Agenda of Ordinary Council Meeting

Ordinary Council Meeting Minutes

20 October 2021

DRAFT

MINUTES OF Carterton District Council
Ordinary Council Meeting
HELD AT THE Carterton Events Centre, 50 Holloway Street, Carterton
ON Wednesday, 20 October 2021 AT 1:15pm

PRESENT: Mayor Greg Lang (Chair), Deputy Mayor Rebecca Vergunst, Cr Robyn Cherry-Campbell, Cr Steve Cretney, Cr Brian Deller, Cr Jill Greathead, , Cr Rob Stockley, Cr Dale Williams, Cr Russell Keys (via videoconference for part of the meeting)

IN ATTENDANCE: HURUNUI-O-RANGI MARAE REPRESENTATIVE: Jareth Fox

COUNCIL STAFF:

Geoff Hamilton (Chief Executive), Kelly Vatselias (Corporate Services Manager), Dave Gittings (Infrastructure, Services and Regulatory Manager), Geri Brooking (People and Wellbeing Manager), Glenda Seville (Community Services and Facilities Manager), Elisa Brown (Communications and Engagement Advisor), Robyn Blue (Democratic Services Officer), Sarah Pettigrew (Democratic Services Officer)

OTHER:

Jo Gillanders (Project Manager for the Wairarapa Five Towns Trail Network) – Item 7.1.

1 Karakia Timatanga

The meeting was opened by a karakia led by Jareth Fox.

2 Apologies

There were no apologies received.

3 Conflicts of Interests Declaration

There were no conflicts of interest declared.

4 Public Forum

Carterton resident, Roger Boulter spoke to the Council on the Five Towns Trail Network Master Plan and Project.

5 Youth Council views on agenda items

Noted

· The Council is currently recruiting new members for the Youth Council

· the next meeting will be held at the end of November 2021.

6 Confirmation of the Minutes

6.1 Minutes of the Ordinary Council Meeting held on 25 August 2021

MOVED

1. That the minutes of the Ordinary Council Meeting held on 25 August 2021 are true and correct.

Cr Dale Williams / Cr Robyn Cherry-Campbell

CARRIED

7 Reports

7.1 Five Towns Trail Master Plan

Purpose

To receive the Wairarapa Five Towns Trail Network Master Plan.

MOVED

That the Council:

1. Receives the report.

2. Delegated authority to the Chief Executive to work with the three Wairarapa District Councils and Wairarapa Trails Action Group, to research and create a suitable legal entity with appropriate and representative governance to deliver the Wairarapa Five Towns Trail Master Plan.

Cr Robyn Cherry-Campbell / Deputy Mayor Rebecca Vergunst

CARRIED

7.2 Amendments to the Wellington Regional Leadership Committee Agreement and Terms of Reference

Purpose

To approve amendments to the Wellington Regional Leadership Committee’s Joint Committee Agreement and Terms of Reference.

moved

That the Council:

1. Receives the report.

2. Approved the updated Wellington Regional Leadership Committee Joint Agreement and Terms of Reference dated July 2021.

Cr Rob Stockley / Cr Steve Cretney

CARRIED

7.3 Report on dog Control Policy and Practices – 2020/2021

Purpose

For the Council to be informed of the dog control activities and practices related to the Carterton District Dog Control Policy for 2020/21 financial year.

MOVED

That the Council:

1. Receives the report

2. Adopted the report on Council’s administration of the Dog Control Policy. and practices for the period 1 July 2020 to 30 June 2021 under section 10A Dog Control Act 1996.

Cr Steve Cretney / Cr Brian Deller

CARRIED

7.4 Animal Facility

1. Purpose

To consider the path forward for Carterton’s animal facility.

NOTED

· The current facility doesn’t meet Ministry of Primary Industries standards and short term remedial action has been taken to fix issues.

· The facility has been on the Council agenda for a number of years. Further delays in deciding the path forward will increase building costs, including with the Masterton facility option.

· The cost of building a new facility has been included in both the CDC Annual Plan and Long Term Plan.

MOVED

That the Council:

1. Receives the report.

2. Agreed to progress the procurement process for a Carterton District Council animal facility.

Cr Robyn Cherry-Campbell / Cr Brian Deller

CARRIED BY A MAJORITY VOTE

FOR – Mayor Greg Lang, Cr Robyn Cherry-Campbell, Cr Rob Stockley, Cr Dale Williams, Cr Brian Deller

AGAINST – Deputy Mayor Rebecca Vergunst, Cr Jill Greathead, Cr Steve Cretney

7.5 Local Government Official Information and Meetings Act Requests

Purpose

To inform the Council of the number of requests under the Local Government Official Information and Meetings Act (LGOIMA) 1987 received between 16 August 2021 and 11 October 2021.

moved

That the Council:

1. Receives the report

Cr Dale Williams / Cr Rob Stockley

CARRIED

7.6 Chief Executive Report

Purpose

To inform Council of officer’s activities since the previous meeting.

moved

That the Council:

1. Receives the report.

Cr Robyn Cherry-Campbell / Cr Brian Deller

CARRIED

7.7 Council Response and Readiness for COVID-19 Resurgence

Purpose

To update the Council on the organisational response to the resurgence of COVID-19 in the community, and readiness for future developments.

MOVED

That the Council:

1. Receives the report.

2. Noted the actions taken to respond to the latest COVID-19 outbreak and the organisation’s readiness for future Alert Level changes.

3. Noted that officers will present a report outlining the ongoing risks and mitigations associated with COVID-19 at the next Audit & Risk Committee meeting.

Cr Jill Greathead / Cr Dale Williams

CARRIED

7.8 Elected Representative Accountablity Report

Purpose

To provide a report on elected members’ activities since the last Council meeting.

moved

That the Council:

1. Receives the report.

2. Noted the elected members’ activities.

Deputy Mayor Rebecca Vergunst / Cr Rob Stockley

CARRIED

7.9 Joining the Local Government Funding Agency (LGFA) as a guarantor

Purpose

For the council to decide whether to become a guarantor of LGFA.

MOVED

That the Council:

1. Receives the report.

2. Agreed to become a guarantor of LGFA.

3. Delegated authority to the Chief Executive to execute the required documents for the purposes of recommendation 2.

4. Authorised any two of the Council’s elected members to execute the required deeds for the purposes of recommendation 2.

Deputy Chair Rebecca Vergunst / Cr Rob Stockley

CARRIED

8 Exclusion of the Public

RESOLUTION TO EXCLUDE THE PUBLIC

moved

That the public be excluded from the following parts of the proceedings of this meeting.

The general subject matter 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 of the Local Government Official Information and Meetings Act 1987 for the passing of this resolution are as follows:

General subject of each matter to be considered	Reason for passing this resolution in relation to each matter	Ground(s) under section 48 for the passing of this resolution
8.1 - Request to Waive Excess Water Charge Account W72600	s7(2)(a) - the withholding of the information is necessary to protect the privacy of natural persons, including that of deceased natural persons	s48(1)(a)(i) - 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 would exist under section 6 or section 7

Cr Brian Deller / Cr Rob Stockley

CARRIED

MOVED

That Council moves out of Closed Council into Open Council.

Cr Rob Stockley / Cr Dale Williams

CARRIED

9 Karakia Whakamutunga

The meeting was closed with a karakia led by Jareth Fox.

The meeting closed at 3.04 pm

Minutes confirmed: …………………………………………………

Date: ...................................................

Ordinary Council Meeting Agenda

15 December 2021

7 Reports

7.1 Reservoir construction

1. Purpose

For the council to approve budget for completion of the wastewater reservoirs

2. Significance

It is acknowledged the matters for decision in this report will have an interest to members of the Carterton Community.

Our Significance and Engagement Policy explains how the Council will determine the degree of significance of particular issues, proposals, assets, decisions, and activities.

Section 5 of the Local Government Act 2002 defines significance as:

‘in relation to any issue, proposal, decision, or other matter that concerns or is before a local authority, means the degree of importance of the issue, proposal, decision, or matter, as assessed by the local authority, in terms of its likely impact on, and likely consequences for, —

(a) the current and future social, economic, environmental, or cultural wellbeing of the district or district:

(b) any persons who are likely to be particularly affected by, or interested in, the issue, proposal, decision, or matter:

(c) the capacity of the local authority to perform its role, and the financial and other costs of doing so’.

The table below is a guide for assessing the degree of significance of proposals and decisions, and the appropriate level of engagement.

Matter/Issue	Determining the Level of Significance
Matter/Issue	Low Significance	Moderate	High
Relates to an asset that is a ‘strategic asset’	Does not relate to strategic assets or does not substantially affect other Council assets	Involves sale of, or substantial impact on, part of a strategic asset, or other Council asset	Sale of a strategic asset, or activities that affect the performance of the strategic asset as a whole
Changes to levels of service	Minor loss of, or change to, service levels provided by the Council (or its contractors)	Moderate changes to the level of service provided by the Council.	Decision or proposal creates substantial change in the level of service provided by the Council
Likely level of community interest	Decision or consequence has little impact or is easily reversible	Minor or moderate level of community interest in a proposal or decision; or there is a moderate impact arising from changes; or one or more areas of the District are affected disproportionally to another; or duration of an effect may impact detrimentally on people or a community	A high level of community interest in a proposal or decision; likely to be, or is, controversial in the context of the impact or consequence of the change; involves a specific area affected (e.g. geographic area, or area of a community by interest, age or activity); or there are substantial impacts or consequences arising from the duration of the effect
Financial impact	No material effect on the Council’s budget, debt, or residents’ rates	Minor effect on rates, debt, or the financial figures in any one year or more of the Long-Term Plan	Substantially affects debt, rates, or the financial figures in any one year or more of the Long-Term Plan
Changes to Groups of Activities	Minor change to how Council manages groups of activities	Partial exit from a group of activities	Ceasing an existing activity or adding a new group of activities
Delivery arrangements	No substantive change to partnership arrangements for delivery of services, or consultant services	Contracting out or entering partnership with the private sector to carry out minor activities on behalf of the Council	Contracting out or entering partnership with the private sector to carry out a significant activity or a group of activities

The primary purpose of engaging (consulting) with the community is to enable effective participation of individuals and communities in the decision-making of councils. This enables elected representatives to make better-informed decisions on behalf of those they represent. Consultation is best undertaken before significant decisions are made.

Council may choose not to consult when it believes the matter is not significant enough. Council may also recognise a matter as significant and choose not to consult, when it believes it has enough information to make an informed decision.

The process of upgrading our Wastewater Treatment Ponds began in 2012. Council obtained a 35-year resource consent from GWRC in 2017; issued a contract to build in 2018 and are actively working towards delivering a solution which could avoid all discharge to waterways. The recommendations in this paper are consistent with delivering on this strategy.

The wastewater treatment ponds are a significant asset. The delivery of this project will not alter the level of service for ratepayers. Officers consider this paper will generate a moderate level of public interest. The financial impact of this paper is covered in sections 9 and section 11.3. There are no proposed changes to Groups of Activities and no proposed changes to Delivery arrangements.

Any additional cost incurred which is unable to be recovered from the contractor will be held by Council as debt until July 2024, when it will transfer to the new Water Services Entity. This carrying cost of this additional debt is not considered to be significant. Legal costs which are unable to be capitalised will be expensed and funded from reserves.

The outcomes of the project - upgraded wastewater treatment ponds, obtaining 35-year resource consent, minimising /eliminating discharge to waterways; further developing our partnerships with mana whenua – are not being altered, and will be delivered following the project re-approval.

3. Background

Prior to 2014 the Council had operated a traditional sewerage treatment and discharge regime, with treated wastewater being discharged into the Mangatārere Stream on a regular basis when the flows were high. The method of wastewater treatment and disposal included tertiary treatment processes located on the Council’s land fronting Dalefield Road. The three-stage treatment process was followed by seasonal irrigation of a relatively small proportion of the final effluent on approximately 3.0ha of land adjacent to the treatment plant, with a larger proportion discharged to an unnamed drain upstream of its confluence with Mangatārere Stream.

The neighbouring Daleton Farm property was purchased in 2012 with the view to developing a land discharge system. The wastewater treatment plant upgrade project started in earnest in 2013, following the granting to the Council of short-term consents for the discharge of treated wastewater and related discharges. All consents expired in 2017. The Council was required to renew the consents by April 2017.

Early in 2014, Council adopted a long-term vision of removing all effluent discharges to water other than in exceptional circumstances. The project to develop Daleton Farm then began, underpinning information collection to support the 2017 consent renewal process.

The Council sought a further short-term consent to allow the discharge of treated wastewater onto land (Daleton Farm) using a pivot irrigator. This allowed deficit irrigation, over an area of approximately 20ha via a centre pivot irrigator, installed in 2014.

The short-term consents allowed the Council to gather data and carry out investigations on the land discharge option.

The Council then spent the next three years designing the upgraded treatment and disposal project and preparing resource consent applications. In December 2016 the Council adopted a strategy for the upgrade, which formed the basis of the applications. In summary the strategy was:

Stage 1 (2015-2017)

- Continue inflow & infiltration investigations.

- Continue network condition assessment, rehabilitation & replacement.

- More tightly manage trade wastes.

- Implement the 2014 consent for Stage 1 irrigation to land on Daleton Farm.

- Install UV disinfection.

- Operate and monitor the environmental effects of land irrigation

- Prepare application for replacement consents informed by monitoring data (for lodgement April 2017).

- Develop sustainable land use practices on Daleton Farm

- Pilot scale test and design Sequential Batch Reservoirs

- Line the inlet and outlet channels and replant the existing wetlands

Stage 2 (2018-2021)

- Construct on-site Sequential Batch Reservoir treatment and storage on Daleton Farm 200,000m3 (doubled from the original plan of 100,000m3), including earthworks, leak detection pipework, pond sumps, anchor trenches and lining of three ponds.

- Further develop amenity wetlands.

Stage 3

- Relocate the existing stream discharge to the lower reach of Mangatārere Stream immediately above the State Highway 2 bridge and closer to the confluence with the Waiohine River

- Construct wet wells, pumping stations and install pipework for discharge to land on Daleton farm

- Progressively investigate opportunities for supplementary land for additional storage and irrigation.

- Develop sustainable arrangements that facilitate long term security of tenure over privately owned land available and suitable for irrigation.

Stage 4 (2026-2045+)

- Progressively expand supplementary bulk storage capacity for treated wastewater off-site as land becomes available and is affordable (land additional to Daleton Farm).

- Extend irrigation to land additional to Daleton Farm as suitable private and/or Council-owned land becomes available and is affordable.

- Continue irrigating treated wastewater to Daleton Farm.

- Remove high-flow stream discharge once alternative irrigation to land options are implemented.

- Add post-reservoir UV plant

- Continue tightly managing trade wastes.

The issues the strategy was seeking to address included:

· Meeting forecast future increased wastewater generated by residential growth;

· A tightening of environmental standards signalled in the GWRC Proposed Natural Resources Plan and early outputs from the Whaitua planning process; and

· Minimising the environmental impact of waste water discharges, and where possible eliminating all waste water discharges in water ways;

· The importance of using existing wastewater facilities as efficiently as practicable by optimising the capacity of the existing WWTP and Daleton Farm; and

· The impact of trade wastes on treated effluent quality;

· High infiltration rates into the pipe network, necessitating an ongoing programme to reduce unwanted inflows to the wastewater treatment plant;

· The importance of achieving a high degree of certainty in giving effect to the Strategy.

Council’s 2015-2025 Long Term Plan approved site preparation, preliminaries and both short and long-term consents. Consents were sought and granted in 2017 as planned. The consents have a 35-year period. Through the 2016/17 annual plan process Council increased the reservoir capacity by an additional 100,000m3, giving a total storage capacity of 200,000m3.

4. Reservoir construction

In November 2018, the tender for the construction and lining of the reservoirs - often referred to as Stage 2 - was awarded to Central Hawkes Bay Earthmovers Ltd (CHBE). The contract had an expected completion date of 30th May 2019. Time delays have been a consistent item for the Council’s Governance Group overseeing the project and remain a contentious issue with CHBE.

Throughout the construction of the reservoirs Tonkin and Taylor have held the position of Engineer to the Contract and provided project management resource. Tonkin and Taylor are one of a handful of preeminent engineering firms in New Zealand and were contracted under daily inspections of the reservoir construction.

Councils project management officer acted as engineers’ representative assistant submitting daily updates and records for three days a week, while Tonkin and Taylor were physically on site for two days a week. Each daily inspection was reviewed by Tonkin and Taylor and if need be clarified and associated NTC issued. Council holds copies of all daily inspections (photos and notes) over the entire construction period.

The initial completion date for the reservoir construction has been delayed by mudfish relocation, the discovery of a high level of unsuitable ground material, the requirement for additional drainage work, inclement weather, ephemeral channel relocation, COVID-19 lock down, delays in completion of earthworks, and now remedial works on the pond liner.

In May 2020, Council met with CHBE to set a final completion date and gain assurances that construction would be completed by that time. At this meeting CHBE stated that the reservoirs would be completed by 20^th September 2020. This date was not met, and a notice of default was issued to CHBE by Council’s engineer to contract (Tonkin and Taylor).

The default notice was issued through a standard contractual process referred to as Notice to Contractor. NTC number 84 claimed CHBE was neglecting to carry out its obligations under the contract. This claim was rejected by CHBE and stated that they were committed to resolving the issues and completing the contract works.

Council’s Governance Group considered CHBE’s position at the time, also weighing the costs to complete the outstanding works against the lower contractual rates CHBE had submitted. A decision was made to endure a longer construction time over the potential increased cost to the ratepayer should Council take over the project at that time (September 2020).

5. Resumption of control of site

During earthworks construction Tonkin and Taylor had issued extensive contractual notices to CHBE. Tonkin and Taylor observed issues with CHBE’s work practices and methodology in, and around, the geomembrane liner. In February 2021, NTC 105 directed CHBE not to drive equipment directly on the liner surface and provided guidance on how to avoid damage to the already installed liner. CHBE was directed to repair the damage found. In August 2021, NTC 117 identified further damage to the western crest of reservoir 3 and instructed CHBE to repair.

On the 9th August 2021 Council were notified by Tonkin and Taylor’s Engineer to Contract that they considered CHBE to be once again in default. Despite multiple contractual notices issued through the NTC system, quality issues were not being addressed. The primary concerns centred around damage to the geomembrane liner, and the construction and backfilling of the anchor trench holding the liner in place at the top of the embankments.

CHBE were given ten working days to provide a remedial action plan. This was considered by both Council and our Engineer to the Contract – Tonkin & Taylor. After careful consideration both Council and our Engineer concluded the proposed remediation plan was inadequate to resolve the faults and Council resumed possession of site on 31 August 2021.

Council fully expect CHBE to repair the damage at their cost. The construction contract required the contractor (CHBE) to carry insurance for these types of situations. As part of the initial engagement process, and throughout the reservoir construction, CHBE provided evidence that they had insurance for the contract works.

Once CDC had resumed control of the site, a local contractor was arranged to oversee the clean-up of the site and to complete the remaining liner installation. Careful cleaning of the excessive soil overspill on, and in the reservoir was undertaken using handheld soft brooms and plastic shovels. This revealed the full extent of lining damage which was much greater than initially thought.

Representative pictures of this damage are below.

Picture 1: Liner damage at the top of the embankments on one of the reservoirs

Picture 2: Scratches to the liner with what appears to be drag marks (Potentially digger bucket drag marks)

Picture 3: A tear to the liner on a corner embankment.

Picture 4: A closer view of scratches with a deeper longitudinal scratch apparent in the liner.

Picture 5: Excessive soil coverage at the top of the embankment and digger bucket resting on geomembrane liner.

6. Damage implications

Liner stresses are greatest at the upper crests of the reservoirs where the weight of the liner, UV exposure, thermal movement, and wind action are highest. Stresses also occur at the base of the embankment where there are weight stresses and differential thermal stresses. The original reservoir design was to a high standard which allowed for 4 times the daily expected stress load, more than enough to cope.

The geomembrane liner specified was a conductive lining that allows for an electrical current to be passed through it identifying any leaks that are unseen to the naked eye.

Checking of liner integrity was planned for a five-year rotation where one reservoir would be drained, cleaned, and checked. Any deterioration would be then be remediated. Developing a regular maintenance schedule could provide the full life expectancy of the liner well beyond 40 years.

Damage to high quality geomembrane liner is rare. Most contractors fully understand the nature of the liner and are careful when working with the finished product. The geomembrane liner is 1.5mm in thickness with damage of 10% depth estimated as potentially reducing the stress resistance by approximately 30%, although this depends on where the damage is located, (top or bottom of the embankments), and the longitudinal or transverse alignment of the damage.

Identification of the damage that may have a material effect on the liner cannot be solely done by eye. A wide mark will be visible to the naked eye but may not be deep enough to raise concern whereas a narrow deep score traversing the primary stress direction may impact the liners’ useful life much more.

7. repair strategy

Damage in all three ponds have undergone a high-level visual mapping and recording by Tonkin and Taylor. A manual, slow, but more detailed survey and recoding is in process using a digital optical micrometer.

Testing and reporting on the impact of the damage on the liner has been initiated, using an Australian company ExcelPlas. A range of representative samples of damaged liner (0.5m x 0.5m) have been sent to the Australian accredited laboratory who are a leading independent geomembrane testing facility. The test results and report on the impact of the damage (strength, durability etc) is not expected to be completed before February 2022.

Final technical decisions around repairs will be made following receipt of the ExcelPlas report, in partnership with our engineer Tonkin & Taylor, and our lining installer Viking. Repairs will likely require additional conductive geomembrane liner to be ordered and imported, which has a lead time of approximately 4 months. Liner replacement is a technical judgement balancing ease of laying (reducing cost), maximising coverage of the scratches, maintaining liner performance and conductivity, whilst ensuring we obtain liner installation warranties.

Meanwhile, the tears, rips and major damage have been patched which will provide CDC with functional reservoirs that can receive treated wastewater, while awaiting a more permanent repair.

As at the end of November 2021, the project is over 80% complete. After liner remediation, the majority of the work left to complete focused on the pipe and pump construction – referred to as Stage 3 in the table below.

Having functional reservoirs allows for the finalisation of the construction works and provides time for the engineering and geomembrane experts to develop a repair strategy that is technically and contractually sound, which promotes the longevity of the ponds. Once Stage 3 pipe and pumping works have been completed, permanent remedial repairs can be undertaken on a single pond at a time and these are not time bound by consenting requirements. Officers anticipate the permanent repairs to be undertaken over the 2022 calendar year.

8. Resource consent requirements

CDC’s current discharge consent to the unnamed stream (leading to the Mangatārere Stream) expires in January 2023. At this time, Council will require significant alternative storage (i.e. the reservoirs), irrigation, and if needed, discharge facilities available. Alternatively, CDC will need to apply for and obtain a new resource consent to continue to discharge into the unnamed stream. The issuing of a new resource consent to discharge falls under the responsibility of Greater Wellington Regional Council, and is not guaranteed.

Once the reservoirs are filled with treated wastewater, CDC must undertake a minimum of 12 months of testing, under operational conditions, to establish the appropriate median limits of water quality. Working back from the January 2023 date, CDC needs to allow for both testing, and remedial repair and construction work associated with the reservoirs, given they may be unavailable during winter months.

This time bound constraint with the current discharge is the paramount driver in completing the reservoir construction project.

9. Cost implications

The table below shows the overall budget for the WWTP project construction. As stated above the revised completion date of the project as agreed with CHBE was September 2020.

Activity	Budget
Stage 1 Development · Investigation and design · Wetlands refurbishment · Upgrade existing treatment plant · First pivot irrigator · 35 year consents	$4,500,176
Stage 2 Reservoirs and ephemeral stream relocation · Investigation and design · Reservoir construction · Wetland refurbishment · Ephemeral stream relocation	$5,473,927
Stage 3 Pumping and pipeworks · Investigation and design · Pumps and pipes	$2,694,257
Construction Budget Total	$12,668,360

December 2021 Update

Forecast Additional Costs	Low Estimate	High Estimate
CHBE Contract · Completing contracted works · Liner remediation & repairs · Legal costs for recoveries	$754,678	$1,244,678
Stage 3 Additional costs · Stage 2 Delays increasing Stage 3 construction costs · Wet well/ pumping/supervision/ project management · Contingency	$518,409	$699,409
Additional Budget requirement	$1,273,087	$1,944,087
Current Authority	$12,668,360	$12,668,360
Total Revised Project Cost	$13,941,446	$14,612,446

The contract with CHBE is under the umbrella of NZS3910 and as such allows for the principal (CDC) to complete the contract and seek reimbursement from the Contractor. Council intends to follow this process to seek to recover the cost of liner remediation and completing the contract works. Our legal costs to enforce this will not be able to be recovered.

Included in the additional budget are legal costs of $150,000 (low estimate) and $300,000 (high estimate) associated with the CHBE contract. These costs are unable to be capitalised, and will be treated as operating expenditure.

10. Rating impact

Council will draw down debt to fund the completion of the reservoirs. From the 2022/23 financial year, the interest cost related to this borrowing will be funded through rates revenue. The impact of this on rates is estimated to be between 0.2% and 0.3% (low to high estimate). This will be included in the 2022/23 Annual Plan.

Legal costs will be treated as operating expenditure in the year they are incurred. These unbudgeted costs will be funded through the current year’s forecast operating surplus. Any additional interest expense incurred in the current year will also be funded throught the forecast operating surplus.

While there will be no direct impact on rates from the legal fees and current year interest, there will be a decrease in council’s reserves. Officers acknowledge a decrease in reserves may reduce the ability to contain rates in future years, but consider this the best approach to manage one-off / non-recurring operating expenditure.

11. CONSIDERATIONS

11.1 Climate change

The undertaking of reservoir construction is underpinned by the drive to reduce the environmental impact of wastewater. Council’s long-term strategy is to remove all treated waste water discharges from waterways. This is a key project in achieving that outcome.

Furthermore the Waster Water Advisory group are considering ways to develop long term research into the uses of treated waste water at the Daleton site. If implemented this partnership with mana whenua, ESR, GWRC and key stakeholders will help build on existing research to better understand the update, and natural treatment of disease causing bacteria through a range of native plant species.

11.2 Tāngata whenua

The request to approve budget for completion of the wastewater reservoirs does not have any specific impact on Tāngata Whenua. It is acknowledged that the temporary discharge of treated waste water into the unnamed stream, which feeds into the Maungatarere Stream is a matter of concern for local hapū. Council are working with hapū and greater Wellington Regional Council on this temporary discharge outfall.

11.3 Financial impact

The additional cost for completion and remediation of the lining will have a financial impact as outlined above. Council will seek to claim reimbursement for costs which CHBE would have otherwise been responsible for. Any funds received as part of this claim will be treated as an offset to the capital cost of the Reservoir Construction project, and reduce debt as appropriate.

11.4 Community Engagement requirements

While Council acknowledges there will be community interest in the reservoir construction project, and the issues surrounding the CHBE contract, there are no community engagement requirements as a direct result of this re-approval.

11.5 Risks

There are legal and financial risks in seeking compensation under the NZS3910 contract. Councils strategy around this claim is being developed, and is likely to remain confidential while proceedings are underway.

12. Recommendation

That the Council:

1. Receives the report

2. Approves the unbudgeted expenditure up to a maximum, $1,944,087 being $1,644,807 in capital and $300,000 in operating expenditure, to complete and remediate the new Daleton wastewater reservoirs.

File Number: 137481

Author: Dave Gittings, Infrastructure, Planning and Regulatory Manager

Attachments: Nil

Ordinary Council Meeting Agenda

15 December 2021

Submission on economic regulation and consumer protection for three waters services in New Zealand

This submission is made on behalf of councils in the Wellington region

· Carterton District Council

· Greater Wellington Regional Council

· Hutt City Council

· Kapiti Coast District Council

· Masterton District Council

· Porirua City Council

· South Wairarapa District Council

· Upper Hutt City Council

· Wellington City Council

We would welcome the opportunity to discuss this submission with Ministry of Business, Innovation, and Employment and be involved in ongoing policy development processes.

Our contacts for service and further discussions:

· Wendy Walker, CEO Porirua City Wendy.walker@poriruacity.govt.nz ; or

· Dougal List, Project Director, Wellington Water Reforms, Dougal.list@poriruacity.govt.nz ph. 021 242 8716

Executive summary of our submission

1. Support for economic regulation: The Wellington councils support the need for economic regulation and consumer protection as part of the Government’s wider three waters reforms. We see that economic regulation and consumer protection in relation to the proposed Water Services Entities (WSE) is important to ensure:

· fair and transparent pricing

· incentivisation and transparency of performance

· increased efficiencies, over time

· an investment pathway for addressing long-term issues (rather than ad-hoc and reactive decision making)

· consumers have clear channels for raising issues and can have confidence in fairness of pricing

· effective resolution of disputes.

2. Local Government feedback: Through the 8-week engagement process, led by the Department of Internal Affairs (DIA) councils have each raised a number of issues and concerns in relation to water reforms which are relevant to economic regulation.

We recommend that the feedback received from local government through the DIA engagement process is closely considered as part of determining options for economic regulation.

3. Integrated and bespoke approach: Economic regulation for water must be carefully designed as part of the wider three waters reforms. This includes how it relates to the wider design of legislation and system stewardship arrangements; representation and governance; planning integration processes; how economic regulation works with the other water regulators to give economic effect to their requirements; and transition processes and timing, (this has a direct bearing on the capacity and capability of WSEs to meet economic regulation requirements).

We recommend that MBIE continues to work closely with DIA and local government to ensure economic regulation will be fully integrated and aligned with the design and policy decisions of the water reforms. Particular attention should be given to the wider community benefits and environmental outcomes expected.

4. Focus economic regulation on the WSE: Our view is that revenue control and investment scrutiny should focus on the four proposed WSE, rather than other smaller rural and community-based providers and schemes. This is to ensure that the regulation model focuses on where it can have the greatest benefit, is cost effective and can be effectively resourced. We note that economic regulation for water will require a different approach to that seen in other regulated sectors. The three waters are inherently more complex than those utilities currently regulated by the Commerce Commission.

We recommend that economic regulation focuses on WSEs and is designed to respond to the specific issues relevant to water.

5. Consumers: The discussion document does not adequately define the range of consumers, services provided to each consumer group, and whether these services are supplied by a WSE or another body. Defining what is meant by a consumer and understanding the range and variability of water consumers will be critical to successfully developing a regulatory framework that advances the long-term interests of consumers.

We recommend that further consideration and focus is given to defining consumer groups, services, and the role of WSE and economic regulation in relation to each group.

6. Broader outcomes: In addition to efficiency, investment by the WSE must also balance meeting regulatory requirements and delivery of broader social, cultural and environmental outcomes. There needs to be more recognition of climate change, resilience and the costs and service levels that this will require. There are also cost and service level implications for meeting specific environmental and social expectations.

We recommend that further consideration is required for how the economic regulation can recognise the importance of broader social, environmental and cultural outcomes, this may require a specific statutory objective.

7. Te Tiriti: Economic regulation will also need to consider how to give effect to the principles of Te Tiriti o Waitangi. This includes recognition of co-governance of the WSE and how economic regulation reflects and recognises the principles and outcomes sought through Te Mana o te Wai which puts the health of a waterbody first, human health needs second, followed by recreational, economic and other needs.

We recommend that further consideration is required for how economic regulation can give effect to Te Tiriti o Waitangi and the principles and outcomes sought through Te Mana o te Wai. This may require a specific statutory objective.

8. Types of economic regulation: We consider that the economic regulator has an important role to help reassure consumers that there has been proper scrutiny of costs for water services through the range of controls set out in our submission.

We recommend that a range of economic regulation is appropriate for water, including: information disclosure, price-quality, pricing, consumer protection and dispute resolution.

9. Accountable organisation: Water regulation is a substantial accountability which will require a bespoke approach.

We recommend that further consideration should be given whether the Commerce Commission is the best placed organisation to be the regulator. This might include what structural or cultural change might be required in order for Commerce Commission to take on such a substantive new accountability.

10. Statutory Objective: Our view is that the objective statements used in Part 4 of the Commerce Act and Part 6 of the Telecommunications Act provide a good starting point for economic regulation of WSE services. However, complementary objective statements may be required to cover all the relevant characteristics for WSE services.

We recommend a modified version of the objective statement from Part 4 of the Commerce Act should be developed, which balances a workably competitive market with community outcomes and the principles of Te Mana o te Wai.

11. Approach to regulation: Water reforms will take time to embed and mature. In this environment, it will be vital that economic regulation plays a constructive and proactive role to support and work with WSE and Taumata Arowai to meet bottom lines and regulatory requirements. The discussion document appears to be based on existing regulatory ‘propose and respond’ dynamic, where suppliers develop investment plans for scrutiny and approval by the regulator. This approach requires a degree of sector maturity. Establishment and transition will require a learning culture and an approach based on sharing of lessons and raising sector capability.

We recommend that a strong focus is placed on the culture and behaviours to ensure economic regulation plays a constructive and proactive role to support and work with WSE and Taumata Arowai to meet bottom lines and regulatory requirements.

12. Transition: Water reforms will result in significant disruption and change across the water sector which will take at least 5-10 years to fully embed. Economic regulation also places a lot of demands on an organisation in terms of reporting and long-range planning. We therefore consider that it will be important to take a transitional approach to economic regulation while also ensuring that the pathway is clear and achievable so that this can be planned for and resourced.

We recommend that further consideration is given to transition pathway including the time, resources and capacity to enable economic regulation.

13. Costs: Our view is that the cost of economic regulation, both set up and ongoing costs, is significantly underestimated and will require further consideration.

We recommend further consideration is given to the costs and resource requirements for establishment and operation of economic regulation.

14. Pricing: Specific considerations for pricing and investment will include a range of factors. These do not all need to be resolved through legislation and should be phased in over time linked to regulatory control periods.

We recommend that clear direction on pricing and a realistic transition pathway will be required from the outset to guide pricing and revenue over time.

15. Planning cycles: Setting the optimal planning horizon and cycles are critical to ensure longer term innovation and investment planning to address complex issues. As noted above, these ideally need to align with broader spatial and investment planning by local government. The timing and alignment of these cycles will require further consideration through the Resource Management Act reforms and review local government processes.

We recommend that the planning cycles and control periods take a transitional approach and consideration is given to how these can be aligned with broader investment planning cycles of local government.

This submission is set out in two parts:

Part A focuses on key matters and issues relevant to the consideration of economic regulation and consumer protection of water services. This includes:

1. Support for economic regulation

2. The development of economic regulation needs to consider broader feedback from local government on water reforms

3. Integration with wider water reforms

4. Focus of economic regulation and approach to water

5. Consumers and services

6. Broader outcomes

7. Iwi / Māori and Te Tiriti [to be added inc. Te mana o te Wai]

8. What types of economic regulation are appropriate for water?

9. Who should provide economic regulation?

10. Statutory objective

11. Approach to regulation – culture and behaviour

12. Importance of the transition process

13. Costs of economic regulation

14. Pricing, investment and efficiency

15. Planning cycles

16. Other considerations

Part B provides responses to specific questions in the MBIE consultation document.

Part A: Key matters relevant to the consideration of economic regulation for water services

1. Support for economic regulation and consumer protection

The Wellington councils support the need for economic regulation and consumer protection as part of the Government’s wider three waters reforms. We see that economic regulation and consumer protection in relation to the proposed Water Services Entities (WSEs) is important to ensure:

· fair and transparent pricing

· incentivisation and transparency of performance

· increased efficiencies, over time

· an investment pathway for addressing long-term issues (rather than ad-hoc and reactive decision making)

· consumers have clear channels for raising issues and can have confidence in fairness of pricing

· effective resolution of disputes

2. The development of economic regulation needs to consider broader feedback from local government on water reforms

Recognising that the Government has decided on a legislated ‘all-in’ approach to water reforms, the Wellington councils hold a range of positions on various aspects of the proposed reforms model.

Through the 8-week engagement process (led by DIA), councils have each raised a number of issues and concerns which are relevant to economic regulation. Consistent themes include:

· The need for clear and effective representation, governance and accountability to enable local voice and influence.

· A desire for sub-Water Service Entity (WSE) representation and processes to support alignment and integration of planning and investment processes for water with other planning processes.

· The need to balance efficiency with local social and well-being outcomes, (including potential variation and influence over levels of service). Examples include Te Mana o te Wai statements, climate change and resilience requirements.

· Ensuring opportunities for community and council input to priorities, planning processes, pricing and service levels. This includes alignment with urban planning processes and planning for community facilities such as parks.

· Clarity of how disputes will be managed and how consumer needs will be met.

· Further clarity of how water reforms will apply to community and rural water schemes – this is of particular concern for consumer protection.

We recommend that the feedback received from local government through the DIA engagement process is closely considered as part of determining options for economic regulation.

3. Integration with wider water reforms

Economic regulation for water must be carefully designed as part of the wider three waters reforms. This includes how it relates to the wider design of:

· Legislation and system stewardship arrangements set by the Crown – this includes the Government Policy Statement for water services which should be co-developed between the Government, councils and Iwi / Māori. This is key to ensure a focus on longer term outcomes such as water quality, climate change, and support for housing.

· Representation and governance (noting the Minister of Local Government has established a working group to consider this matter).

· Planning integration processes – including documents the WSEs will be required to produce and the process, input and consultation requirements for these. These are likely to include longer term strategic plans, asset management plans, pricing and investment plans, and service level plans. This is a two-way process as WSE will also need to input into the planning of councils (district / regional plans, spatial planning) to ensure that the future needs are understood and can be accommodated.

· Planning processes and cycles – local authorities currently undertake 10-year investment planning with a 3-year review cycle, (this may however change depending on the outcomes of the various Government reforms). It will be important for the regulator to design regulatory process that ensures reasonable integration with relevant planning cycles, for example, on land use, roading and flood control.

· How economic regulation works with the other water regulators in order to give economic effect to their requirements.

· How economic regulation and in particular consumer protection will apply to community and rural water schemes. While we consider economic regulation focus should be on the 4 WSEs, we think further consideration should be given to a consumer protection regime that covers all water schemes - especially where consumers have no alternatives. This should be explored as part of the proposed DIA working group on community and rural water schemes.

· Transition processes and timing – this has a direct bearing on the capacity and capability of WSE to meet economic regulation requirements. In addition:

o There should be coherence between asset valuations, depreciation and asset life assumed in setting up the WSEs and those used by the regulator to set revenues (these will vary across councils).

o Similarly, there should be coherence between funding assumed to be lost to local government and permitted to be recovered by WSEs ahead of their first full revenue path determinations.

o Existing asset owners and WSE establishment entities will have to represent the interests of the WSEs in any policy and regulatory process ahead of the WSE go-live date.

We recommend that MBIE continue to work closely with DIA and local government to ensure economic regulation will be fully integrated and aligned with the design and policy decisions of the water reforms. Particular attention should be given to the community benefits and outcomes expected.

4. Focus of economic regulation and approach to water

Our view is that revenue control and investment scrutiny should focus on the four proposed WSE, rather than other smaller rural and community-based providers and schemes. This is to ensure that the regulation model focuses on where it can have the greatest benefit, is cost effective and can be effectively resourced.

We note that economic regulation for water will require a different approach to that seen in other regulated sectors. The three waters are inherently more complex than those utilities currently regulated by the Commerce Commission. Reasons for this include:

· The WSEs differ from the other regulated monopolies in their degree of vertical integration and complexity – spanning from bulk water supply, to reticulation, servicing households and businesses across three waters, and the billing and customer relationship with end users. They must also grapple with security and scarcity constraints.

· The WSE will offer a fully integrated service – collection, treatment and distribution of three waters. There’s no separate retail layer (as in electricity, gas and telecommunications), so the firms will have to manage billing, revenue assurance, infrastructure planning and investment.

· The WSE will be subject to Government stewardship arrangements, including a Government Policy Statement.

· The WSEs will be bigger (by value) than any network the Commerce Commission currently regulates, and this will only grow based on the renewal, growth, service improvement and climate change adaptation investment anticipated. Investment will include significant CAPEX programmes across multiple projects in each WSE.

· Economic regulation for water will be closely interlinked with wider regulation and governance / representation. Roles, responsibilities and decision-making accountabilities need to be clear.

· In addition to economic regulation, WSE will be regulated by Taumata Arowai and by environmental planning controls (primarily through regional councils). These will directly drive investment requirements. Economic regulation needs to accommodate other regulatory requirements and how these will impact on costs, quality and management practices.

· Water is essential for the well-being of people. Water services cannot simply be disconnected if there are issues of non-payment or debt. This includes statutory requirements under the Health Act.

We recommend that economic regulation focuses on WSEs and is designed to respond to the specific issues relevant to water.

5. Consumers and services

The discussion document does not adequately define the range of consumers, services provided to each group and whether these services are supplied by a WSE or another body. Defining what is meant by a consumer and understanding the range and variability of water consumers will be critical to successfully developing a regulatory framework that advances the long-term interests of consumers. Consumers will include a range of types of users:

· households

· schools, hospitals and other social / community institutions

· Iwi / Māori

· local and regional councils

· land and property developers

· a range of corporate and commercial users, including very large industrial consumers

· rural consumers

· vulnerable consumers

· private and community water schemes and self-suppliers

Consideration of consumers also needs to take into account that there will be connected and non-connected beneficiaries of services. For example some properties will be directly connected to services, while other properties will directly benefit from the services (but are not directly connected) such as flood or stormwater protection. This includes private property, roads, parks and other public spaces.

Further clarity of what these different consumers mean for economic regulation is required. For example:

· Will the WSE contract with each consumer? If so how, what is the timeline and resource requirements? This might include a supply contract, like the one WaterCare deems connected drinking and wastewater parties to have accepted (see here). The regulator may oversee different versions of the contract for large vs. small entities, (or urban vs. rural consumers) but it doesn’t seem unreasonable for oversight to apply to all non-self-supply arrangements.

· Transition processes from councils (or any other special purpose entity) to WSE for charging consumers.

· What allowance will there be for vulnerable consumers or to recognise issues of deprivation and affordability?

· How will issues of unpaid debt be managed by or recovered by a WSE? Does this require amendments to the Rating Powers Act?

· Who is defined as the consumer – landlord, tenant? This might vary for different consumers and different services.

· Different classes or types of consumers may have differing interests, and different considerations in terms of how services should be priced and whether suppliers have an open-ended obligation to supply. This may have major implications for business investment decisions and some existing consumers may need to be excluded from services over time in order to comply with wider environmental outcomes.

· What are the channels for different consumers and how will these be managed? For example:

· Extending the mandate of the consumer advisory council to include water seems wise to have a suitably resourced entity able to advocate at a policy and regulatory design level as well as helping to set performance expectations. This would strengthen any regulatory system.

· The consumer protection and dispute resolution components to address connected consumer aspects of the service – ie, these need to address issues at an individual customer level

· how the WSEs will bring community preferences into their performance target setting, solution design, workplan prioritisation, and delivery. This will include both:

· planned, such as through strategic asset management processes; and

· unplanned, such as for a new development e.g. how does the 'consumer' once defined, work their way through all the other legislation and agencies to get approval for new developments, particularly given the housing crisis and changes that are being made to the consent process for development.

We recommend that further consideration and focus is given to defining consumer groups, services and the role of WSE and economic regulation in relation to each group.

6. Broader outcomes

In addition to efficiency, investment by the WSE must also balance meeting regulatory requirements and delivery of broader social, cultural and environmental outcomes.

There needs to be more recognition of climate change and resilience and the costs and service levels that this will likely require. There are also cost and service level implications for meeting specific environmental and social expectations e.g. how wastewater is treated and how drinking water is disinfected. The new Freshwater regulations will also require significant investment into wastewater treatment and retention ponds.

Such considerations are outside of a focus on efficiency and need to include thinking around resilience, (increased stormwater capacity, redundancy of pipe networks eg, duplicated mains, wastewater sumps for overflows, and bigger water storage). Such matters will need to be factored into any price / quality regulations.

Clarity on the importance of these broader outcomes and expectations needs to set as part of the statutory purpose of the WSE and objective of economic regulation as well as through the GPS for water. The GPS should be co-developed between Government, councils and Iwi / Māori to ensure buy-in. This will inform longer term / strategic planning and flow through into regulatory investment plans.

We recommend that further consideration is required for how the economic regulation can recognise the importance of broader social, environmental, and cultural outcomes, this may require a specific statutory objective.

7. Iwi / Māori and Te Tiriti o Waitangi

Economic regulation will also need to consider how to give effect to the principles of Te Tiriti o Waitangi. This includes recognition of co-governance of the WSE and how economic regulation reflects and recognises the principles and outcomes sought through Te Mana o te Wai which puts the health of a waterbody first, human health needs second, followed by recreational, economic, and other needs^{^[1]}.

Te Mana o Te Wai requires the integrated management of freshwater in line with the principle of ki uta ki tai (from the mountains to the sea). This goes beyond the alignment of storm, waste and drinking-water management and must include flood management practices that shape our waterways, commercial allocation, changing land use, water sensitive urban design, the active role of Mana Whenua, and many other critical elements.

Giving effect to these principles may require a specific statutory objective. See section 10 below.

We recommend that further consideration is required for how economic regulation can give effect to Te Tiriti o Waitangi the principles and outcomes sought through Te Mana o te Wai. This may require a specific statutory objective.

8. What types of economic regulation are appropriate for water?

We consider that the economic regulator has an important role to help reassure consumers that there has been proper scrutiny of costs for water services through the range of controls below. These should all apply to the WSE.

Consideration needs to be given as to what extent the same controls should apply to rural and community-based schemes. This should be given consideration through the proposed DIA working group.

Our view is that the types of regulation listed below would be appropriate for water.

· Information disclosure: Yes - this is a bare minimum for large network monopolies providing essential services. However, information disclosure may have to start simple and grow in scope and depth as the new entities mature. Integrating donor financial and asset information systems is likely to take some time, as will developing clear information strategies and then bringing data completeness and quality up to standard.

· Price-quality: Yes – the entities are big enough and won’t have competition, equity market or local democracy forces to discipline their performance. The reforms place significant focus on the benefits of efficiency gains and lower costs, but the entities will also have to lift investment to make sure they’re managing long-term lifecycle costs and delivering acceptable service quality. It will be important for the regulator to understand this context and not look to efficiency gains as their primary measure of success.

· Pricing: Yes - pricing will be a big part of the transition. WSEs will have tough choices to make about geographic cost equalisation, allocating costs between consumer groups, (eg, residential vs. commercial), allocating costs between services and structures (eg, fixed vs. usage-based components). It would make sense for the Government Policy Statement to provide direction to the economic regulator on pricing principles and priorities. There will also be value in the economic regulator to provide oversight of pricing methodologies and monitoring for pricing issues.

· Consumer protection: Yes – this needs to be well integrated with price-quality regulation and oversight of pricing methodologies. If WSE are to contract with connected parties, then it would make sense for consumer protection regulation to focus on the form and operation of those contracts. This could include links to mechanisms such as customer charters, though it does not seem necessary for this to be resolved in primary legislation.

· Dispute resolution: Yes – this should be achievable from the outset. It would make sense to mandate membership of an approved scheme. Presenting the scheme with some risk of losing its mandated status, while not enabling WSEs to forum-shop would be ideal. A legislative framework for electricity, gas and broadband already exists as examples of the approach that can be taken. The framework is based on the principles found in the Australian Benchmarks for Industry‑based Customer Dispute Resolution.

We recommend that a range of economic regulation is appropriate for water, including information disclosure, price-quality, pricing, consumer protection and dispute resolution.

9. Who should provide economic regulation?

Our view is that further consideration should be given to which entity is best placed to provide economic regulation. We agree that Taumata Arowai should not be the economic regulator – this organisation will already have considerable challenges which require focus and time to work through.

We also consider that further assessment should be undertaken of whether Commerce Commission is the best placed organisation. This might include what structural or cultural change might be required for the Commerce Commission to take on such a substantive new accountability. This includes the behavioural and collaborative approach required to establishment of regulation for water. Building on the issues outlined in section 4 above, reasons for considering a new entity or changes to Commerce Commission to enable it to succeed include:

· Adding WSEs would roughly double the regulatory asset base (RAB) value regulated by the Commerce Commission – ie, the WSEs are massive in terms of the scale of the assets.

· The Commerce Commission already has challenges balancing its resourcing across the sectors it regulates and scaling to meet peaks and troughs in workload.

· Concerns in the discussion document about economy of scope may be overstated – both regulators would be big enough to sustain expertise and ‘overhead’ costs would not be large.

· A water economic regulator could encompass price / quality, pricing and consumer protection. This would provide a wider sector mandate than the Commerce Commission has, (setting aside its generic pan-sector activities). The synergies of having all those functions in a dedicated water regulator may be more important than the cross-sectoral synergies the Commerce Commission could bring.

· There are potential benefits in having another major economic regulator attracting and developing the pool of economic regulatory staff which will in turn develop the capability of the water sector in relation to regulation.

· It could also be good for the Commerce Commission to have a comparator organisation. Good practice should develop more quickly with two sizeable organisations learning in parallel.

· WSE capacity, capability and maturity will be the limiting factors for the transition to economic regulation. There should be sufficient time to establish and grow a new regulator. The scale of the task relative to the Commerce Commission’s existing workload is such that allocating the role to the Commerce Commission will not greatly reduce the resourcing challenge. A new entity would add to New Zealand’s capacity to attract and grow suitable talent, including from the UK and Australia.

· In terms of breadth of functions and single-sector focus the new regulator would be similar to the UK’s Water Services Regulation Authority (Ofwat), Communications Regulator (Ofcom), and Office of Gas and Electricity Markets (Ofgem).

10. Statutory objective

· Our view is that the objective statements used in Part 4 of the Commerce Act and Part 6 of the Telecommunications Act provide a good starting point for economic regulation of WSE services. However, complementary objective statements may be required to cover all the relevant characteristics for WSE services.

· The Part 4 and 6 objectives seem a reasonably good fit for most aspects of drinking water services – these are consumed by connected parties and can be thought of as ‘rivalrous and excludable’ to some extent. This means that the idea of ‘consumers’ makes sense, and outcomes produced in ‘workably competitive markets’ can provide a relevant touchstone when thinking about quality of service, investment, efficiency and pricing structures. The same may also be true for the reticulation part of wastewater services.

· It’s less clear that the Part 4 and 6 objectives are a good fit for storm water services, or for the treatment part of wastewater services. They mostly provide their services, such as property and environmental protection, to the community rather than connected consumers – they are more like public, or quasi-public goods. Stormwater protects roads, utilities, buildings, parks, and manages impacts on receiving environments. The assets that are protected are not the same as the properties that are connected. Stormwater management and wastewater treatment protects our freshwater and marine environments – again, not the properties or consumers who are connected to the network. This makes ‘consumers’ a less relevant focus for the objective statement and may make workably competitive markets a less apt touchstone for desirable outcomes.

· The other aspect of WSE services that the objective does not address is Te Mana o te Wai. This goes beyond being a compliance obligation or service quality dimension for WSEs so may not be adequately addressed by an objective statement focussed on consumer outcomes.

· From above, we think it may be best to develop three complementary objective statements rather than a primary objective with two secondary objectives. These would need to be aligned with the statutory objectives of WSE. The three objectives would be:

1. Outcomes for consumers consistent with workably competitive markets – i.e., consistent with Part 4 and 6 and relevant to services provided to connected parties.

2. Outcomes for communities and the environment consistent with a well performing local authority. This part of the objective statement could borrow from s14 of the Local Government Act 2002, and most of the matters there are relevant to the provision of public or quasi-public services.

3. Outcomes consistent with Te Mana o te Wai. The part of the objective statement could borrow from section 3.2 of the National Policy Statement for Freshwater Management 2020.

· The subclauses of the Part 4 and 6 objective statements would remain relevant to the task of the economic regulator – i.e., innovation and investment, efficiency, consumer focus, price levels and profits – and would work as subclauses for the first two objectives above.

· We think the subclause relating to excessive profits remains relevant, in the sense that the WSEs will need to produce an operating surplus (profit) each year to ensure their investments programmes can be financed, even if they cannot distribute profits to their owners. It may be worth replacing “extract excessive profits” with “produce excessive profits” to reflect that the WSEs will retain profits rather than distribute them externally. A core part of the regulator’s role will be to calibrate operating profits such they are sufficient to support efficient investment over time, but not higher than they need to be.

· We recommend a modified version of the objective statement from Part 4 of the Commerce Act should be developed, which balances a workably competitive market with community and environment outcomes and the principles of Te Mana o te Wai.

11. Approach to regulation – culture and behaviour

Water reforms represent a substantive change process across multiple organisations, with the establishment of new accountabilities. This system will take time to embed and mature. In this environment, it will be vital that economic regulation plays a constructive and proactive role to support and work with WSE and Taumata Arowai to meet bottom lines and regulatory requirements. This will require a learning culture and approach based on sharing of lessons and raising sector capability.

The consultation paper assumes approaches to regulation modelled on the Commerce Commission’s existing regulatory practices. These include a ‘propose and respond’ dynamic, where suppliers develop investment plans for scrutiny and approval by the regulator. This is a well understood approach to regulation, but it does assume significant maturity on the part of the supplier and tends to operate in a relatively low-trust and non-collaborative style – i.e., with the regulator assuming that a profit-driven supplier will want to maximise the commercial value of their business.

The context for the WSEs will be unique, so it would be desirable to provide the economic regulator with more latitude to craft fit-for-purpose approaches to regulation. The WSEs will be new entities, without profit motive, delivering a mix of private, public and quasi-public services with unique governance and accountability arrangements. These factors mean that regulatory innovation should be encouraged, and it may be effective for the economic regulator to combine traditional tools of revenue building blocks and asset management scrutiny with a more collaborative style of developing and sanctioning investment plans and quality objectives.

This potential to develop a fit-for-purpose approach should be recognised in the legislation and could be supported by establishing a new water economic regulator.

As part of this, it will be important to:

· build in as much role clarity as possible,

· design economic regulation arrangements to be workable within this operating environment,

· allow time for the WSEs to digest and make sense of their operating environment before expecting them to lock in long-term revenue paths and quality standards,

· establish strong relationships and systems of working together across the WSE and with Taumata Arowai.

This needs to recognise that the WSEs will have to navigate a complex operating environment in terms of the number of agencies who have input or control of their strategies, plans, investments, and operations, including:

· Governance entities and mechanisms, which (in the current blueprint) includes a representation-based governance group who will issue strategic and performance expectations.

· A government policy statement. This is a critical document for setting clear direction and expectations for water and will need to be jointly developed between Government, councils and Iwi / Māori.

· Consumer forums, and potentially other community and customer engagement channels.

· Tightly linked infrastructure planners, including roading authorities and local government.

· Taumata Arowai setting drinking water and occupational competency standards, and providing oversight of wastewater and stormwater performance.

· New environmental regulation arrangements.

We recommend that a strong focus is placed on the culture and behaviours to ensure economic regulation plays a constructive and proactive role to support and work with WSE and Taumata Arowai to meet bottom lines and regulatory requirements.

12. The transition process is important

Water reforms will result in significant disruption and change across the water sector which will take at least 5-10 years to fully embed. At the same time the WSE will also need to respond to:

· new governance arrangements,

· increased drinking water regulation,

· increased regulation of stormwater and wastewater,

· capacity and capability challenges of scaling up investment to address regulation as well as historical under-investment,

· a pressing need to adapt to the impacts of climate change on water supply, receiving environment capacities, flooding severity, inundation risk, and physical threat. The current level of service for stormwater will decline without large increases in capacity,

· changes to relationships between consumers and water service providers.

Economic regulation also places a lot of demands on an organisation in terms of reporting and long-range planning. Achieving net gains from the reforms and beginning to demonstrate ongoing efficiency gains are likely to take years to manifest.

We therefore consider that it will be important to take a transitional approach to economic regulation while also ensuring that the pathway is clear and achievable so that this can be planned for and resourced. This requires further consideration in the discussion document.

Further issues we consider important in relation to transition are:

· The ability (and relative importance) of realising efficiency gains may be overstated in early years for the WSE. It will initially be more important to ensure effective transition and establishment of the new WSEs and the economic regulator, including clear processes and channels for consumers.

· Coherent long term investment plans will take time for the new WSEs to collate and refine. This requires aggregation of data and investment plans, and harmonisation of strategies, planning tools, delivery processes and operations across multiple councils.

· Aggregation of pricing and charging models from existing councils will be complex and take time to work through.

· Any process to move towards consistent and/or equalised tariffs and consumer outcomes (quality, service levels, relationships) will raise a range of challenges and significant changes for some consumers. How issues of fairness and equity are managed will need to be carefully considered.

· The process of change for consumers will be significant in terms of not only billing but also communications and engagement to ensure that consumers understand the change in service provider and what this means for them.

· There is limited regulatory system capacity, and time will be required to build human resource and expertise.

· It also takes management time and resource to engage with economic regulation, which has an opportunity cost given those people will have their hands full with amalgamation and associated changes processes. Economic regulation requirements should be aligned to match expected organisational maturity and capacity of the WSE.

· The costs of transition need to be further considered. These appear to be understated in the discussion document.

We recommend that further consideration is given to transition pathway including the time, resources and capacity to enable economic regulation.

13. Costs of economic regulation

Our view is that the cost of economic regulation, both set up and ongoing costs, is significantly underestimated and will require further consideration. For example:

· In 2020 the Commerce Commission budgeted just under $20m for its energy and telecommunications regulation work – and water will be broader in scope compared to other regulated sectors.

· The availability of expertise and staffing will potentially be a constraining factor and impact on costs.

· The discussion document underestimates the complexities for the three waters, which will push up costs.

· The discussion document potentially overestimates the level of local input that will be feasible through the proposed representation and governance structures. This will result in the need for robust complaint processes at the sub-regional level, especially for vulnerable people. Currently every Council has systems for people to contest decisions, input into planning and follow through to elected members. A centralised internet-based system for complaints will not work for all communities and consumers.

We recommend further consideration is given to the costs and resource requirements for establishment and operation of economic regulation.

14. Pricing, investment and efficiency

Specific considerations for pricing and investment will include a range of factors. These should not all need to be resolved through legislation and should be phased in over time linked to regulatory control periods. Clear direction on pricing and a realistic transition pathway will be required from the outset to guide pricing and revenue over time.

· Equalisation: Our view is that legislation should not prescribe geographic averaging or equalisation of tariffs. We suggest a better model would be for the regulator to develop pricing principles, (this might include transition pricing methodology – how will prices be standardised, over what time, minimum / maximum movements) and review pricing methodologies. This would allow a more nuanced development of pricing arrangements as the WSE are established and a move towards equalisation over time.

· Local conditions and historic investment: Pricing will need to take into account the different cost pressures between the 4 WSEs, and within each WSE footprint. This will include different factors such as climates, soils, wealth, asset quality and historical investment and regional council regulation. This will drive different demands for investment, which can have implications for how much equalisation can be considered equitable or efficient.

· Other pricing matters: there are a range of other pricing matters that the economic regulator should address through pricing principles and oversight of supplier’s pricing methodologies such as:

· Differential pricing for use: to what extent pricing should be usage based, how usage charges should be set, and how they should vary for different types of consumers, time of use, and service etc.

· Ability to pay: how suppliers should manage affordability and handle non-payment, including through tools such as social tariffs and coordination with social agencies

· Development contributions: How development contributions are set and managed, including any process for these to be challenged.

· Revenue and assets: Entities would benefit from early clarity on revenue input methodologies, (including depreciation rules) and the opening value of their regulatory asset bases (RABs) – ie, the information they will need to model how their investment will translate into revenue. This will be essential for managing their financing arrangements, including understanding their ability to borrow and their need to retain cash reserves. Developing the input methodologies and fixing the opening RAB value will be complex and will require participation from the WSEs to represent their interests and to bring together relevant information. The process will include working through a variety of legacy valuation models, ensuring coherency with methods and assumptions used when establishing the WSEs, ensuring rules will enable WSEs to finance large investment programmes without access to equity markets, and working through the role that financial incentives and penalties can play in non-profit entities.

· Depreciation: How will these be standardised, agreed / disputed given the potential for impacting the “cost” of investment and the asset useful life (AUL). This is one of the largest drivers of Opex costs, and if increased, will result in substantial cost increases. Economic regulation will need to define how this is calculated. Some Councils do not fund depreciation, (just renewals as they occur) with excess income in any year going into depreciation reserves to fund renewals in later years.

· Expenditure plans: Entities are unlikely to have enough clarity about their long-horizon planning to be able to propose Capex and Opex plans within their first few years of existence. Consumers are looking for certainty of costs, affordability and fairness. That means it would make sense to:

· start with a transitional price path based on existing council rates and fees and charges,

· defer engagement on price-path rules until after the entities have formed,

· not require a first regulatory proposal until several years in. This should be based on clear guidance about pricing, revenue and levels of change that are acceptable to consumers across any investment period,

· have a short first regulatory period (two or three years),

· provide flexibility for the duration of the second (and probably ongoing) regulatory periods (3-6 years, at the WSE’s option).

· Level of service: The price / quality regime needs to consider the different service levels that should apply, for example central Wellington vs a small rural community. The residents of small rural towns may not expect a similar level of service when they may generally be happy to cope with occasional ponding on roadsides or water restrictions in summer.

· Use of surpluses: Will this be restricted to re-investment in three waters assets and repayment of debt, or will WSEs be allowed to re-invest surpluses into non-regulated activities?

· Non-regulated activities: Because the WSEs are unable to pay dividend or raise equity, they are likely to build up substantial cash reserves. If the WSE are investing in non-regulated activities, will these be limited in scope to be in the same industry (such as electricity providers remaining in the same industry) or not? To what degree will economic regulation apply to these activities?

We recommend that clear direction on pricing and a realistic transition pathway will be required from the outset to guide pricing and revenue over time.

15. Planning cycles

Setting the optimal planning horizon and cycles are critical to ensure longer term innovation and investment planning to address complex issues. As noted above, these ideally need to align with broader spatial and investment planning by local government. The timing and alignment of these cycles will require further consideration through the RMA reforms and review local government processes.

Price / quality regulation usually involves having to submit plans and expenditure forecasts covering years 3 to 7 (for a five-year regulatory period). The regulator scrutinises those plans and approves a funding envelope that the supplier can then use as they see fit – ie, they can reprioritise within the envelope, but aren’t funded to exceed the assumed levels of expenditure.

The fixed envelop forces the supplier to prioritise when new spend pressures arise, which can be for unforeseen circumstances such as responding to a new development. This needs to be allowed for.

The regulator will need to design suitable arrangements for the WSEs that create cost discipline, while not stifling growth investment. This will require a transitional approach, potentially based on:

· starting with transitional revenue paths

· after approximately 3 years, have the first proper control period (but make sure the regulator can defer this)

· make the first proper control period only 2-3 years in duration

· allow subsequent periods to be between 3-6 years

· allow for flexibility in plans, investment required and pricing to respond to changes in context or new demands for investment

· The regulator may practically need to have “resets” between periods staggered so that only one WSE resets each year so the regulator can rotate its resources from one WSE review to the next. Resets usually consume 12-18 months of intensive resourcing, so one WSE per year would fit neatly into a 5-year cycle (with the ‘slack’ year focussed on input methodology (IM) reviews, etc).

16. Other considerations

The discussion document discusses the administrative costs of the regulation, but there are some other important costs too:

· Regulatory error – regulators can get things wrong, which can be costly. They never have as much information as management, and they can have their own incentive challenges. The risk of error is higher when the regulator isn’t well resourced, so WSE will want a good, capable, well-resourced regulator that won’t make bad mistakes.

· Loss of agility – the flip-side of control is always some loss of agility. Good regulation tries to mitigate this problem, but the residual risk can be high if the regulated entities are not in a steady-state situation.

Part B: Specific matters

The table below contains our brief comments on topics covered in the MBIE briefing paper or refers to our more comprehensive feedback in part A of this submission.

MBIE Q #	Topic	Our comment
ECONOMIC REGULATION
1	Case for economic regulation of three waters infrastructure.	Support. See section 1.
2	Regulation of storm water network.	Support. Needs to include stormwater. Wastewater and stormwater management are difficult to separate – some systems are physically interconnected, the two systems often directly impact one another, and frequently they are managed by the same staff. Stormwater critical for water quality
3	Economic regulation of WSEs.	Support. Focus should be on WSE for price quality. Information disclosure could apply to other large suppliers, and consumer protection and dispute resolution should apply to any supplier (excluding self-supply).
4	Regulation of community and private schemes.	The focus of economic regulation should be on the four WSEs. See discussion in section 4.
5	Information disclosure regulation.	Support – see discussion above in section 8.
6	Water Services Entities & price-quality regulation in addition to information disclosure regulation.	See discussion above in section 8.
7	Individual price-quality regulation.	Yes – the entities are large, and each will be unique.
8 a & b	Gradual implementation, or transitional price-quality path? Should a transitional price-quality path be developed and implemented by an independent economic regulator, or by Government and implemented through a Government Policy Statement?	Support gradual implementation. Further consideration required, see comments in section 12.
9	Applications for regulation.	See comments in section 4.
10	Purpose statements.	See comments in sections 6 and 10.
11	Specific economic regulation regime vs generic economic regulation.	Should be a new item of legislation and not the generic Part 4 or an addition to the Part 4 regime.
12	Length of the regulatory period.	See discussion in section 15 on planning cycles- don’t prescribe a fixed length. Allow for a transition period, then a short first control period (2-3 years) then a range from 4-6 years. This will allow flexibility to adapt as WSEs stabilise and mature and will help setup a staggered reset workload.
13a	Developed and published input methodologies.	Yes - but need early engagement before these come into force.
13b	Minimising price shocks to consumers and suppliers.	Ensure the regulator has regard to price shock, and has tools to address them, is important – but an objective of ‘minimising’ is too crude.
13c	Efficiency challenge for each regulated supplier.	See comments in submission– need to balance efficiency challenge with increased investment required and achieving broader outcomes
14a	Policy objectives for the structure of three waters prices.	Government should not directly control pricing. Direction should be set through co-development of a GPS working with councils and Iwi.
14b	Responsibility for determining the structure of three waters prices.	See the discussion on pricing in section 14.
14c	Role of the economic regulator in regard to pricing structure.	See discussion in section 14 on pricing.
15	Merits appeals.	Providing for merits appeals make sense. The fear of litigation can stifle regulatory processes somewhat, and suppliers will always be reluctant to challenge their regulator, but on balance it’s an important safeguard given the power that economic regulators wield.
16	Compliance and enforcement tools.	Tools proposed seemed reasonable. We note that table 4 in the MBIE discussion paper (page 47) was missing a row for pricing oversight.
17	Which organisation should be economic regulator?	As discussed above in section 9, we recommend that consideration is given to setting up a new regulator to cover economic and consumer protection regulation.
18, 19, 20	Levies.	Levies provide a good alignment of interests – the WSEs will have to pass levies through to their consumers. They won’t want the levies too high as to add to pricing pressure, or too low as to cause the regulator to be under-resourced (and unable to make good decisions). Crown funding can be too fickle. We would recommend the levy be calculated on the same basis as the Taumata Arowai levy.
CONSUMER PROTECTION
21a	Are additional consumer protections warranted?	Important to have sufficient consumer protection for the following reasons: · Water is essential for life managed by a monopoly industry with limited to no alternatives for consumers. · Water is a scarce resource, and it is costly to ensure quantity and quality – leading to a need for transparency. · Consumers have very high standards of performance and water quality. It is important to ensure there will be a meaningful process for handling consumer issues when service standards are not met.
21b	Should regime contain a bespoke purpose statement?	Purpose statement would be important to set the tone of the regime. The four elements outlined in the MBIE discussion paper at paragraph 166 are a start to the development of the purpose statement, but would benefit from the notion of fairness, and accountability being included.
22	Minimum service level requirements via a mandated code.	As above – ensure adequate structures to set service levels.
23	Consumer protection regulator - empowered to issue guidance alongside a code?	As above – ensure adequate structures to set service levels.
24	Regulate water service quality in a single piece of economic regulation and consumer protection legislation?	Needs to be transparent, fair and independent. Keep as simple and clear as possible. There are a large number of agencies with a say or interest in water and how it is delivered. The role of each needs to be clarified. See comments in section 1
25	Variability of minimum service level requirements across different types of consumers.	Generally should be similar. Needs more definition of different types of consumers. Vulnerable consumers need a separate set of requirements, such as restricted service for difficulty with ability to pay.
26	Vulnerable consumers.	Water is an essential commodity. Some consumers are ‘vulnerable’ because of their ability to pay, others are medically dependent on the supply of water. Minimum service level requirements, perhaps along the lines of the newly instituted Electricity Authority “Consumer Care Guidelines” should be considered.
27	How Treaty of Waitangi principles should be factored into the design of consumer protection.	See comments made in section 7. Coordinate with the work being done by the Māori Advisory Group, part of Taumata Arowai.
28	Should consumer protection regime should apply to all water suppliers?	For reasons set out in question 21 above. Apply to all water suppliers so consumers can have confidence in the industry and suppliers all operate on a level playing field.
29	Compliance and enforcement tools.	Make them clear and transparent, and identify which entity is responsible.
30	Which organisation should be the consumer protection regulator?	Refer section 9, we think a new regulator should be considered to provide economic and consumer protection regulation. This will help ensure coherency between consumer protection measures and wider governance and control arrangements.
31	Should regulator be required to incentivise high-quality consumer engagement?	The providers in a ‘mature’ industry, should strive for high quality consumer engagement without regulator needing to provide incentives.
32	Expert advocacy body.	Beneficial to have a means for consumers to have representation on technical issues. However, is it already covered? Once there is a better understanding of the roles of the entities shown in Table 11, questions around the need for, and provision of, an expert advocacy body may become clear.
33	Should expert body be established via an extension to the scope of the Consumer Advisory Council’s jurisdiction?	Note the CAC currently being established under the Electricity Price Review is not yet established or functioning and there is currently legislation in the Electricity Industry Amendment Bill includes the establishment of the Small Electricity Consumer Agency to protect the interests of domestic and small business consumers. It is too early to say if extending the jurisdiction of these bodies to the water sector would be appropriate.
34	Need for dedicated consumer disputes resolution scheme.	There is a need for a dedicated dispute resolution scheme. A well run, best practice scheme will provide confidence for consumers in dealing with providers, and access to justice through an independent, specialised scheme.
35	Should disputes be subject to a dispute resolution scheme? Any other kinds of issues that a consumer dispute resolution provider should be able to adjudicate on?	Subpart 4 of the Water Services Act 2021 deals with Consumer complaints and so any additional dispute resolution scheme should have clear jurisdiction, so consumers know which body is responsible. See comment in 36 below.
36	Should a mandatory statutory consumer disputes resolution scheme should be established for the water sector?	A mandatory scheme is essential for consumer confidence in the industry and for a level playing field for suppliers. It is easiest for consumers to have a one-stop-shop for all complaints, rather than a variety of complaints covered by different dispute resolution processes, which may have overlapping issues. One independent, mandatory scheme protects the integrity of the decision maker, as suppliers cannot ‘walk’ if a decision does not go their way. To ensure the integrity of the scheme, provisions must include the ability for the Minister responsible to seek independent reviews of the performance of the scheme and the ability to withdraw approval of the scheme if it is not performing.
37	Do you consider that a new mandatory statutory consumer disputes resolution scheme should be achieved via a new scheme or expanding the jurisdiction of an existing scheme or schemes?	Utilities Disputes has an existing scheme and experience in dealing with water complaints. Any scheme should adhere to the six principles – accessibility, independence, fairness, accountability, efficiency, effectiveness from the Australian benchmarks for industry-based customer dispute resolution.
38	Do you consider that the consumer disputes resolution schemes should apply to all water suppliers, water suppliers with 500 or more customers, or just Water Services Entities?	It is important to require all water suppliers to join the mandatory scheme for dispute resolution to prevent forum shopping and to create a level playing field for all suppliers. Setting an arbitrary number of say 500 complicates resolution for consumers, eg, their supplier has 499 consumers and a month later has 501 consumers.
39	Do you think the consumer dispute resolution scheme should incentivise water suppliers to resolve complaints directly with consumers?	Suppliers should be required to first attempt to resolve complaints directly with the consumer. Complaints provide an opportunity for improving service. See AS/NZS 10002 – Guidelines for Complaint Management in Organisations, which sets out the standards for complaint handling and the Australian benchmarks also provide some guidance around the principles of dispute resolution which would be useful for organisations. If not resolved, then suppliers must tell consumers of their right to take the complaint to an independent dispute resolution scheme.
40	Considerations for traditionally under-served or vulnerable communities?	Vulnerable communities, and those struggling with the ability to pay will need to be taken into account. Consider as part of the roles of the agencies in Table 11.
41	Should costs of consumer protection regime be funded via levies on regulated suppliers?	Levies should be paid by regulated suppliers as part of the cost of doing business. They also ensure ongoing recognition of the consumer protection regime.
42 & 43	Levy consultation and collection.	Refer to the answer above for questions 18, 19 and 20.
Implementation and regulatory stewardship
45	Will regulatory charters and a council of water regulators arrangements will provide effective system governance?	Refer section 2. This needs to be considered as part of the system design of water reforms.
46	Do you consider it is useful and appropriate for the Government to be able to transmit its policies to the economic and consumer protection regulator(s) for them to have regard to?	Refer section 2. This needs to be considered as part of the system legislation and stewardship arrangements set by the Crown – this includes the Government Policy Statement for water services which should be co-developed between the Government, councils and Iwi / Māori. This is key to ensure a focus on longer term outcomes such as water quality, climate change, and support for housing
47	Should economic and consumer protection regulator be able to share information with other regulatory agencies?	Refer to Section 11

Ordinary Council Meeting Agenda

15 December 2021

7.6 Chief Executive Report

1. Purpose

To inform Council on planned operational activities for Council

2. Significance

The matters for decision in this report are not considered to be of significance under the Significance and Engagement Policy.

3. Community Services

Community Development

Unfortunately, the Christmas Parade and the Summer Street party have been another casualty of Covid 19, both being cancelled.

Pack the Bus is back for 2021, with Carterton’s Park Up and multiple school visits scheduled over the 30^th of November and 1^st of December. The Community Development Team, along with two elected members will support the New World Park Up, by helping pack the bus. Donations have been collected in the Events Centre and will be placed on the bus on behalf of the community and CDC team.

In January we are planning four free Whanau Play Days. We were successful in a funding application to Nuku Ora’s Tu Manawa fund which provides funding for programmes relating to Sport, Active Recreation, or Play. Our sessions will act as a way to engage with the community, while promoting free, unstructured play in multiple locations in Carterton. Promotion of the days will commence in the second week of December.

We were also successful in receiving a very small amount of funding from Neighbourhood Support Association to put towards replacement of all Neighbourhood Support street signs. We have started an audit to document and map all sign locations and will start replacing according to priority. Following the High Street fire we have again proposed a NS network for business owners in Carterton. This will be discussed at the next Go Carterton social.

Carterton and Masterton District Councils have both agreed to the proposed approach for the review of the Wairarapa Rangatahi/Youth Strategy. South Wairarapa District Council will consider the same recommendations shortly. Currently we are in the information gathering stage and are developing an online survey that will be rolled out to youth in February. The strategy review will be completed by September 2022.

Youth 2 Work Wairarapa and the Mayors Task Force for Jobs contract continues to achieve great outcomes. For the period 1^st July 2021 to 31^st October 2021 there have been 19 employment outcomes that meet the criteria of the fund. In total for the programme to date, which started in October 2020, there have been 72 placements through Youth 2 Work Wairarapa.

Communications and Engagement

During the last period we have run 26 different campaigns and advertising. Key campaigns have been around Water Conservation and Covid. These will continue throughout the summer.

Many people still turn to the Council’s Facebook page for local updates on COVID-19 updates. The Councils’ social media channels have been used to share appropriate information on the following COVID-19 topics:

· Where to get vaccinations in Wairarapa

· Carterton pop-up vaccination clinics

· Where people can go to get assistance downloading/printing their My Vaccine Pass

· How the Government’s COVID-19 Framework (Traffic Light system) will affect Council facilities

The Council also has a dedicated COVID-19 page on its website which has been updated to reflect the latest information www.cdc.govt.nz/covid19

An ad for the Midweek newspaper and a radio ad outlining the three Wairarapa Councils’ facilities and how they are operating under this framework have been publicised.

Regional Roles

The regional team is made up of staff that work either across all three Wairarapa Councils or with Carterton and South Wairarapa District Council. The work streams include Zero Waste, Zero Waste Education, Climate Change and Walking and Cycling.

Regionally we are assisting GWRC on a review of the Wairarapa Cycle map. This includes both on road and off road cycle paths and safe cycling roads and loops throughout Wairarapa.

We have been actively posting through the Huri Huri Facebook page, including sharing information from cycling groups and clubs, passing on cycling safety advice, and seeking feedback on equipment. There are currently 611 followers on this page. We have also worked with the comms team on updating cycling and walking related pages on our website.

Planning is underway for the 2022 Wairarapa Walking Festival which will be held in November. An initial steering group meeting has been held, and Volunteer Wairarapa will be providing support, alongside ourselves, in organising the event.

An engagement plan will be carried out from late November to early December to help inform the Positive Aging Strategy action plan for the next three years. It included a community workshop and community pop-ups being. Further engagement will include workshops with staff and councillors.

Meetings with the new St Johns Community Engagement Coordinator for the Wellington and Wairarapa have led to a date being set for the rollout of the Caring Caller programme in the Wairarapa. https://www.stjohn.org.nz/what-we-do/community-programmes/caring-caller/ This is a key element to tackling loneliness in the Wairarapa.

The partnership with CCS Disability Action has led to having free access to research that will aid Carterton District Council to predict the number of mobility parks required in the future. Work will be underway in this area soon. Work is also underway regarding how the District Plan Review can incorporate the housing goals of the Positive Ageing Strategy.

Since July 2021 the Zero Waste Education has delivered the programme to 632 children over 24 classes in five schools across the Wairarapa.

Comments from teachers have been extremely positive:

“Tammy was fantastic. She had the class engaged for the duration of the lessons – including the reluctant learners.

I was really impressed with the content the students and the students were able to reflect on their learning at the end of the day. Lots of positive feedback given by Tammy to children”

“Tammy is so clear in her delivery – she waits for kids to answer and to be quiet before she speaks. Content is awesome. She includes spontaneous te reo and it is obvious she is passionate about the plant and the programme she delivers. Thanks Tammy. I think you are super”.

The success of this term has been attending two principal meetings (Masterton and South Wairarapa), with positive results – within 5 minutes of meeting with the Masterton Principals, our educator returned to five emails from interested schools, some of which were sent during the presentation. As a result, 2022 will be a busy year for Zero Waste Education, with seven schools booked already (term one and two fully booked, with three and four filling up quickly).

On the 4^th November 2021 He Pou a Rangi Climate Change Commission came to visit the Wairarapa. While here they met with the Wairarapa water race users, Wairarapa students and the three Wairarapa Councils. These meetings were open discussions between the groups and the Commission. This visit was a real success, with all parties finding the day valuable. It is beneficial for everyone that the Commission better understands our concerns and difficulties which are very specific to our region.

Community Services team – key projects update

4. people, HEALTH, SAFETY AND WELLBEING

COVID-19 Protection Framework

On 3rd December 2021, Council moved its services to the new COVID-19 Protection Framework at the ‘Orange’ setting. The new Framework offers more certainty and stability in the delivery of our operations and services enabling teams to continue functioning effectively through all setting levels including Red.

The three Wairarapa councils have worked together to ensure as much consistency across the region as is possible, by taking a pragmatic approach based on the current level of risk in the community, the high vaccination rates of Wairarapa residents, advice from the Local Government Response Unit, and the capacity of staff to comply with setting requirements.

We have also best safeguarded the viability and continuity of council services through the next phase of the pandemic, while best protecting residents, and fulfilling our obligations as Persons Carrying out a Business or Undertaking (PCBU) under the Health and Safety at Work Act 2015.

All our services, facilities, and workplaces continue to operate as we have under Alert Level 2 including the Transfer Station, Cemetery, Operations Depot, Dog Pound, all Parks & Reserves, Haumanu House (including Foodbank), Recreation Trails, and the main Council office.

Two facilities will operate using a Vaccine Pass - the Events Centre (including the Library) and the Swimming Pool.

In addition to the general considerations above, without a Vaccine Pass under the Orange and Red settings, the Events Centre’s operations and income would be severely restricted as theatres, concerts, conferences and other events are not allowed. Not requiring a Pass would mean a significant financial and cultural loss for over 89% of the community who are eligible to hold Passes.

As the Library is located in the Events Centre building, and is not able to be adequately ‘separated’ due to the shared entrance, open communal space, and toilet facilities, it had to be included in the Pass requirement.

In deciding to require a Vaccine Pass at the Swimming Pool, Council considered the vulnerability of children who are not eligible to be vaccinated. With the majority of pool users being children and young people, requiring a Vaccine Pass is the best way to keep them protected, and reduce the potential impact of an outbreak on our vulnerable adults and older people.

During the move to the new Framework, the Community Services and Library Teams have taken an educational approach including working with people to help them obtain their Passes. We have also partnered with Digital Seniors to provide ongoing support where needed.

To ensure services continue for the small percentage of people who are not eligible to hold a Vaccine Pass, we are already delivering most services in an alternative form such as remote attendance of council meetings and online borrowing of library books. Our teams are considering how we may meet other service needs.

Ultimately, the decision to restrict any ratepayer funded services is always a difficult one and council is committed to providing the best levels of service possible. Current legislation means that the cost of all Council services is spread over all ratepayers, whether they choose (or are able) to use services, or not. An example of this is that not all ratepayers have vehicles, however, all ratepayers still share the cost of roading, which is the largest cost of all council services.

As we progress into this next stage of the pandemic, our teams remain committed to the community and how best we can meet their wellbeing needs.

Health & Safety Incident Reports

We continue to encourage all staff to report accidents, damage and near miss incidents. We have made reporting easier for staff by having a number of ways to report - e-mail, text, phone or filling out a form, without fear of blame or punishment. The aim is to prevent further or increased harm or damage.

Throughout the year we have increased the visibility and profile of the Health & Safety (H&S) Committee, and now have a representative from across all Council departments. The H&S Committee members report on Health and Safety matters, and pass on messages to their teams at their toolbox meetings.

The Committee have also been deeply engaged in developing and reviewing COVID-19 guidelines and protocols, and will be instrumental in reviewing safety assessments which consider whether vaccinations will be required by specific high-risk roles.

The graph below details all incidents reported during October and November 2021. Of note, there have been no accidents reported since June 2021, and staff are identifying ‘task improvements’. This is where they feel there is a safer way to perform a task or operation.

Wellbeing activities

Council supported and raised awareness for White Ribbon Day (25^th November) through a number of activities. White Ribbon banners were displayed in Holloway Street as a visual reminder for members of the public, and staff were encouraged to wear white ribbons. Fundraising boxes were placed at the Events Centre and the Council office, and the Communications Team created a video montage with various staff holding White Ribbon posters and commenting on the slogans.

Council commits to White Ribbon pledge with 133 White Ribbons

Staff Training

First Aid training has continued from October to December with 12 staff completing ‘Essential First Aid training’ with Red Cross. As well as meeting our obligations under the Health and Safety at Work Act 2015, this training equips our front-line customer services teams to be able to support members of the public should the need arise.

Project Management training, organised in conjunction with South Wairarapa District Council, was attended by 15 CDC staff. Project Management training increases staff capability to deliver projects and activities within required timeframes and budgets.

5. planning services

Local Alcohol Policy

The Wairarapa Local Alcohol Policy (LAP) was adopted by the Masterton, Carterton and South Wairarapa District Councils in 2018. While the Sale and Supply of Alcohol Act 2012 specifies a minimum six-yearly review period, the Wairarapa LAP provides for a review after three years, and is therefore now due for review. Council officers are currently in the initial planning stages and have formed a project team with staff from Masterton and South Wairarapa District Councils. We will hold a workshop in the new year to discuss the project approach and timeframes.

Wairarapa Combined District Plan Review

This year the combined committee have worked through 28 of the Chapters within the District Plan with a varied number of changes to be analysed for each. Analysis, as per Section 32 of the Resource Management Act setting out the preparation for evaluation reports, are being prepared.

In addition, the following technical evaluations for the Wairarapa are nearing completion.

· Liquefaction

· Refined earthquake hazard identification

· Greater Wellington Regional Council flood mapping

· Noise criteria assessment

· Heritage assessment

The following draft chapters for are also being prepared for review by the Committee:

· General rural zone

· General residential zone

· Subdivision

· Temporary activities

· Activities on the surface of water

· Mixed use zone

6. building services

Consenting forecast numbers remain set to approximately equal those of the previous two years. Chris Bargh deserves special mention in being key in maintaining Council’s consenting output during a time period incorporating the loss of the team leader and the added requirements of overseeing a new member of the team.

The regulatory team are looking forward to a period where consents cannot be processed. The Legislated close down period is set under the Building Act and RMA from, and including, the 20^th December 2021 until, and including, the 10^th January 2022.

7. Liquor and Food licensing

Food

There are no outstanding food registrations remaining for the 2021 year with all food premises been renewed including four new food businesses in the last month.

NZ Food Safety have repeatedly encouraged the use of remote verifications which Council have adhered to, but these are slower to conduct and has resulted in nine outstanding overdue food verifications remaining that can be undertaken under the traffic light system.

Alcohol

The overall number of liquor licence applications (on, off, club, manager certs and specials) have been steady but reduced in comparison to previous years. Council is anticipating, with the new traffic light system combined with double vaccination for the overwhelming majority, we will see an increase in events in the new year and a subsequent increase in special license and mangers certificate applications.

Hairdresser & Beauty Therapy

Registration renewals for hairdressing is completed however the registration renewal for beauty therapy have waited for the traffic light system. Five of these remain requiring on-site registration inspections.

8. animal control

The Animal management officer will continue efforts into locating and addressing owners with unregistered dogs. there may be follow up requirements for infringement notices but each incident will be dealt with on a case by case basis. Council tend to take a more educational approach for first time offences.

When the weather and time allows, there will be some simple reminders painted onto the town centre footpath for leads to be used. these will be located at the entranceways to the town centre as a trial and can be easily removed if need be.

There has been extensive work undertaken on updating the Animal & Dog Control web page, making it more user friendly and adding more information and features.

9. summary

The past few weeks have been a challenging time for the CDC team, elected members, and our community as we move into the Covid Traffic Light system. I am acutely aware of the concerns our wider whānau face with all this change. We remain hopeful that the next few weeks will bring more stability and an improved understanding of how we cope with what being in Orange means.

In addition to this, the Parks and Gardens teams have been focussing on weeds and grass growth which was unable to be dealt with earlier due to the Covid restrictions.

The damage to the wastewater reservoirs is devastating news to us all. No more so than for the project team building the new wastewater ponds. Turning our anger and frustrations into action sees a renewed passion to complete this project and ultimately remove any discharges from the waterways.

With the festive season approaching I will be seeking to ensure that staff and elected members take a well-earned break. With the Three Waters Reforms, Covid-19, the wastewater reservoir project and a change in Chief Executive they probably deserve some down time.

Finally, I would like to acknowledge the contribution, passion, commitment and advice Councillor Rob Stockley has made during his time at CDC. I wish him all the very best for the future.

10. CONSIDERATIONS

10.1 Climate change

N/A.

10.2 Tāngata whenua

N/A.

10.3 Financial impact

N/A.

10.4 Community Engagement requirements

N/A.

10.5 Risks

N/A.

11. Recommendation

That the Council:

1. Receives the report.

File Number: 137407

Author: Dave Gittings, Infrastructure, Planning and Regulatory Manager

Attachments: Nil


AGENDA Ordinary Council Meeting
Date:	Wednesday, 15 December 2021
Time:	1:00pm
Location:	Carterton Events Centre 50 Holloway Street Carterton
Mayor G Lang Deputy Mayor R Vergunst Cr R Cherry-Campbell Cr S Cretney Cr B Deller	Cr J Greathead Cr R Keys Cr R Stockley Cr D Williams J Fox – Hurunui-o-Rangi Marae representative

Equipment	Low Estimate	High Estimate
Dosing Equipment (package) with instrumentation with upgrades to WTP and buildings for equipment	$125,000	$168,000
*Capital Total for 2 treatment plants**	$250,000	$336,000
Estimated Annual Operating cost	$16,000	$21,000