Rehette Stoltz: Local Government New Zealand Vice-President on the cost of water infrastructure projects under the Local Water Done Well programme

The cost of water infrastructure projects have been rising as councils learn more details about what's required. 

Every council has now submitted their plan under Local Water Done Well programme. 

As Newstalk ZB first revealed last week, the final bill is now expected to reach almost $48 billion – about $9 billion more than first thought. 

Local Government New Zealand Vice-President and Gisborne Mayor Rehette Stoltz told Heather du Plessis Allan they've taken a more detailed look into costings over the whole ten years than they previously had. 

She says we're comparing a ten-year plan which wasn't as in depth, to the current very detailed plan. 

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Episode Transcript

Speaker 1 (00:00):
Turns out councils may have underestimated how much they're going
to have to spend on upgrading their water systems. The
local Water Done Well model has come in nine billion
dollars higher than councils estimated under their own long term plans.
The heat Stolts is the mayor of Gisbon.

Speaker 2 (00:14):
Morning ahead, good morning.

Speaker 1 (00:15):
How is it that council's got this estimate so wrong?

Speaker 2 (00:19):
So usually when councils do be planning or their ten
year planning, you would plan for those first three years
with asset management planning and the finances around that, and
then the next seven years and your ten year plan
will be less detailed. What we did here was to
take a proper look at the whole life of this project.
So I think it was more in detailed asset management

(00:41):
planning and also then the financial sustainability and the long
term affordability cost effectiveness that went into those costings.

Speaker 1 (00:49):
Okay, So would you not think, though, if you're going
to just have a look at it kind of a
once overlightly look, which is fair enough, that you would
go more conservative and estimated estimated to the high side
rather than the low side.

Speaker 2 (01:00):
What we compared these costings were with was our ten
year planning costings which we had before, So I think
we did more in depth planning, and there are different
economic regulations, different environmental standards though we had to take
into account. So I think we are comparing a ten

(01:20):
year plan that was not as in depth with something
that was really really detailed.

Speaker 1 (01:26):
Yes, okay, but is this not the problem with what
has been going on at council level, which is that
councils do not properly understand how much money they have
to put into infrastructure and then it's a surprise when they.

Speaker 2 (01:37):
Have to do it. We are definitely dealing with a
generation of under investment. I agree with what you're saying.
We do look at what we have to do, but
often it is shorter term planning. We look at three
year chunks of planning. Sometimes for asset management we do
look at thirty year planning, but the costings don't go

(01:57):
with that. So I agree with you, we do need
to have this longer term look. Also, we are now
able to borrow over the lifetime of these assets with
water and costings being of ring fence, so I do
think it is a smarter way of looking at these
longer term investments.

Speaker 1 (02:16):
Okay, so in which case then there is some upside
to having the government involved here.

Speaker 2 (02:22):
I think the government did a lot of planning to
make sure that our guard rails in place. We had
to have several hurdles that we had to jump over
in order to show that our plans are compliant. We
not only looked at finances and revenues sufficiency, but there
are also the economic regulation. We had to make sure

(02:43):
there's accountability requirements. We also had to look like stuff
at no privatization risk, no in appropriate transfer of control.
So I do think the government put in place requirements
that expect high level plans of us that our comities
deserve but also can afford in the long run.

Speaker 1 (03:02):
Okay, Now we've ended up with thirty eight of the
councils combining their services into the twelve big entities, which
is kind of what we wanted. We wanted that consolidation,
and then seven of them are going along. Is this
roughly what we expected?

Speaker 2 (03:15):
I think that's what we expected because we are all
so unique here in disbond. We are going in house.
We've always done that, We've invested over time, where then
we're in not too bad a position, but there are
smaller councils that really need that economy of scale to
go together. So I think what Minister What's got in
the end was what they were hoping for. But also

(03:35):
here that even though we are going in house, we
are setting up our structure that down the line we
can latch onto a bigger or a different CEO if
things change in the future.

Speaker 1 (03:49):
All Right, Rahett, thank you very much, really appreciate time
at our head stots Local Government, New Zealand Vice President.

Speaker 2 (03:55):
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