The reform proposals made by the government are the result of a large amount of review and analysis of the current state of services in New Zealand and the views of national and international experts about the benefits of change
The reform proposals made by the government are the result of a large amount of review and analysis of the current state of services in New Zealand and the views of national and international experts about the benefits of change. Obviously, it is important that the information used to create the proposals is accurate and that any assumptions are appropriately tested and validated. Some assumptions that we understand to be key to the proposals are:
Our own reviews of the analysis completed by government show that the forecasts for investment needed to upgrade and maintain our 3 waters infrastructure are critically important. The forecasted investment figures used by government have been calculated using economic models but tests show they are in line with what we are forecasting to spend in Central Hawke’s Bay already based on our Long Term Plan and asset management planning.
A key way that the new entities are proposed to reduce cost is through the borrowing of more money to complete necessary upgrade works and paying the debt back over a longer period of time. An assumption has been made that these new entities will be able to borrow more than Councils currently can.
Another way that the new entities are proposed to deliver savings to customers is through pure economies of scale. Larger organisations can reduce organisational overheads and leverage greater purchasing power. It is important to note that the savings through increased size are not about reducing the number of staff working on assets. Conversely it is proposed that more staff will be required to manage the assets over time. The calculated efficiency savings through increased scale have been forecast by the government to be in the order of 40% over a 30 year period.
While this reform programme is separate to the changes in drinking water standards and the introduction of the Water Services Bill and new regulator Taumata Arowai, it is important to consider them together in part. It is assumed that the current trajectory of the regulatory changes will continue and that the governments proposed reform of the 3 waters service delivery sector will be able to meet the requirements of future regulators.
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