution in relation to each matter, and the specific grounds under section 48(1) of the Local Government Official Information and Meetings Act 1987 for the passing of this resolution are as follows:

(A)	(B)	(C)

General subject of the matter to be considered.	Reason for passing this resolution in relation to each matter.	Ground under section 48(1) for the passing of this resolution.


Minutes of the Wellington Water Committee held on 31 May 2017 – Proposals for Appointing Directors to the Board of Wellington Water Limited.	The withholding of the information is necessary to enable the local authority to carry out, without prejudice or disadvantage, commercial activities (s7(2)(h)).	That the public conduct of the relevant part of the proceedings of the meeting would be likely to result in the disclosure of information for which good reason for withholding exist.

Appointment of Company Directors, Wellington Water Limited.	The withholding of the information is necessary to protect the privacy of natural persons. (s7(2)(a)).	That the public conduct of the relevant part of the proceedings of the meeting would be likely to result in the disclosure of information for which good reason for withholding exist.

Wellington Water Limited Board Membership.	The withholding of the information is necessary to protect the privacy of natural persons. (s7(2)(a)).	That the public conduct of the relevant part of the proceedings of the meeting would be likely to result in the disclosure of information for which good reason for withholding exist.

Chair of Wellington Water Limited.	The withholding of the information is necessary to protect the privacy of natural persons. (s7(2)(a)).	That the public conduct of the relevant part of the proceedings of the meeting would be likely to result in the disclosure of information for which good reason for withholding exist.

This resolution is made in reliance on section 48(1) of the Local Government Official Information and Meetings Act 1987 and the particular interest or interests protected by section 6 or 7 of that Act which would be prejudiced by the holding of the whole or the relevant part of the proceedings of the meeting in public are as specified in Column (B) above.”

Kathryn Stannard

DIVISIONAL MANAGER, SECRETARIAT SERVICES

HUTT CITY COUNCIL

11 31 May 2017

Wellington Water Committee

Minutes of a meeting held in the Porirua City Council Chambers,
16 Cobham Court, Porirua on

Wednesday 31 May 2017 commencing at 1.00pm

PRESENT: Deputy Mayor D Bassett (Chair) (HCC)

Mayor W Guppy (Deputy Chair) (UHCC)

Mayor M Tana (PCC)

Cr I Pannett (WCC)

Cr J Brash (GWRC)

APOLOGIES: There were no apologies.

IN ATTENDANCE: Cr R Leggett Alternate (PCC)

Mr C Upton, Chief Executive (UHCC) (part meeting)
Ms W Walker, Chief Executive (PCC) (part meeting)

Mr A Wilson, Chief Asset Officer (WCC) (part meeting)
Mr C Crampton, Chief Executive (WWL) (part meeting)

Mr J Strahl, Chair (WWL) (part meeting)

Ms J Bryan, Principal Advisor (WWL) (part meeting)

Mr R James, Programme Director, Community Infrastructure Resilience (part meeting)

Mr M Kinvig, Group Manager, Network Strategy and Planning (WWL) (part meeting)

Ms K Stannard, Manager Secretariat Services (HCC)
Mrs H Clegg, Minute Taker (HCC)

PUBLIC BUSINESS

1. APOLOGIES

There were no apologies.

2. PUBLIC COMMENT

There were no public comments.

3. Presentation

Household Resilience

There was no presentation held. Members stated that they were pleased with the household resilience presentations made to each Council over the past month. The Chief Executive, Wellington Water Ltd advised that the 12 step resilience year long programme had commenced. He agreed to update members at the next meeting.

4. CONFLICT OF INTEREST DECLARATIONS

There were no conflict of interest declarations.

5. MINUTES

Meeting minutes Wellington Water Committee, 7 March 2017

Resolved: Minute No. WWC 17201

“That the minutes of the meeting of the Wellington Water Committee held on Wednesday, 31 May 2017, be confirmed as a true and correct record.”

Company Update Report (17/806)

Report No. WWC2017/2/8 by Wellington Water Ltd.

The Chief Executive, Wellington Water Ltd (WWL) elaborated on the report. He explained that the aim of the resilience programme was to provide 20 litres of water per person, per day after day eight of an emergency. He stated that the recent government announcement of $12M would assist with the programme. He further explained that approximately $3-$5M was still required to establish alternative water sources and that talks would commence with Greater Wellington Regional Council (GWRC) in this regard.

Mr James, Programme Director, Community Infrastructure Resilience explained the locations of alternative water sources. He further explained the Hansen Street, Wellington bore was due to be completed this week with the Keneperu Hospital bore being the next one to be developed.

In response to questions from members, Mr James agreed that existing reservoirs throughout the region may be alternative water sources, provided they survived an event, along with desalination plants, water tanks at schools and many local streams and tributaries. He advised that the goal was to provide clean drinking water within 500m of residents.

The Chief Executive, WWL agreed that there were many other forms of emergency (apart from earthquakes) and that future reporting would reflect this.

With regard to the water quality issue, the Chief Executive, WWL explained that lessons had been learnt from the Havelock North inquiry. He highlighted that immediately the e-coli positive result was obtained from the Waterloo reticulation system, chlorine was added to the water. He added that this resulted in the two bores situated near the Dowse Art Museum and Buick Street, Petone also having to be chlorinated. This was due to the numbers of people accessing the bores as they were classified as a public water supply and must be maintained at a safe level. He further explained that investigations were continuing to find the source of the e-coli contamination.

In response to questions from members, the Chief Executive, WWL explained that certain forms of protozoa were not killed by the chlorine. However, testing had revealed the region’s water did not have any of the harmful protozoa present. He confirmed that WWL had access to the relevant expertise it required. He agreed with the importance of depreciating water assets and the importance of collaboration of urban development personnel with WWL to ensure infrastructural requirements were successfully organised from the outset. He noted that there was further work required on water sensitive design principles.

Resolved: Minute No. WWC 17202

“That the Wellington Water Committee receives the Company Report.”

7 .

Statement of Intent 2017-2020 (17/797)

Memorandum dated 17 May 2017 by the Divisional Manager, Secretariat Services

The Chair reminded members that each Council had already approved the Statement of Intent as had the Board of Wellington Water Ltd.

The Chief Executive, Wellington Water Ltd explained that efficiencies, costs and value for money were inherent in all actions of Wellington Water Ltd. He agreed that there needed to be more public education with regard to the relevant agencies on flooding issues.

Resolved: Minute No. WWC 17203

“That the Committee:

(i) notes that the Board for Wellington Water Ltd has approved its Statement of Intent 2017-2020; and

(ii) receives and considers the Wellington Water Ltd’s Statement of Intent 2017-2020 attached as Appendix 1 to the report.”

Draft Three Waters Plan (17/801)

Memorandum dated 18 May 2017 by the Divisional Manager, Secretariat Services

The Chair elaborated on the report. He presented a brief overview of work completed to date with regard to responding to the Local Government Commission’s recommendations.

Cr Pannett and Cr Brash expressed concern that the draft Three Waters Plan was not a plan but a document filled with ideas. The Chair advised that he would take their comments on board.

Resolved: Minute No. WWC 17204

“That the Committee:

(i) agrees that the draft Three Waters Plan (‘the Plan’), attached as Appendix 1 to the memorandum, be provided to the Local Government Commission;

(ii) agrees that when neighbouring Councils in the wider region indicate further interest in increased collaboration, then the Plan will be revisited with them; and

(iii) agrees to invite Kapiti Coast District Council and the Wairarapa District Council Mayors onto the Wellington Water Committee to revisit the Plan and drive it forward.”

9.	Submission on the Proposal for a Single Wairarapa District Council (17/812) Memorandum dated 19 May 2017 by the Divisional Manager, Secretariat Services
	Resolved: Minute No. WWC 17205 “That the Committee: (i) receives the memorandum; and (ii) notes the final submission, on behalf of the Committee, on the proposal for a single Wairarapa District Council attached as Appendix 1 to the memorandum.”
10.	Change of Committee Meeting Date (17/822) Memorandum dated 23 May 2017 by the Divisional Manager, Secretariat Services
	Resolved: Minute No. WWC 17206 “That the Committee agrees to change its meeting date from 7 September 2017 to 1 September 2017 to be held in Committee Room 1, Wellington City Council commencing at 1pm.”

11. EXCLUSION OF THE PUBLIC

Resolved: Minute No. WWC 17207

“That the public be excluded from the following parts of the proceedings of this meeting, namely:

12. Minutes – 7 March 2017

13. Proposals for Appointing Directors to the Board of Wellington Water Ltd (17/802)

(A)	(B)	(C)

General subject of the matter to be considered.	Reason for passing this resolution in relation to each matter.	Ground under section 48(1) for the passing of this resolution.

Minutes of the Wellington Water Committee held on 7 March 2017 Proposals for Appointing Directors to the Board of Wellington Water Ltd.	The withholding of the information is necessary to protect the privacy of natural persons (s7(2)(a)). The withholding of the information is necessary to enable the local authority to carry out, without prejudice or disadvantage, commercial activities (s7(2)(h)).	That the public conduct of the relevant part of the proceedings of the meeting would be likely to result in the disclosure of information for which good reason for withholding exist. That the public conduct of the relevant part of the proceedings of the meeting would be likely to result in the disclosure of information for which good reason for withholding exist.

There being no further business the Chair declared the meeting closed at 2.10pm and the non public portion of the meeting finished at 2.55pm.

Deputy Mayor Bassett

CHAIR

CONFIRMED as a true and correct record

Dated this 1^st day of September 2017

17 01 September 2017

Wellington Water Committee

18 August 2017

File: (17/1264)

Report no: WWC2017/4/111

Engagement with Councils on the 10 Year Service Plan

Purpose

1. To inform the Water Committee on our progress to date in developing the three waters 10 and 30 year service plans and our engagement with councils on these plans.

Recommendation

That the Wellington Water Committee receives the report on developing the three waters 10 and 30 year service plans and our progress to date in engaging with councils.

Context

2. Wellington Water is committed to helping our client councils make well-informed three waters investment decisions. Development of the region’s three water 10 and 30 year service plan is one of the most significant deliverables for the company.

3. These plans have been developed on the basis of ensuring investment activities respond to the performance of our 12 service goals and the aspirations of our client councils and communities in a way that delivers best value for money.

4. Our approach has been to provide our client councils with an updated performance dashboard of their three waters services, identify key issues, provide them with a number of 10-30 year investment options and put forward our recommendations for their Long Term Plans (LTPs).

Long Term plan options and challenges

5. Engagement with our client councils on their draft plans is nearly complete and to date our presentations have been well received. Councils have been engaged in the discussions and appear to support the investment logic that sits behind the service plans.

6. This work has clearly identified the service performance challenges for each council and the investment choices available to them to lift performance over time. It has highlighted the following regional issues to consider:

· the opportunity of reducing the Greater Wellington Regional Council (GWRC) bulk water levy to the four city councils to allow funds to be prioritised differently over the other three water outcomes;

· identifying separately the investment needed (on top of the ‘Base’ plan) to upgrade infrastructure in support of growth, e.g. new water supply storage;

· the trade-off decisions needed to balance investment across the competing demands identified in the ‘Base’ 10 year plan;

· increasing the investment on top of the ‘Base’ 10 year plan to bring forward key activities and improve performance sooner, e.g. upgrades to wastewater networks.

Note: the ‘Base’ investment plan is aligned with Council’s previous 2015 infrastructure strategy budgets.

Reducing the GWRC Levy

7. In our discussions with GWRC, they understood the wider three waters challenges across the four cities. They have agreed to explore different levels of investment in improving resilience of the bulk water supply network to understand the impact that this might have in reducing the levy to the four city councils.

8. By optimising the GWRC programme to only deliver key resilience projects, the levy to councils would be reduced to allow funds to be prioritised differently over other equally important three waters outcomes within their council area. We are supporting this approach because we believe the risk of our communities being without water after a major seismic event is less now that the alternative supply plan of providing 20 litres per person will be in place by 30 June 2018 under the Community Infrastructure Resilience (CIR) work.

9. It should be noted that the calculations associated with this levy plan have not been completed and therefore it is only a concept that is being explore at this stage.

Enabling Growth

10. Growth is particularly challenging due to the extent of network upgrades required to accommodate it. The capacity of the wastewater is possibly one of the most significant issues to respond to, particularly in light of the national policy statement (NPS) for freshwater and the standards that will be set in the natural resources plan. Furthermore, the requirements of the NPS on Urban Development Capacity (UDC) 2016 will require councils to ensure infrastructure capacity exists or is planned for effectively going forward.

11. With this in mind, we are recommending infrastructure associated with growth will require additional funding over and above the current financial envelopes for three waters. To what extent will depend on the actual growth and the capacity of the networks, which will only become fully apparent once all hydraulic modelling is completed, which is expected to be over the next three years.

Competing Demands

12. It is evident from our service planning work that there are numerous competing demands across three waters with large projects and initiatives for many of our client councils to accommodate in their 2018/28 plans.

13. The inevitable trade-off decisions needed to balance investment across outcomes in the three waters and keep them within their current infrastructure strategy budgets is particularly challenging for many councils. At current investment levels, improving service performance is a long term objective for many councils that extend beyond 20 years.

Increased Investment

14. In addition to improving seismic resilience and enabling growth as discussed above, our councils have significant other areas of service performance requiring improvement, including minimising the impacts of flooding and reducing overflows from the wastewater network.

15. Where agreed by councils, we have provided an increased investment option (‘Base +”) that identifies those key activities to bring forward into the 10 year plan that will improve performance and achieve desired outcomes sooner, i.e. bringing forward upgrades to a council’s wastewater network. Investing in improvements to the wastewater network also increases our regional resilience, enhances the environment and accommodates the growth aspirations across the region.

Next Steps

16. Over the coming weeks we will complete our engagement with councils where these have been scheduled.

17. We will be working with GWRC and the four city councils to understand the change in levy and impact on council Opex budgets and the extent of the opportunity to achieve accelerated performance outcomes across all three waters services.

18. During 2017, we will continue working with each council to refine our three water service plans to combine into their wider council LTPs and Infrastructure Strategy’s.

Appendices

There are no appendices for this report.

Author: External Author (Wellington Water Ltd)

21 01 September 2017

Wellington Water Committee

18 August 2017

File: (17/1261)

Report no: WWC2017/4/112

Company Update Report

1. To give the Committee an update on issues relevant to the ongoing performance of the company..

Recommendation

It is recommended that the Wellington Water Committee receives this Company Update Report.

Service Planning Task

2. We are right in the middle of working with councils to finalise Long Term Plans. We have provided a separate report on this matter.

Customers at the heart of everything we do

3. Two senior representatives from Scottish Water will be with Wellington Water from 28 August to 1 September 2017. The aim is to review our customer and community service work and to lay out a plan for improved customer and community service over the next two years. Scottish Water is a leading water services provider in the United Kingdom.

4. The Wellington Water Committee has been invited to a session with Scottish Water. I will be able to share the key outputs of the visit with you on the day of the committee meeting.

Service Delivery Strategy Finalised

5. During 2016/17 we set ourselves a target of deciding how we will deliver our services looking forward. You will recall Wellington Water is a melting pot of all the service delivery models of our legacy councils which ranged from fully “in-house” to fully outsourced.

6. Every year we spend nearly $130M delivering services. How we go about delivering services presents a value for money opportunity to our owners.

7. Attachment 1 (to be tabled at the meeting) provides the final product. You will see the key elements are:

a. A single Alliance between a private sector partner and Wellington Water to delivery day to day operations and maintenance;

b. A single region wide, 10 year performance based contract for our four wastewater treatment plants; and

c. A contractor panel for our CAPEX works which will compliment what we have already achieved with the consultancy panel.

8. We will continue to deliver Water Treatment services in-house as we already do this work on a regional basis. It will be important to benchmark our performance over the next two to three years to ensure we are delivering services efficiently.

9. The Porirua Wastewater Treatment Plant is currently operated by Wellington Water staff. The move to a region wide contract will require us to transfer these resources to the new service provider. We have told our employees that their transfer to the new provider will be an explicit term of the contract.

Memorandum of Partnership signed with Ngāti Toa

10. Approximately 30 staff travelled to the Takapūwāhia Marae to take part in a ceremony to enter into our first Memorandum of Partnership with iwi. It was an awesome morning with great expectations created.

11. The signing of Memorandum of Partnership between Wellington Water and Te Runanga o Ngāti Toa (Ngāti Toa) provides a vehicle to develop a relationship which will lead to better informed decision making around the management of the three waters.

12. We expect to enter in a Memorandum of Partnership with the Port Nicholson Settlement Block Trust within the next two months.

Resilience Work Continues

13. Central Government has teamed up with Local Government to deliver an emergency level of service of 20 litres per person per day from day eight after a large natural event. The value of this work is $12M and we have been asked to deliver it by 30 June 2018. Everything is on track.

14. During the first seven days following a natural event we rely on personal storage at home. A recent survey undertaken suggests only about 20% of the population have enough water stored and most people think the water reticulation system will be fixed within the month (see Attachment 2). We need a game changer in here to make a real difference. We think an initiative focused on neighbourhoods, one at a time, where residents can pay the cost of the tank off their rates bill combined with Wellington Water looking after distribution or via sponsorship is really the only effective way to make progress.

15. Planning and delivery of large bulk water improvements to reduce the outage time for the water reticulation system is ongoing. The most notable project underway is the Harbour Drilling Project. The first bore is now complete but the water quality was less that we would have like, while the quantity was satisfactory. We are proposing to do a second exploratory bore closer to the main harbour channel in an attempt to find better water quality. As the quality improves the cost of treatment reduces.

Water Services Association of Australia

16. The Chair and I travelled to Canberra to take part in the annual Chair and Managing Directors symposium. The key observations were:

a. Australian Water Authorities are adopting the International Urban Sustainable Goals as part of their planning for delivering water outcomes;

b. Customer and community outcomes are still the main focus of Australian water entities. Customer from the point of view of water and wastewater services, and community from the point of view of freshwater quality, resilience etc; and

c. There is a lot of effort being put into creating a mentally healthy workplace. Like New Zealand, the focus has previously been more on worker safety rather than their personal wellbeing.

Key Operational Issues

Waterloo Wellfield

17. Both the Hutt City Council and the Greater Wellington Regional Council approved permanent treatment of the Waterloo Wellfield. This was necessary following a record of E Coli transgressions and there being no assurance this could not happen again.

18. We think the process was managed well, however there is a residual angst from the Hutt City communities who will need more time to get over the loss of not being able to access untreated water from the Waiwhetu aquifer. We are planning a public meeting to allow people to express their disappointment and possibly a public notice acknowledging this loss of service.

Wastewater Problems

19. We have encountered three significant wastewater network leaks over the last couple of months. All have required major repairs and were reasonably significant activities. This is more than we would have expected and could be related to the shaking effects of the 14 November earthquake.

IBM Building

20. Our building suffered some damage in the 14 November 2016 earthquake. Repairs are now underway. As part of normal response to such a large earthquake we engaged an independent engineer to review the performance of the entire building. This review has been completed and suggests the NBS rating of our building lies in the 40-50% level subject to peer review.

21. Initially, we wanted to move out of our building into temporary accommodation while we searched for a long term solution. Regrettably all interim options are either too expensive or have earthquake performance issues themselves.

22. After weighing up all the facts we have decided to remain in the current IBM building until we can move into a permanent new building. This could be some three to five years.

Housing Infrastructure Fund

23. I am one of three advisors to the Housing Infrastructure Fund (HIF). The HIF offers interest free funding to high growth councils to advance infrastructure to enable housing.

24. I have produced a learnings paper for Chief Executives from this. The most important point for the three water networks however, is to have up to date hydraulic models. Without them network constraints are not known and new designs, especially for infill housing, can be sub-optimal.

25. We have promoted full network wide modelling for all councils in the current long term plan work.

Appendices

No.	Title	Page
1 ⇩	Service Delivery Strategy (to be tabled at the meeting)
2 ⇩	Excerpt from customer survey on water storage	25
3 ⇩	Three Waters Dashboard	28
4 ⇩	Health and Safety Dashboard	29

Author: External Author (Wellington Water Ltd)

30 01 September 2017

Wellington Water Committee

17 August 2017

File: (17/1256)

Report no: WWC2017/4/202

Draft Water Sector Structural Reform

Purpose

1. To inform the Wellington Water Committee on progress with a number of significant reviews in the water sector attached as Attachment 1 to the report.

Recommendations

It is recommended that the Committee discuss potential implications of water sector reviews and how they could impact on Wellington Water, the region and country.

Three Waters Review

2. Government announced a review of three water services to be led by the Department of Internal Affairs (DIA) that will determine whether the current regime is ‘fit for purpose’ and to develop long-term improvements to the three waters system, refer to the Draft Terms of Reference attached as Attachment 2 to the report.

3. The review came about as a result of growth and housing supply issues. Originally this work was being led by the Ministry for the Environment but with the change in Ministers and the earthquake ownership has shifted to a wider group of Ministers (Local Government, Housing and Infrastructure, Finance and Transport Economic Development).

4. The review has three-stages (stage one: analysis of the issues/due diligence due for completion in November 2017, stage two: options to address priority issues and stage three: recommendations for Ministers and Cabinet due for completion end of May 2018).

5. The review responds to concerns about the performance and vulnerabilities of the current system and a lack of central government oversight. It is seeking increased collaboration between central and local government and will focus on financial incentives, asset management practices and compliance and monitoring. Outcomes of the review will support wider national interests such as resilience to hazard events, efficient delivery of services, support for business and economic growth, delivery of housing supply, and improving environmental and public outcomes.

6. The review has acknowledged the co-regulatory approach (modelled on the gas industry) that was put forward by Local Government New Zealand but first wants to look at what regulation is needed before jumping to the form of a regulatory body. This signals that regulation could be on the cards.

Havelock North Inquiry

7. The stage one report found significant collaboration failings between the Regional Council, District Council and the Drinking Water Assessors. Stage two of the Inquiry is looking at the possibility of formalising ‘joint working groups’ to increase collaboration. Christchurch has recently formalised a joint working group (Canterbury Drinking Water Reference Group) between its entities in response to this suggestion.

8. Working collaboratively is consistent with existing Local Government Act 2002 obligations (that DIA are suggesting could be further enhanced), the Resource Management Act 1991 (planning collaboratively) and the Ministry of Health Act 1956. Stage two of the Inquiry (due to report in December 2017) also asks nationwide structural questions relating to whether there should be a dedicated drinking water supply entity or entities, options for the management and delivery of drinking water, what role a single or multiple entities might have and its governance/accountability. Stage two will also look at WaterCare, Wellington Water and overseas entities.

9. The Water New Zealand submission on the Inquiry responded to the above questions agreeing that a change is needed to aggregate local authority water departments to promote better risk management and safe water supplies. They emphasised that a consolidated criterial mass of competence was necessary for water supply providers and that the larger the entity was the more likely it is to sustain competence/capability. The fragmented and small size of water departments across the country leads to a lack of consistency between local authorities.

10. Water New Zealand commented that entities should either own or manage water assets and water rates should be ring-fenced to be spent on water services. They favoured a Board of Directors governance. Tasmania and Scottish Water Models were also suggested as possibilities.

Water 2050 Project

11. Local Government New Zealand (LGNZ) is developing a policy framework for water through its Water 2050 Project. The framework will integrate freshwater quality and quantity, standards, rights and allocations, land use, three waters infrastructure cost and affordability and funding. It will also recognise that the allocation of iwi rights and interests in freshwater is a live issue for the Crown.

12. Advisory groups have been established for water quantity, quality, infrastructure and funding and governance. The project will prompt discussion about how quality standards for swimmability for example connect to infrastructure investment and community’s affordability.

13. We understand that LGNZ are having conversations about the interface between their work and Central Government’s Three Waters Review.

Discussion

14. Towards the end of 2017, central government will have defined the water problem/issues and we are likely to see (amongst other recommendations) mandatory treatment of drinking water, amended drinking water standards, increased certification standards for water staff, strengthened role of Drinking Water Assessors and possibly centralized regulation and expectations for increased collaboration between water entities (from stage two of the Havelock North Inquiry). These are all pointing in the direction of a new enhanced water sector regulatory framework.

15. This is on top of ever increasing expectations around water quality, providing efficient and value for money customer services and complying with National Policy Statements and legislation (ie. Resource Management Act). While we might be reasonably placed, we too have challenges in some of our cities just to keep core infrastructure in good order and investment in areas of growth. Some changes could be challenging for smaller councils which begs the question of how larger water businesses with economies of scale should support/share knowledge with smaller ones.

16. When you compare the New Zealand situation with overseas jurisdictions the stand out difference is the use of an economic regulator (like the Commerce Commission’s role for electricity). It is quite possible these reviews will focus on the option of full economic regulation as opposed to co-regulation suggested by LGNZ. Full economic regulation could involve price setting for three waters inside a closed finance system with very specific requirements on the delivery of activities to meet long run levels of service, eg. water quality limits as set by the Whaitua.

What is economic regulation?

17. It can be argued that economic regulation provides consumer protections and ensures consumers’ interests are promoted through efficient provision of good quality, reliable and sustainable services.

18. Introducing regulation requires sound evidence to set required levels of service while maintaining affordability and standards for environmental quality. It provides incentives for regulated companies to be efficient and allows consumers to share in these efficiencies, promotes stable and low-cost financing of water company activities, and protects consumers and taxpayers against the risks of company failure.

19. A sound evidence base for water in New Zealand has been on the agenda for a while (Treasury’s National Infrastructure Unit and the metadata standards). Financial incentives are part of the Three Waters Review and the Productivity Commission has looked at how the water sector could be more efficient for water customers.

Appendices

No.	Title	Page
1 ⇩	Range of Water Sector Reviews	34
2 ⇩	Central Government Three Waters Review - Draft Terms of Reference Summary	35

Author: David Bassett

Chair, Wellington Water Committee

MEMORANDUM 37 01 September 2017

Our Reference 17/1252

TO: Chair and Members

Wellington Water Committee

FROM: Kathryn Stannard

DATE: 17 August 2017

SUBJECT: Final Proposal for a Combined Wairarapa District Council

Recommendation

That the Committee receives the information and notes Sir Wira Gardiner’s letter to the Committee attached as Appendix 1 to the memorandum.

Purpose of Memorandum

1. The Local Government Commission has issued a final proposal to change the structure of councils in the Wairarapa. It proposes a new council called the Wairarapa District Council. It would replace the existing three district councils: South Wairarapa, Carterton and Masterton District Councils. The final proposal can be found at http://www.lgc.govt.nz/assets/Uploads/Final-Proposal-for-Wairarapa-District-Council-July-2018.pdf.

Main Features of the Proposal

2. Establishment of a new Wairarapa District Council.

3. Maintaining Greater Wellington Regional Council as the regional council for the Wairarapa.

4. The Wairarapa District Council would have a major elected at large and 12 councillors elected by voters from each of seven wards.

5. Five community boards, for Featherson, Greytown, Martinborough, Carterton and Masterton wards with 21 elected members in total.

Next Steps

6. Before 11 October 2017 electors can request a poll on the proposal by presenting the Local Government Commission with a valid petition. Between November 2017 – February 2018 a poll on the final proposal will be held.

7. If the results of the poll are against the proposal then there will be no further action. If the results of the poll are for the proposal then a transition body will be in place early 2018. Between October 2018 – October 2019 there will be an election of the new Council. If new Council elected in October 2018 it would have a four year term to bring it back into line with the three yearly cycle.

Letter from Local Government Commission

8. Attached as Appendix 1 to the memorandum is a response from the Chair of the Local Government Commission in response to the Committee’s submission regarding options for more efficient delivery of three waters in Wairarapa.

Appendices

No.	Title	Page
1 ⇩	Letter from Sir Wira Gardiner	39

Author: Kathryn Stannard

Divisional Manager, Secretariat Services

Deputy Mayor D Bassett (Chair)	Hutt City Council
Mayor W Guppy	Upper Hutt City Council
Mayor M Tana	Porirua City Council
Cr C I Pannett	Wellington City Council
Cr J Brash	Greater Wellington Regional Council
Cr D Ogden	Greater Wellington Regional Council (Alternate)
Mayor R Wallace	Hutt City Council (Alternate)
Cr R Leggett	Porirua City Council (Alternate)
Cr G McArthur	Upper Hutt City Council (Alternate)
Cr P Gilberd	Wellington City Council (Alternate)