Water services delivery in Whanganui - planning for the future

(Whanganui District Council’s preferred option)

Development of a multi council-controlled organisation with Whanganui, Rangitīkei and Ruapehu district councils.

This model prioritises local voice at the decision-making table by joining forces with our closest neighbours - Rangitīkei and Ruapehu District Councils.

Under this model we would form a multi council-controlled organisation which would manage the delivery of water services for all three districts – about 31,000 connections (number of users).

One of the key advantages to a multi council-controlled organisation delivery model is that it achieves the scale required by Government and enables access to higher levels of borrowing and better financing tools which spread repayments over a longer term. Greater borrowing power helps to keep costs to the ratepayer lower over the medium-to-longer term.

Whanganui, Rangitīkei and Ruapehu district councils would also retain ownership of water assets and there are legal restrictions against privatisation.

Further information on each model under consideration, including financial information, advantages and disadvantages can be found in our consultation document(PDF, 7MB) .

Under this model, we would establish a new water services council-controlled organisation that was 100% owned by Whanganui District Council. This organisation would be able to access higher levels of borrowing for water and better financing tools that spread repayments over a longer term which should help to keep costs to the ratepayer lower over the medium and longer term. However, it is expected to be most expensive in 30 years. 

Further information on each model under consideration, including financial information, advantages and disadvantages can be found in our consultation document(PDF, 7MB) .

A multi council-controlled organisation with as many councils in the Manawatū-Whanganui region as possible

This model is similar to Model 1. However, in addition to Whanganui/Ruapehu/Rangitīkei district councils, it could also include some or all the following councils in the Manawatū-Whanganui region: Tararua, Palmerston North, Horowhenua and/or Manawatū.

The seven councils in the broader Manawatū-Whanganui region worked together during 2024 on the possibility of a regional multi-council approach to managing three waters. If created in its entirety, this regional multi council-controlled organisation could manage approximately 85,000 connections (users). 

While governance models and transitioning to a new organisation could be more challenging under this model (due to the bigger size of the region and competing considerations), delivering the best possible outcome for our communities is a shared priority and we recognise that the greater the scale of a new water entity, the greater the possible benefits for our communities. 

Further information on each model under consideration, including financial information, advantages and disadvantages can be found in our consultation document(PDF, 7MB) .

This is essentially how water services are currently managed in Whanganui. The council currently employs staff and contractors to deliver water services and the cost of this is included in your Whanganui District Council rates bill.

Councils are legally required to demonstrate this model as a baseline. Whanganui’s previous investment decisions and plans for future investment in the Long-Term Plan 2024-2034 mean that this option would probably meet the new rules and regulations, but it doesn’t help with some of the challenges we do face and doesn’t leave us in the strongest position to deal with the unexpected in the future.

Further information on each model under consideration, including financial information, advantages and disadvantages can be found in our consultation document.(PDF, 7MB)

Since the October 2023 elections, the Government has repeated the need for councils to work together to achieve scale in the delivery of water services. Our modelling shows that the more people paying for water services, the better. More users (connections) enable a more efficient, effective, and sustainable water services delivery.

Our preferred option is a partnership between Whanganui, Rangitīkei and Ruapehu district councils to deliver water services. This option offers long-term financial stability, keeps decision-making within our awa catchment, and provides the opportunity to improve compliance monitoring and protect skilled local jobs.

A Water Services Council-Controlled Organisation is a body that is specifically established to manage and deliver water services, where the ownership and control primarily lie with one or more councils – essentially it is a company owned by councils dedicated to providing water services to the community.

Whanganui District Council believes there is a role for Iwi representation that brings a Te Ao Māori perspective to shareholder decisions. The detail of Iwi and Hapū involvement should be addressed at the design phase of any water services council-controlled organisation and draw on existing examples of good practice from local government and the water sector.

This sentiment is shared by both councils in our preferred option (Rangitīkei and Ruapehu). Once the preferred model is agreed by all three councils, this involvement will be formalised in partnership with Iwi and Hapu. In the meantime, we will continue to work with Iwi and Hapū to identify meaningful opportunities for mana whenua input. 

We have made good investment decisions in the past and have budgeted for increased investment in three waters infrastructure in the Long-Term Plan 2024-2034. Local Water Done Well requires any assets, revenue, expenses and debt associated with water services to be kept separate or ‘ring-fenced’ from the wider services of the council. The new requirements of Local Water Done Well are expected to increase the cost to deliver water services in the future.

Impact on rates

Councils and the Government agree that water will cost all communities more in the future than what we have planned for in our Long-Term Plan – regardless of which model we proceed with. This is due to a range of things, such as mitigation for climate change to reduce the chance of flooding, population and industrial growth, replacing or upgrading ageing infrastructure, new standards increasing the cost of compliance, improvements in technology, health requirements and government policy.

The modelling shows that in the first few years of operation, the cost of water services for Whanganui users is roughly the same in all the models. Over time, the three council WS-CCO becomes cheaper than either of the go-it-alone models (2 and 4). In all the models, water charges as a percentage of median household income remains at approximately 2.4%-2.6%.

If a WS-CCO was set up and charged customers directly for water, the council would no longer charge for water services in rates bills. The modelling showed that the financial impact on the cost of delivering the rest of council services is also marginal.

Following is a financial projection of what Whanganui ratepayers could expect to pay on average for water (drinking water, stormwater, wastewater) under the different water services delivery models, compared to what we predicted and modelled for in the Long-Term Plan 2024-2034. 

Estimated average annual cost for water users

Estimates include GST.

*WS-CCO: Water Services Council-Controlled Organisation 

Please note: The practicality of financial modelling means the above numbers show the projected average cost for a user connected to all three water services (drinking water, wastewater, stormwater).

Financial modelling has been done to enable comparison of different options under the anticipated new rules and is NOT a prediction of future rates. 

Whanganui District Council already has agreed levels of service for its three waters. This level of service is committed to in our Long-Term Plan 2024-2034 and reported on annually. No change is forecast to levels of service for the short-term under any of the proposed models. 

However, it is important to note that a multi council-controlled organisation established in response to Local Water Done Well may subsequently reprioritise or improve levels of service to ensure alignment between the geographical areas serviced by the multi council-controlled organisation.