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November 18, 2008
Learning from New Zealand: De-Politicizing Water Service Delivery
By Larry Mitchell
Prairie water was once described by someone obviously familiar with it as “too soft to walk on but too hard to drink” That quip came to mind recently in witnessing the raging debate over Winnipeg’s water. Some critics find it hard to swallow a plan in which the Winnipeg City proposes to put all of its water and wastewater operations into a stand-alone utility company.
Among all of this discussion, there are some important points that need to be emphasized, and these observations come from experiences in my home country, New Zealand. There, for the past 15 years, New Zealanders witnessed a significant shift in the delivery of water services in New Zealand using the methods proposed for Winnipeg.
The same general issues and tone of the present Winnipeg debate once accompanied the widespread consideration of transferring water and wastewater services in New Zealand away from local government. Now we look back and wonder what all the fuss was about.
In Auckland, New Zealand’s largest city, Watercare Services Limited, is a water and wastewater utility company owned jointly by several territorial local authorities. It is managed and operated by the company’s own expert staff. Its board is populated with businessmen skilled in running a corporation of this kind who have their performance objectives clearly set for them in a widely consulted upon statement of corporate intent.
At Hutt City, further south of Auckland, their separate water and wastewater treatment plants with their super efficient modern operations contributed to the city in 2006 receiving the premier national Business Excellence award against all comers including the private sector.
So what is the situation here in Manitoba? One of my local relatives expressed initial scepticism of the plan but had this to say. “We have been paying for years for this new water plant. I bet the money is no longer there, if it is we sure don’t know where and anyhow what has prevented it from being used for other things, probably nothing. The underground pipes too are going to need replacement and soon.”
There were a number of critical factors considered in public consultation in New Zealand that addressed these concerns and brought about the changes. I would like to single out an important few.
The first, and “clincher” turned on the issue of improved accountability arising from the separation of water services from the general activities of the Councils concerned. By placing the finances, asset management, funding and operation of water into a separate entity the true costs and performance results of these activities were clearly revealed. As well, all money raised for water supply and wastewater treatment could only be used to pay for and fund these activities.
Another positive result of the better management of water was its pricing. True costs, including funding of renewals and future capital works were charged and it was remarkable to observe the emergence of widespread water saving initiatives that sprung out of these pricing signals.
Once the true costs of water became a subject of public interest, leak loss detection and reduction programs were quickly introduced. That reduced some water loss rates from as much as 20 per cent down to near five per cent. All of these savings were then reflected back to the consumer in lower prices.
Quality standards set were reached and response rates to emergency call outs improved markedly. All of this came about largely from the concentration upon and accountability for water services made possible because of the new corporate way chosen to deliver the services. Left within municipalities, water will remain just a staid, old departmental activity with little emphasis being given to its special place in the lives of city citizens.
In reaching a decision here in Winnipeg I trust that the waters will not be “muddied” with strident opinion that fails to acknowledge the potential and significant benefits that can arise from the plan to turn the utility into a stand-alone utility.
Larry Mitchell, Senior Fellow is a New Zealander though a Canadian by birth. He has over 30
years active experience of commerce, chartered accounting and since the mid-nineties an immersion in local government finance and policy practice. He services the New Zealand local government sector with extensive financial and policy advice primarily through his "Base Stats with Trendz" statistical reports to over 30 New Zealand Councils. Larry is working with the Frontier Centre to lead, develop and deliver the Canadian Local Government Index a major initiative designed to assist with performance improvements of the Canadian local government sector. Larry graduated B Com, (Auckland University) in 1967. He served as a pilot in the RNZAF before taking up public accountancy practice. Following over twenty years experience as a partner in Coopers and Lybrand's Auckland office in 1996 he graduated Master of Public Policy (Victoria University) majoring in public sector finance. He operates his own international local government consultancy business from Puhoi, 40 km north of Auckland, New Zealand.