Longstanding discount deals to allow big industries to discharge into council wastewater networks will be ended by the Government’s reform programme

Smaller councils have expressed fears their districts will lose jobs and rates, once they are no longer able to offer sweetheart deals on waste discharges.

Meat and other food processing plants, in particular, are big business for provincial New Zealand. Waste infrastructure bosses say some have negotiated deals to pay “very little” to pump their waste into municipal waste networks; others pay more.

The Cabinet has agreed to set up a new trade waste permitting regime, run by the four big new water services incorporations, according to a just-published Cabinet paper. The new regional entities will decide the quality, quantity and timing of the discharges, as well as conditions with regard to testing.

Manawatū District Council, the home to big meat processing plants like Ovation and Affco, says it will lose its point of difference for businesses to locate there. “There is a risk for particularly large employers who will no longer work with their local Council on Three Waters infrastructure,” spokesperson Ben Caldwell says. “They will instead have to deal with someone … who will probably have no understanding, passion or connection to our district.”

And Timaru mayor Nigel Bowen, who has been a vocal opponent of the proposed Three Waters reforms, says he has “serious concerns” about the harm caused to the local economy if it loses the competitive advantage of discounted trade waste.

Trade waste is any commercial and industrial liquid waste that is disposed of into the wastewater system. According to the Cabinet paper, that includes liquid waste from breweries, laundromats, food premises, dental surgeries and mechanical workshops – to name a few. The ground-up waste from abattoirs may seem especially distasteful to some. 

In Timaru those breweries and food businesses include DB, McCain’s, Heartland Chips, Juice Products NZ and Alpine Salmon, most based at the big Washdyke industrial estate. About 50 percent of the district’s water use is commercial, and the council is concerned about remaining competitive for these kind of water user businesses if it loses direct control of its water and waste services.

“Taking control of this away carries the very real prospect that our businesses will end up paying more to support growth elsewhere.”
– Nigel Bowen, Timaru mayor

“One of the major problems we’ve always highlighted with the Government’s one-size-fits-none model is that it doesn’t seem to recognise the economic benefit of water services and removes any competitive advantage between districts,” Bowen says. “Like many centralised models, it will see Timaru ratepayers funding growth elsewhere.”

He argues that water services are a major driver for economic development in the area. The community has invested significantly in trade waste infrastructure to support its food industry.

“Investing in upgraded services and having full control over this system allows us to have a competitive advantage over other areas through such measures as setting a higher fixed charge, but lower variable charges. We also have the ability to have tailored, but consistent arrangements with each business.

“This enables us to provide a point of difference to other areas and create an attractive business environment for the industries that underpin our economy.”

Bowen says his council has “serious concerns” about the new water companies being able to reset the conditions businesses are currently operating under. “It will lead to across-the-board harmonisation of rates that won’t respect the investments we’ve made in trade waste and will harm our local economy,” he says.

“Our community has invested $60 million in putting an award winning wastewater scheme in place across our district, allowing for tailored services for our business community. Taking control of this away carries the very real prospect that our businesses will end up paying more to support growth elsewhere.”

It’s an argument Timaru, Manawatū and other provincial councils made in their Parliamentary submission on the Water Services Entities Bill. “Local variability matters in water services,” they said. “Water sources and wastewater treatment options are different between different parts of the country. This means water services need to be responsive and adaptable to local needs.”

Their anti-reform grouping, Communities 4 Local Democracy, commissioned a report by consultants Castalia. “Wastewater services often need to consider local needs,” it found.

“There are different options of treating and discharging treated wastewater. Some communities, including local hapū, may have different expectations and needs in respect of wastewater. Within the complex governance structure proposed in the mega entity model it is unlikely local variations in demands will be reflected.”

“SMEs are a core part of our local communities and outcomes from infrastructure investments like roading or water and wastewater management can have a significant impact on local businesses.”
– Jo Tozer, MYOB

The select committee is due to report back on November 11. It will recommend whether the reform model should be amended so councils retain greater control of the water rates and trade waste charging regime, but it seems unlikely that would be changed – such a change would undermine the reforms’ key plank separating water infrastructure finances from those of councils.

Local Government Minister Nanaia Mahuta, in her Cabinet paper in June, emphasised the importance of greater transparency around trade waste charges. If the threshold for requiring a trade waste permit was set too high, and too few discharges required permits, then the new entities would not have sufficient ability to control what enters their networks, she warned.

Trade waste customers would be able to appeal decisions on permits and charges that they were unhappy with, the Cabinet paper said.

The value of local business relationships

Ian Kebbell reckons one of the most important parts of his business is the relationships he maintains with local councils like South Wairarapa and Ōtorohanga. At Supercare NZ, his 200 workers are contracted to clean and collect waste from council offices, libraries and other facilities.

By working with councils across a range of jobs, there are efficiencies. Because councils are responsible for buildings, water and waste, he can send one truck out to the Wairarapa’s remote beach communities like Castlepoint, Riversdale and Ocean Beach to both clean the public toilets and portable loos, and empty the bins.

“It’s concerning about the loss of control at that local level and people sitting in Wellington making decisions about what happens in South Wairarapa or what happens in the Hawke’s Bay,” he says.

Supercare NZ owner Ian Kebbell says he’s worried about officials in Wellington making decisions on water and waste services in provincial New Zealand. Photo: Supplied 

“You need to understand the local needs and demands – that’s the biggest thing that worries me, that loss of ability to achieve those partnerships locally that give better outcomes for the communities.”

Kebbell is among business leaders who fear the loss of the relationship with local councils, when four big new regional incorporations take responsibility for the drinking water, wastewater and stormwaters.

A MYOB survey of 572 small-to-medium businesses shows 57 percent disagree with the Three Waters reforms. The concern is highest in Canterbury and Otago, and less pronounced in Waikato.

Jo Tozer, from the accounts and payroll provider, says SMEs are a core part of local communities. The MYOB survey findings show outcomes from infrastructure investments like roading or water and wastewater management can have a significant impact on them.

“With 44 percent of SMEs we surveyed saying they would like water and wastewater management to be a local council priority over the next three years but a majority saying they disagree with the Three Waters reforms, it suggests that perhaps small businesses may feel as though water management is an issue that should be managed at a local level,” she says.

“While we didn’t poll on the reasons behind their sentiment around Three Waters, there will be many factors that play into it, like the sense of connectedness between local council and community.”

“When we became the water and wastewater retailer in Auckland, we inherited 44 commercial wastewater tariffs from the former councils and local network operators. These tariffs meant some companies were paying very little for the services they received and others were paying a lot.”
– Mark Bourne, Watercare

Those relationships are at the heart of longstanding local discount deals to allow big industries to discharge into council wastewater networks – deals that will be ended by the Government’s reform programme.

There’s one water authority that has already crossed this bridge. In Auckland, council-controlled organisation Watercare inherited 44 commercial wastewater tariffs from the former councils and local network operators, when seven city and district councils were merged into one super-city in 2010.

“These tariffs meant some companies were paying very little for the services they received and others were paying a lot,” says Watercare chief operations officer Mark Bourne.

“Therefore, we introduced standardised charges – phased in over a three-year period – to ensure commercial customers paid the same amount for the services they received, regardless of their location in Auckland.”

If’s difficult to directly compare different councils’ trade waste charges. The formulas are complicated – here’s Wairoa District Council’s one, for example:

In Wairoa, the biggest employer is (again) Affco. “Affco’s discharges are managed by Hawke’s Bay Regional Council as the regulator and grantor of the resource consent,” says district council chief executive Kitea Tipuna.

In this formula, Wairoa District Council says, Volume, BOD5, ISS, VSS, TN, TP and TC should be replaced by the relevant percentages set for different towns and communities in the district.

Perhaps that complexity is the way some councils like it, to avoid questions from ratepayers about why they are trading off industrial waste discharge for jobs. 

“Detailed decisions on pricing and charging will be decisions for water services entity’s boards, based on consultation with consumers, communities and the regional representative group. “
– Michael Lovett, Internal Affairs

But there’s much to be said for the standardisation espoused by Watercare and Internal Affairs.

In a statement to Newsroom, Internal Affairs deputy chief executive Michael Lovett says the Water Services Entities Amendment Bill (currently being drafted) will cover the transitional arrangements for existing trade waste permits. That Bill will also set up the system for the charging for trade waste, and other water services.

Detailed decisions on pricing and charging will be left to the water services entities’ boards, based on consultation with consumers, communities and each regional representative group. Further details will be released shortly.

Newsroom Pro managing editor Jonathan Milne covers business, politics and the economy.

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