Notice of Meeting:

I hereby give notice that an ordinary meeting of the Dunedin City Council will be held on:

 

Date:                                                    Monday 20 September 2021

Time:                                                   12.00 noon

Venue:                                                via Zoom Audio Visual Link

 

Sandy Graham

Chief Executive Officer

 

Council

PUBLIC AGENDA

 

MEMBERSHIP

 

Mayor

Mayor Aaron Hawkins

 

Deputy Mayor

Cr Christine Garey

 

Members

Cr Sophie Barker

Cr David Benson-Pope

 

Cr Rachel Elder

Cr Doug Hall

 

Cr Carmen Houlahan

Cr Marie Laufiso

 

Cr Mike Lord

Cr Jim O'Malley

 

Cr Jules Radich

Cr Chris Staynes

 

Cr Lee Vandervis

Cr Steve Walker

 

Cr Andrew Whiley

 

 

Senior Officer                                               Sandy Graham, Chief Executive Officer

 

Governance Support Officer                  Lynne Adamson

 

 

 

Lynne Adamson

Governance Support Officer

 

 

Telephone: 03 477 4000

Lynne.Adamson@dcc.govt.nz

www.dunedin.govt.nz

 

 

 

 

 

 

Note: Reports and recommendations contained in this agenda are not to be considered as Council policy until adopted.

 

 


Council

20 September 2021

 

 

ITEM TABLE OF CONTENTS                                                                                                                                         PAGE

 

1             Public Forum                                                                                                                                                              4

2             Apologies                                                                                                                                                                    4

3             Confirmation of Agenda                                                                                                                                        4

4             Declaration of Interest                                                                                                                                           5     

Reports

5             Three Waters Reform                                                                                                                                          19                

 

 


Council

20 September 2021

 

 

1          Public Forum

At the close of the agenda no requests for public forum had been received.

2          Apologies

At the close of the agenda no apologies had been received.

3          Confirmation of agenda

Note: Any additions must be approved by resolution with an explanation as to why they cannot be delayed until a future meeting.


Council

20 September 2021

 

Declaration of Interest

 

  

 

EXECUTIVE SUMMARY

1.         Members are reminded of the need to stand aside from decision-making when a conflict arises between their role as an elected representative and any private or other external interest they might have.

 

2.         Elected members are reminded to update their register of interests as soon as practicable, including amending the register at this meeting if necessary.

1.          

3.         Staff members are reminded to update their register of interests as soon as practicable.

 

 

RECOMMENDATIONS

That the Council:

a)     Notes/Amends if necessary the Elected Members' Interest Register attached as Attachment A; and

b)     Confirms/Amends the proposed management plan for Elected Members' Interests.

c)     Notes the proposed management plan for the Executive Leadership Team.

 

 

Attachments

 

Title

Page

a

Councillor Register of Interest

7

b

Executive Leadership Team Register of Interest

17

  



Council

20 September 2021

 

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20 September 2021

 

Reports

 

Three Waters Reform

Department: 3 Waters

 

 

 

 

EXECUTIVE SUMMARY

1          This report updates the Council on the Government’s three waters regulatory and service delivery reform proposals. It also updates the Council on independent analyses of the aspects of the reform proposals commissioned by the Otago-Southland Three Waters Office.

2          A draft letter to the Minister of Local Government providing feedback from the Dunedin City Council on the proposed reforms is attached to this report as Attachment A.

3          The draft letter to the Minister provides feedback on the following:

a)    Council requests adequate time and appropriate accessible information to engage meaningfully with the community on three waters service delivery reform;

b)    Council requests the Government to continue working constructively and in partnership with councils and iwi/Māori to resolve the following issues prior to engagement with communities:

i)          the design of mechanisms to enable local influence in the new water services entities;

ii)         improvements to the modelling of the financial impacts of the proposed reforms; and

iii)        the design of three waters workforce development initiatives to help ensure the objectives of any reforms can be achieved; and

c)    Council must be able to control the strategic direction of land use planning.  Council is best placed to balance the wide variety of considerations that inform land use planning decisions, of which three waters service provision is but one part.

4          This report also outlines legislative considerations that may be relevant to any future Council decisions and consultation on three waters reform.   Council is not currently able to make any decisions on a future model for three waters service delivery in Dunedin as there is insufficient information and time available to meet the moral and legal requirements of council decision-making.

RECOMMENDATIONS

That the Council:

a)     Notes the updates on the three waters reform proposals.

b)     Notes the updates on independent analyses of aspects of the reform proposals commissioned by the Otago-Southland Three Waters Office.

c)     Approves, with any amendments, the draft feedback letter to the Minister of Local Government at Attachment A. 

d)     Authorises the Chief Executive to make any minor editorial changes to the letter

e)     Authorises the Mayor or his delegate to speak to the Minister and/or her officials in support of the letter if offered the opportunity.

f)     Notes the Council cannot make a formal decision to adopt an alternative model for three waters service delivery without first amending the 10 Year Plan 2021-31 and undertaking commensurate community consultation.

g)     Notes a decision to provide feedback to the Minister of Local Government by 1 October 2021 does not commit the Council to a particular position on a future model for three waters service delivery or to continued participation in the Government’s reform programme.

h)     Notes the Dunedin City Council is committed to consulting with the community on three waters reform in a meaningful way once the Council has further information from the Government on the next steps in the reform programme.

i)      Notes the Government intends to make further decisions about the three waters service delivery model after 1 October 2021.

 

BACKGROUND

5          The Government has initiated changes to three waters regulatory and service delivery arrangements to address challenges highlighted by the Government Inquiry into Havelock North Drinking Water and the Three Waters Review.

6          In June and July 2021, the Government made several substantial announcements and information releases in relation to the three waters reform proposals

7          On 2 June, the Government published financial modelling and analyses it commissioned from the Water Industry of Scotland and other consultancies to advance the evidence base that informs the case for nationwide three waters service delivery reforms.  Documents published as part of the 2 June 2021 information release are available on the Department of Internal Affairs website at https://www.dia.govt.nz/three-waters-reform-programme-national-evidence-base. The documents are listed in Attachment B.

8          On 30 June, the Government announced its proposed new water services system for New Zealand. Documents published as part of the 30 June announcement are available on the Department of Internal Affairs website at https://www.dia.govt.nz/three-waters-reform-programme-cabinet-decisions-and-reform-proposals. The documents are listed in Attachment B. 

9          In conjunction with the 30 June announcement, the Government also launched a new website to publicise three waters reforms: https://threewaters.govt.nz/

10        On 15 July, the Government announced a $2.5 billion package to support the transition to the new water services system.

11        The support package is made up of two components:

a)         A $2 billion component to invest in the future of local government and community well-being; and

b)        A $500 million component to ensure than no council is left financially worse off as a direct result of the three waters service delivery reforms.

12        The $2 billion component will be allocated to councils on the basis of a nationally consistent formula. The Dunedin City Council’s allocation is $46.172 million.

13        Documents published as part of the 15 July announcement are available on the Department of Internal Affairs website at https://www.dia.govt.nz/three-waters-reform-programme-reform-support-package. The documents are listed in Attachment B. 

14        Following these announcements, the Government initiated an eight-week period for Councils to provide feedback on the potential impacts of the proposed reforms and how they could be improved. The deadline for feedback is Friday 1 October 2021.

15        Further Government announcements on implementation measures and transition arrangements are expected after 1 October 2021.

Three waters regulatory reform update

16        The Water Services Bill, if passed, would replace Part 2A (Drinking Water) of the Health Act 1956 and implement system-wide reforms to the regulation of drinking water and source water.

17        At the Council meeting on 23 February 2021, the Council considered the Water Services Bill and approved a joint submission to Parliament’s Health Committee. The joint submission was prepared by the Otago-Southland Three Waters Office on behalf of all of the Otago and Southland councils, including the DCC.

18        The Health Committee delivered its report on the Water Services Bill on 10 August 2021. The Bill’s second reading in Parliament has been delayed by the recent COVID-19 lockdown. The Government intends for the Bill to be passed in 2021.

19        The Ministry of Health remains New Zealand’s drinking water regulator until the Water Services Bill passes through Parliament and comes into effect. At that point, Taumata Arowai will become the drinking water regulator.

20        The Ministry for the Environment intends to amend the National Environmental Standard for Sources of Human Drinking Water 2007 to align it with the Water Services Bill. Public consultation on the proposed amendments is expected in the near future.

21        Other Government reform initiatives

22        In addition to the three waters reform, the Government has announced further wide-ranging reforms related to freshwater, resource management, climate change and zero carbon, all of which have potential to have significant impacts on the delivery of three waters services.

·    Resource management system reform:

proposed Natural and Built Environments Act

proposed Strategic Planning Act (30-year spatial plans)

proposed Climate Change Adaptation Act

·    National Policy Statement for Freshwater Management

·    National Policy Statement on Urban Development

·    New Zealand Coastal Policy Statement

·    National Environmental Standards for Sources of Human Drinking Water

·    Review of the Future of Local Government

·    Zero Carbon Act and Climate Change Commission initiatives

23        The linkages and impacts between three waters reform and other Government reform is unclear, but these reform initiatives have potential overlapping regulatory, operational and cost impacts. 

DISCUSSION

Proposed new water services system

24        The reports and other documents published on 2 June and 30 June contain information about estimated potential three waters investment requirements for New Zealand, scope for efficiency gains from transformation of the three waters service delivery system, and the potential economic (efficiency) impacts of various three waters service delivery aggregation scenarios.

25        In summary, modelling done for the Government indicated a likely range for future three waters investment requirements at a national level in the order of $120 billion to $185 billion. This translates to an average household cost of between $1910 and $8690 by 2051 if councils continue to delivery three waters services on a standalone basis. The modelling also estimated these average household costs could be reduced to between $800 and $1640 per household and efficiencies in the range of 45% over 15-30 years if the proposed service delivery reforms go ahead. An additional 5,800 to 9,3000 jobs and a GDP increase of between $14 billion to $23 billion in Net Present Value (NPV) terms over 30 years were also forecast.

26        Independent reviews by Beca and Farrierswier of the Government information noted the modelling gives reasonable estimates of the direction and order of magnitude of the impacts of three waters reform, but the difference in household cost estimates between the status quo and delivery reform options could be substantial.

27        As a result of this modelling, the Government has decided to:

a)         establish four statutory, publicly-owned water services entities to deliver drinking water, wastewater and stormwater services to communities across New Zealand;

b)        provide for local authority ownership of the new water services entities on a non-shareholding basis, with balance sheet separation between councils and the new entities;

c)         provide protections against future privatisation of the entities in the entities’ establishing legislation (including a prohibition on paying dividends to owners, and a legislative requirement to put any future privatisation proposal to a referendum);

d)        provide mechanisms for councils and mana whenua to influence the strategic objectives and priorities of the entities through regional representative groups that will set expectations and select the independent panels that appoint the entity boards;

e)        establish independent, competency-based boards to govern the new entities;

f)         set a clear national policy direction for the three waters sector, including integration with any new spatial / resource management planning processes;

g)         establish an economic regulation regime; and

h)        develop an industry transformation strategy.

28        As shown in the graphic below, Dunedin has been placed in water services entity D, which would service most of the South Island. The boundaries of Entity D broadly coincide with the Ngāi Tahu takiwā. The Government remains open to discussion on the precise boundaries of the proposed entities.

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Financial considerations

29        In respect of the Government’s published information on financial impacts, the ‘local dashboard’ developed for Dunedin City Council shows the following:

30        In the dashboard graphic above:

a)         A is an estimate of current (2021) annual household charges for water services;

b)        B is an estimate of future annual household charges for water services in 2051 under delivery by a new water services entity; and

c)         C is an estimate of future annual household charges for water services in 2051 under continued council delivery of three waters services.

Otago-Southland Three Waters

31        In 2020, the DCC and nine other councils from across Otago and Southland (including the two regional councils) established the Otago-Southland Three Waters Office to support collective participation by the councils in the Government’s Three Waters Reform Programme.

32        In late-2020, the Otago-Southland Three Waters Office commissioned Morrison Low to assess council three waters infrastructure and services across Otago and Southland. The purpose of the assessment was to inform discussions within the two regions about options and future decisions relating to the Government’s reform programme.

33        In early-2021, Morrison Low completed a ‘Regional Situation Analysis’, which focused on challenges and opportunities at a regional scale.

34        Morrison Low’s draft ‘Cross-regional current state assessment’, which presented findings at the individual territorial authority level, was provided to the Council meeting on 25 May 2021.

35        In July 2021, Morrison Low provided each council with an individualised ‘Impacts assessment’ report. The DCC’s ‘Impacts assessment’ report is attached to this report as Attachment C.

36        The ‘Impacts assessment’ report assesses the impacts of three potential future scenarios for three waters service delivery in Dunedin:

a)         Continue participation in Government-led service delivery reforms.

b)        ‘Opt out’ of Government-led service delivery reforms: establish Otago-Southland entity.

c)         ‘Opt out’ of Government-led service delivery reforms: continue Dunedin City Council delivery model.

37        The purpose of the ‘Impacts assessment’ report is to provide information to support future Council decision making on participation in the Government’s Three Waters Reform Programme. The report highlights the differences between each of the options in terms of governance, future investment, financial considerations, resources, and risks and challenges.  

38        The ‘Impacts assessment’ report concluded there are expected to be some efficiencies and benefits from a combined regional entity compared to Dunedin delivering three waters services alone.

39        In August 2021, Morrison Low provided each council with an individualised review of the Water Industry of Scotland (WICS) data as it applied to each specific council. The report provided commentary on how to interpret the WICS calculations and how those relate to Dunedin, as well as a comparison of the approaches adopted by WICS and Morrison Low in the analysis of potential future costs with and without water reform. The DCC’s individualised review from Morrison Low is attached to this report as Attachment D.

40        Morrison Low’s review highlighted a range of areas where the WICS financial modelling and thus the Government’s case for change, from a financial perspective, has been overstated.  The WICS’s assumptions about debt to revenue ratios and efficiency savings have significant impact on modelled household costs under two different service delivery scenarios (continued council delivery, and delivery by a new water services entity). The difference between Morrison Low and WICS’s household cost estimates is substantial.

41        The Morrison Low conclusions were that overall, while the projected household charges from the WICS analysis may be the subject of some contention, they are likely to be directionally accurate. That is, household charges will increase in the new regulatory environment, and DCC ratepayers are likely to have lower household charges under the proposed entity delivery model than through continued council service delivery.

Opportunity to provide feedback on the proposed three waters reforms

42        The Government has asked for feedback on the potential impacts of the proposed reforms and how the reforms could be improved.

43        Specifically, councils have been asked to provide feedback on:

a)         how to ensure all communities have both a voice in the new three waters service delivery system and influence over local decisions;

b)        how to ensure there is effective representation on the new water services entities’ oversight boards; and

c)         how to ensure councils’ plans for growth, as reflected in spatial plans, district plans or LTPs, are appropriately integrated with water services planning.

44        The draft DCC feedback letter at Attachment A focusses on the following subjects related to the Governments three waters reform agenda:

a)         Council requests adequate time and appropriate accessible information to engage meaningfully with the community on three waters service delivery reform;

b)        Council requests the Government to continue working constructively and in partnership with councils and iwi/Māori to resolve the following issues prior to engagement with communities:

i)          the design of mechanisms to enable local influence in the new water services entities;

ii)         improvements to the modelling of the financial impacts of the proposed reforms; and

iii)        the design of three waters workforce development initiatives to help ensure the objectives of any reforms can be achieved; and

c)         Council must be able to control the strategic direction of land use planning.  Council is best placed to balance the wide variety of considerations that inform land use planning decisions, of which three waters service provision is but one part.

45        The draft letter also affirms the DCC’s broad support for reform of the three waters regulatory system, and for reforms that enable Ngāi Tahu to meaningfully participate in decision making about water services in the Ngāi Tahu takiwā.

46        The draft letter endorses a joint letter from the Mayors and Chairs of the LGNZ Zone 6 councils to the Minister. The letter, which is dated 25 August 2021 and is signed by the Mayor of Dunedin,  requests that the reform programme is paused to provide communities with adequate time to clearly understand the implications of the three waters proposals. The Zone 6 letter is attached to this report as Attachment E. 

Implementation of the new water services system and transition arrangements

47        It was previously understood that every council would make its own decision about participating in the reforms before any service delivery changes were implemented or transition arrangements begun. At this stage, the Government has not ruled out introducing legislation that would mandate an “all-in” approach to reform. Council decisions on continued participation in the service delivery reforms, if required, were previously scheduled to take place in December 2021.

48        The Government is expected to announce next steps after 1 October 2021. Next steps are likely to include details on implementation of the proposals, including the timeframes and responsibilities for any community or public consultation, and transition arrangements.

49        Legislation will be required to implement aspects of the proposal. Introduction of a Water Services Entities Bill to Parliament is expected to occur this in 2021.

50        The Government has indicated that the new water services entities would ‘go live’ in 2024. The Government is working on the assumption that council long-term plans for the 2024-2034 period will no longer include water services. 

51        The Government has acknowledged that the transition of stormwater functions to the new entities is likely to take longer than the transition of drinking water and wastewater functions. A technical reference group established to consider the future management of stormwater systems was due to advise Ministers on an approach to transition stormwater to the new water services entities in July 2021. No updates on this advice have been provided at this stage.

Council decision making and consultation

52        The current request from the Government is an optional request for feedback. Councils have not been asked for any formal decisions about continued participation in the reform programme at this stage. Rather, the Government has provided councils an opportunity to review the data and information behind the reform proposals and to provide feedback on both the proposals and the evidence base they have been built on.

53        Part 6 of the Local Government Act 2002 (LGA), sections 76 to 90, provides the requirements for local government decision making and consultation. This includes the principles of consultation and the information that needs to be provided, including the reasons for the proposal and the reasonably practicable options.  In particular:

a)         Section 76 requires that in making a significant decision, which a decision on the future management and or ownership of three waters assets would be, councils must comply with the decision-making provisions.

b)        Section 77 states that councils must seek to identify all reasonably practicable options and then assess the advantages and disadvantages of each option.

c)         Section 78 requires that in the course of making a decision a Council must consider community views, but section 78(3) explicitly says that consideration of community views does not require consultation, which is reinforced by case law.

d)        Section 79 gives councils discretion to decide how the above Part 6 requirements are met, including the extent of analysis done and other factors.

54        A decision to provide feedback to the Minister of Local Government by 1 October 2021 does not commit the Council to a particular position on a future model for three waters service delivery or to continued participation in the Government’s reform programme. No specific Council engagement or consultation with the community is required prior to providing this feedback.

55        However, despite section 79 of the LGA, a decision to transfer the ownership or control of a strategic asset from the Council (or to it) would need to explicitly be provided for in the Council’s Long Term Plan and have been consulted on specifically in its consultation document. 

56        Dunedin’s 10 Year Plan 2021-31 did not include detailed information on three waters reform options and their implications when consultation on the draft 10 Year Plan was undertaken earlier this year because detailed information was not available at that time. An amendment to the 10 Year Plan and a commensurate consultation process would be necessary to alter three waters ownership and governance arrangements and transfer assets to a new entity.

57        At this stage, no Council decision is required on future three waters service delivery arrangements.

58        Council is not able to consult with the community at this time as there is insufficient information and time available to meet the moral and legal requirements of council decision-making. Further advice regarding any future consultation requirements will be provided following future Government announcements.

59        Any future Council decisions required on participation in the Government’s Three Waters Reform Programme will be of high significance and trigger a full special consultative procedure.  Council will need adequate time to meaningfully engage with the community.

OPTIONS

60        The Government has provided an opportunity to give feedback on the three waters reform programme. It is recommended the Council takes this opportunity by writing to the Minister for Local Government as presented in Attachment A, with any amendments.  

61        Alternatively, the Council may elect not to provide feedback to the Government at this point.

NEXT STEPS

62        If the Council approves the draft letter, with any amendments, it will be sent to the Minister of Local Government by the 1 October deadline.

63        Staff will develop an analysis of options (based on further information from the Government, advice on next steps, and regional discussions) prior to community consultation and Council decision making on future water services delivery to ensure sufficient information is available to meet the moral and legal requirements of council decision-making. Whether this will ultimately be required will be dependent on Government decisions after 1 October 2021.

64        Staff will update the Council following further Government announcements on implementation of the three waters service delivery reform proposals.

65        Staff will provide further information to Council on three waters reform-related matters as necessary.

 

 

Signatories

Author:

Scott Campbell - Policy Analyst

Authoriser:

Tom Dyer - Group Manager 3 Waters

Simon Drew - General Manager Infrastructure and Development

Attachments

 

Title

Page

a

Draft letter to the Minister of Local Government (Dunedin City Council feedback on three waters reform programme)

33

b

Three Waters Reform: Lists of documents published on Department of Internal Affairs websites (June-July 2021)

39

c

Impacts assessment: Dunedin City Council (Morrison Low)

41

d

Review of WICS data: Dunedin City Council (Morrison Low)

117

e

Zone 6 letter to Minister of Local Government (25 August 2021)

145

 

SUMMARY OF CONSIDERATIONS

 

Fit with purpose of Local Government

This report supports democratic local decision making and action by, and on behalf of communities, and promotes the social, economic, environmental and cultural well-being of communities in the present and for the future.

Fit with strategic framework

 

Contributes

Detracts

Not applicable

Social Wellbeing Strategy

Economic Development Strategy

Environment Strategy

Arts and Culture Strategy

3 Waters Strategy

Spatial Plan

Integrated Transport Strategy

Parks and Recreation Strategy

Other strategic projects/policies/plans

 

This report has been prepared with reference to Dunedin’s strategic framework.

Māori Impact Statement

The Government has undertaken extensive high level engagement with iwi/Māori in relation to three waters reforms, including with Te Rūnanga o Ngāi Tahu. Central Government officials have worked closely with Ngai Tahu to develop the boundary for the South Island water services entity.

Iwi/Māori engagement has been guided by Crown/Māori partnership objectives, which have included a focus on enabling greater strategic influence; integration within a wider system; reflective of a Te Ao Māori perspective and improving outcomes at a local level.

A consistent guiding principle throughout the three waters regulatory and service delivery reforms has been to ensure that the Treaty of Waitangi and Te Mana o te Wai are referenced appropriately within the legislative framework. Feedback from engagement with iwi/Māori at a high level, indicates that Te Mana o te Wai is exercised at a localised hapū and whanau level through Kaitiakitanga. It is at this level that Council will need to engage with mana whenua in the provision of water services and water service delivery. Council will engage with mana whenua upon further announcements from Government about how three waters reform will progress.

Sustainability

The Government’s Three Waters Reform Programme aims to enhance the economic and environmental sustainability of three waters infrastructure and services across New Zealand.

LTP/Annual Plan / Financial Strategy /Infrastructure Strategy

This report and a decision to approve a letter to the Minister of Local Government has no direct implications for these plans and strategies.

 

However, this report notes that the Government is working on the assumption that council long-term plans for the period 2024-2034 will no longer include water services (subject to any individual council decisions on continued participation in the three waters service delivery reforms). It also notes the Council cannot make a formal decision to adopt an alternative model for three waters service delivery without amending the 10 Year Plan 2021-31 and ensuring the amendment meets section 130 of the Local Government Act 2002.

Financial considerations

There are no financial implications directly associated with this report and a decision to approve a letter to the Minister of Local Government.

 

However, this report provides updates on analyses of the financial impacts of the proposed three waters reforms commissioned by the Government and the Otago-Southland Three Waters Office.

Significance

This report and a decision to approve a letter to the Minister of Local Government does not commit the Council to a decision on a future model for three waters service delivery.  The decision in this report is considered low in terms of the Council’s significance and engagement policy.

 

Any future Council decisions required on participation in the Government’s Three Waters Reform Programme will be of high significance and trigger a full special consultative procedure. Government direction on next steps for the reform programme is expected in the coming weeks/months.

Engagement – external

DCC staff regularly engage with staff of the other Otago and Southland territorial and the Otago-Southland Three Waters Office on matters relating to three waters reforms.

Engagement - internal

This report was prepared by the 3 Waters Group. There has been broad internal engagement on the preparation of this report including with finance, legal, city planning and policy staff.

Risks: Legal / Health and Safety etc.

There are no known risks associated with this report.

Conflict of Interest

There are no known conflicts of interest.

Community Boards

Community Boards are likely to be interested in three waters reform updates and staff will consider how to update the Community Boards in future.

 

 


Council

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