The Local Government (Water Services) Bill provides that a water services CCO must (subject to certain exemptions):
- be owned by a council(s) and/or trustees of a consumer trust(s)
- be a company (and therefore covered by the Companies Act 1993)
- have an independent, competency-based board, which cannot include people who are elected members or employees of a council that is a shareholder in the organisation.
The objectives of a water services CCO are set out in the Local Government (Water Services) Bill and its permitted activities (unless it has an exemption) is limited to:
- providing water services in accordance with the Bill
- undertaking activities related to, or necessary for, providing water services (for example, the management or maintenance of water services networks).
The Bill sets out a new planning and accountability framework for water services. The DCC, as sole shareholder, would be required to prepare a statement of expectations and the water services CCO must prepare a Water Services Strategy, annual budget and annual report.
A water services CCO is required to give effect to the DCC’s statement of expectations. While the CCO will be responsible for preparing the Water Services Strategy, DCC (as sole shareholder) can decide its level of involvement in its preparation in accordance with the legislation.
How would the DCC ensure a water services CCO delivers the right services for Ōtepoti Dunedin?
Although the DCC is proposing the in-house model, if we were to pursue the water services CCO, we would ensure robust accountability to DCC as shareholder to protect community interests and provide continued oversight.
Day-to-day water service responsibilities would be transferred to the CCO. However, the DCC would put measures in place to maintain effective monitoring, performance reporting and alignment with strategic objectives. Examples of these measures (including those required by legislation) include:
- responsibilities of the CCO as specified in a transfer agreement
- rules and governance arrangements set out within the CCO’s constitution
- a Statement of Expectations
- the CCO producing a Water Services Strategy and Annual Budget
- an Asset Management Plan prepared by the CCO and reviewed by the DCC to ensure sound long-term management of water infrastructure
- regular performance reporting from the CCO to the DCC on finances, service levels and major projects, including through its water services annual report
- protections to ensure strategic assets continue serving community needs
- DCC input on key CCO governance appointments
- the DCC being able to initiate strategic reviews of the CCO’s performance
- ongoing partnership between the DCC and CCO to maintain strategic alignment.
The DCC would develop and formalise these measures through the process of transitioning water services to a CCO.
If the DCC set up a new water services CCO, would the DCC’s water services assets be transferred to that CCO?
Yes, if the CCO model was chosen, the DCC’s water services assets would be transferred to it.
The reasons for a CCO to own the assets include:
- the CCO would then have full management of all water services assets it needs to run as independently from the DCC as possible within the legislation. It would be able to deal with all matters around contracting, maintenance, repair, replacement of assets/infrastructure without having to ask the DCC to undertake these works.
- the capacity to borrow from the Local Government Funding Agency would be almost twice as much as if the infrastructure assets stayed with the DCC. Note: this would lead to the CCO having higher debt levels which would have to be serviced by the CCO.
However, remember that even if the water services assets are transferred to the CCO, the CCO is still solely owned by the DCC, and the Local Government (Water Services) Bill prohibits the privatisation or sale of water services assets.
FAQs
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Are the DCC and Christchurch City Council considering sharing some aspects of water services delivery with each other?
A shared services arrangement between the DCC and Christchurch City Council (CCC) is being investigated to identify if there could be reduced costs and enhanced water service delivery for both councils.
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Could this affect our need to choose between in-house or CCO models for Ōtepoti Dunedin water services delivery?
No, we still need to make a choice about which model should deliver our water services. The investigation into a shared services arrangement with CCC does not affect that need. Any arrangement would not affect the ownership of each council’s existing water assets. It would be managed through a contract rather than a shared entity, so it is possible under both the in-house and CCO models.