Red tape and pipe dreams for water

JAMIE SMALL
Last updated 05:00 17/05/2014
Waipa District
Bruce Mercer/Fairfax NZ

DECLINE: Ageing water infrastructure is threatening business development in the Waipa District.

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The word Waikato means "flowing water", and it's easy to see how the region got the name. Criss-crossed with countless streams and rivers, it's also home to the country's longest river, which runs through the heart of the Waikato, discharging 340 cubic metres per second into the sea.

So it's hard to imagine why the tap is being turned off for new businesses.

But according to frustrated businesspeople, that's exactly what is happening.

Te Awamutu Chamber of Commerce chief executive Susan Trodden's job is to promote business in the small town. She says commercial growth is skidding to a halt thanks to water problems.

Last year, a group of 35 Chinese mayors visited Te Awamutu, and one expressed interest in setting up an animal hide processing plant near the town.

"We couldn't even progress the conversation because of the amount of water needed," says Trodden.

She says the local council - Waipa District Council - doesn't know how many opportunities are missed as water supply lags behind growth.

Fifty kilometres down the road at South Waikato District Council, chief executive Craig Hobbs is facing the same issue. He says the council is bound by its strategy to actively grow the district's economy, but is held back by the supply of water.

"With the water allocation volumes on the Waikato River being fully allocated, it makes it increasingly difficult for districts like ours to promote new industrial development."

The Waikato Regional Council - which controls water allocations in the region - is allowed to dish out up to five per cent of the river's lowest flow from the whole river system above the Karapiro dam, and 10 per cent above the river mouth. That means, for example, if a litre of water is allocated at Huka Falls, that one litre cannot be allocated at Lake Karapiro.

These limits are in place to protect the ecosystem, which suffers if too much is taken from the river.

As it stands 89 per cent of the allowed allocation upstream of Karapiro has been dished out, and 87 per cent of the allocation upstream of the river mouth.

On paper, we're running out of water. If the regional council accepted every resource consent pending in the queue today, the Waikato River would be far over-allocated.

That's why the Waikato Regional Council is tentative in dealing out consents to businesses and local councils.

"There's only a finite amount of water out there," says Brent Sinclair, Waikato Regional Council's division manager of consents and compliance. "The majority of water resources in the region are under significant pressure."

But there's a significant gap between the numbers on the spreadsheets and what's happening in the real world. Anyone can tell by looking out the window we're not about to run out of water.

Hundreds of millions of litres dished out by the regional council aren't actually used.

Hamilton City Council, for example, is allocated 105,000 cubic metres of water per day, but uses on average only 58,000. And the city's allocation grows every year, with provision to go up to 146,000 cubic metres per day.

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Sinclair says the extra allocation is to allow for future growth in the city. Right now, Hamilton doesn't have the infrastructure to process and deliver that much water.

Most farmers and businesses don't use their whole allocation either, though they might get close in droughts and other extreme situations.

We aren't actually using anything close to the allowed 10 per cent of Waikato River water. Unused allocations can be given away or sold, and this often happens between small businesses and farms. But realistically, snapping up unused allocations is impractical for new businesses.

The problem is evident in Cambridge, another town in the Waipa district.

Two companies recently entered informal discussions with the Waipa District Council to set up dairy processing plants connected to the Cambridge water supply, but soon realised there wouldn't be enough water.

The council won't confirm who the businesses were, but says combined water use for the plants would have been around 750 cubic metres per day.

This is despite the fact that on average Cambridge only uses 14,000 cubic metres of its allocated 41,000 cubic metres per day. The town's peak daily take is 23,000.

So the problem isn't just supply, it's infrastructure. Cambridge cannot physically deliver the water to bring in new primary sector businesses.

A council spokesperson says: "The businesses involved were well informed about these issues all the way through and in the end they made the decision to look at sites elsewhere."

The spokesperson says most New Zealand towns wouldn't have excess capacity to bring in this type of industry without infrastructure upgrades unless a similar business had left town.

"It's for this reason that councils must do long-term planning."

To accommodate these two businesses, the town's main water treatment plant would need to be upgraded as well as water mains and reservoirs.

Lorraine Kendrick, civil engineer and water services manager for the Waipa District Council, says the council is taking its water obligations seriously.

"Like any other council in the country, water is an issue."

She says water capacity upgrades are required, and the council has been running an infrastructure renewal programme for the last 15 years.

The district has seen an unexpected amount of growth, particularly in the Cambridge area, that puts water services under pressure.

The council's current 10-year plan has $73 million set aside for water supply projects, and Kendrick estimates that another $100 million will need to be spent before 2050.

The council has models in place that indicate where infrastructure upgrades are needed as development projects are brought forward.

The problem with the system is the council doesn't hear every idea, and doesn't know all the business it is missing out on.

But Kendrick says she is happy with the state of infrastructure in the Waipa, and the council can keep up with future growth.

"We know what our systems are. We know where we're going."

Funding infrastructure is up to the politicians, and nobody knows unquestionably where the money will come from, or even if it will come at all.

Kendrick says the money needs to be spent if the council wants growth.

But infrastructure isn't cheap. The projected spend on water, waste water and stormwater in the Waikato region between 2012 and 2022 is $3 billion.

Most water assets around the Waikato were installed between the 1930s and 1950s. The lifespan is between 80 and 100 years.

So over the next 40 years, most of the region's water, wastewater and stormwater assets will be crossed off the list one by one. With each cross comes the multi-million dollar choice to upgrade or replace.

The plan is to roll out new infrastructure and renewals as they are needed, to save spending ratepayer money on areas that might not be urgent. In the meantime, businesses and councils miss growth opportunities.

Wide-ranging upgrades would require councils to put themselves into debt that would last several generations - something they are unwilling to do and ratepayers are unlikely to vote for.

If local councils can't - or won't - front up with the funds, businesses have the option of providing their own infrastructure, if they can afford it.

Titanium Park - a 70-hectare commercial development near Hamilton Airport - plans to solve some of its own problems.

Current infrastructure is inadequate for the business park's growth, and limits the types of business it can attract.

Aidan Donnelly, senior development manager for the park's developer McConnell Property, says the company doesn't intend to target businesses that use a lot of water.

He says the current infrastructure is beyond its use-by date and needs to be upgraded or replaced.

Titanium Park's developers have no illusions that the council will come to their rescue, and plans are in place to finance their own waste water pipe connecting to a treatment plant in Cambridge.

"Historically, generally a lot of the big infrastructure was delivered by the public sector. But increasingly the public sector has budget restraints."

McConnell Property has projects all over the country, and Donnelly says the issue isn't localised to the Waipa, or even the Waikato.

"In a perfect world the required infrastructure would be available… realistically funding is always an issue."

He doesn't feel hard done by, and says co-ordination between the private and public sectors around infrastructure is a sound solution.

"On occasion the private sector can be a little more innovative around solutions," he says. "There may be smarter solutions than, for example, running a single wastewater pipe to Cambridge."

He says there is more innovation in the private sector and it tends to move more quickly.

Indeed, private sector-funded infrastructure projects are cropping up nationwide.

The proposed fix for Hawke's Bay's water issues is a combined public and private sector project - the Ruataniwha Water Storage Scheme.

No new water consents have been granted in Hawke's Bay since 2007. Over-allocation of water in the region has put

the environment at risk.

Governance and management of the scheme sits with the Hawkes Bay Regional Council, and like most large-scale projects involving regional government, the scheme has been beleaguered by delays and questions of funding. Meanwhile, agricultural business growth in the drought-prone region is at a standstill.

The council is currently deciding whether to invest $5 million in the scheme. Next month the council plans to make a decision on investing a total of $80 million in the $275 million project.

Work began last month in Canterbury on a privately owned three-stage irrigation scheme expected to cost $375 million. The scheme was thought up by farmers 20 years ago to irrigate 60,000 hectares of the dry Canterbury plains.

Shareholders in the Central Plains Water scheme include local farmers, Fonterra and Synlait. The scheme has its own board of directors rather than being managed by the regional council.

So far, farmer shareholders have invested $35 million and Crown Irrigation - a government investment fund - has loaned the scheme $6.5 million.

Murray Gibb is the chief executive of Water NZ, a not-for-profit organisation that advocates for the water sector. He says the governance structure of water needs to be torn down and reformed, starting with central government.

"If you start at the top, we've got eight different central agencies at least that are interested in defining policy... They're not necessarily very well co-ordinated."

Gibb says water delivery relies on regulation, which relies on policy. And New Zealand's policy is horribly outdated.

He says consolidating the control of water into fewer organisations would achieve scale economies. Co-ordinating resources between local councils in the Waikato would improve corporate efficiency and let them physically share the load of water supply.

"What you've got in the Waipa is just a symptom of a much, much bigger picture."

Again, large-scale restructure relies on the cooperation of politicians and the concern of voters.

It's time for discussions, and everyone involved knows it. The Waikato Mayoral Forum last month published a report recommending a reformation of water control in Hamilton, Waipa and Waikato district. Later this year central government is expected to amend the National Policy Statement for Freshwater Management.

Issues that desperately need addressing are wide-ranging and complex. Time is running out for the Government to decide who will manage our water; how it will be measured, dished out and delivered; and who will pay.

- Waikato Times

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