Water - Into The 21st Century

SPEECH TO THE 7TH ANNUAL NEW ZEALAND WATER SUMMIT AUCKLAND

Ladies and gentlemen .... thank you for inviting me to speak here this morning.

You don't have to travel far from New Zealand to realise how fortunate we are to take for granted that water will flow out of the tap, and that it is - usually - safe to drink.

About 85 per cent of New Zealanders, 2.75 million people, have access to safe drinking-water - a major improvement on the 70 per cent in 1994 and only about 50 per cent in 1992. (Ministry of Health: annual reports on the microbiological quality of drinking-water supplies.)

The improvement has been a result of a major programme to improve the public health safety of drinking-water, begun by the Ministry of Health in 1992.

But we cannot assume that those statistics will continue to improve. Just think of Sydney, and the shock last year when authorities had to make public warnings about the quality of the water supplies.

There is also the myth that water is "free". I'm sure everyone here this morning is all too well aware of the cost of delivering quality water to homes and businesses around the country - and disposing of waste water. The local authority water and wastewater infrastructure alone, when last estimated (1992/93), was valued at about six billion dollars.

On a more personal level, water services cost each ratepayer an average of $400 a year - not including wastewater. (Consumer Magazine - October 1998 figures.) In Auckland the fiqure was $616, while in the "cheapest " areas (small South Island Boroughs) the cost was under $150.

The delivery of clean water - and the disposal of wastewater - is one of those very basic and essential infrastructure services our society relies on. But it is not something we can take for granted.

Our world is changing rapidly, and we must move with it. We can learn a lot from history, but past solutions very rarely contain the answers for the future. And it is important to be aware that our view of the world today must take into account just how different the world will probably be for our children and our grandchildren.

For example, MIT Media Labs, of the United States, states that "80 per cent of the systems, processes, services and products that today's five-year-olds will experience and use as adults have not yet been thought of".

To illustrate that this is not a far-fetched view, let me read you a couple of "historic" quotes: "This 'telephone' has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us." A Western Union internal memo in 1876.

"I think there is a world market for maybe five computers." IBM's chairman Thomas Watson in 1943.

"There is no reason for any individuals to have a computer in home." Ken Olsen, president, chairman and founder of Digital Equipment Corp in 1997.

The world is changing - and the pace certainly won't be slowing, in fact quite the reverse. We must meet this challenge by being forward thinking in all aspects of our social and economic policy making. Our water services are no exception.

This Government is committed to promoting economic growth, social prosperity and security, and environmental sustainability. Our broad economic framework this decade has allowed innovation and enterprise to flourish, based on five fundamental elements:

an open, internationally competitive economy; low inflation and interest rates; low tax rates and fiscal prudence; an open, transparent and predictable legal and business system; and flexible labour markets which enable business to adjust to their changing markets at home and abroad.

We must now build on this framework to ensure we don't get left behind the rest of the world. This is why I recently announcedthe following five-point plan to further promote innovation andcreate internationally competitive products and services by: lifting New Zealanders' skills and New Zealand's intellectual knowledge base, and championing the success of winners; better focusing on the direction of the Government's effort in research and development; improving access to risk capital (including investor investment capital) by the knowledge based economy; ensuring regulations and laws support, and not frustrate, innovation and the knowledge based economy; and actively promoting success and helping build a culture supportive of innovation and enterprise.

Reliable, high quality, accessible infrastructure, with the capacity to respond to current and future demands, is an essential ingredient for a successful and productive economy.

Electricity, telecommunications, roading, water, wastewater and stormwater services are critical for most, if not all businesses, industries, learning institutions, individuals and communities.

Recent examples of infrastructure failure, both in New Zealandand across the Tasman, have brought home just how critical. I'm sure everyone here this morning will remember the Auckland "water crisis" where the only winners were the makers of water tanks!

We have very few statistics and hard data on water usage - most water is not metered. But we do know that: New Zealanders consume about two thousand million cubic metres of water each year (not include hydro electricity). Of this two thousand million cubic metres, about 11 per cent is used by people in their homes; 57 per cent for irrigation; 18 per cent for livestock and 14 per cent in industry. 85 per cent of New Zealanders get their water supplies from their local authority. Four per cent of the population relies on private community supplies provided by individuals or bodies such as schools, motels and hospitals. 11 per cent of the population relies on individual household supply, including rainwater collection and the use of bores. Industry obtains about 66 per cent of its water requirements from non-public supply sources.

These figures show just how vital the water sector is. Concerns raised over a number of years by stakeholders in the sector about certain aspects of New Zealand's water and wastewater sector and the legislation that governs it have promted a comprehensive and co-ordinated review of the delivery of water and wastewater services, with stormwater included where relevant.

These concerns particularly include: The fragmented nature of the regulatory framework for water and wastewater and how it may inhibit good management practice. For example, there are currently at least five main pieces of legislation relating to the sector, and more than 30 pieces in total. The poor state of the infrastructure in some areas and the need to address issues of maintenance and replacement. For example recently local authorities in Dunedin, Auckland and Wellington have announced the need to confront and remedy the impact of deferred maintenance on their water and wastewater assets. In some cases this deferral and neglect has gone on for more than a decade and their communities are now paying the price - such as heavy rain putting so much pressure on the wastwater system, that raw sewarage runs down streets and into shops and the local swimming pool (Kilbirnie, Wellington). The variable quality of drinking water and the potential in some areas for public health to be compromised. As I noted earlier, there has been a significant improvement in access to safe drinking-water since 1992. But is it good enough that those latest figures show that 15 per cent of New Zealanders still don't have proven access to safe-drinking water? I don't think so. Nor can New Zealand risk the problems experienced in Sydney last year. The impact the sector can have on the environment, and on cultural values.

The Ministry of Commerce's Director of Resources, Katrina Bach, spoke to you yesterday about the review. I don't wish to double up on her comments, but there are a number of points I would also like to cover.

Firstly, let me emphasise that the review is not about privatisation - despite what some political activists and conspiracy theorists may try and tell you. The Government believes that ownership of local authority water and wastewater infrastructure is a matter for local communities to decide. However, it is important to look at governance to ensure public and private management of this increasingly precious resourceis effective.

Secondly, let me emphasise that the review is not simply a cost cutting exercise. It is about finding the best way of managing and maintaining water and wastewater infrastructure to get the services we all need.

Further more, the review is not about imposing a single solution on communities that does not recognise unique characteristicsand different needs. We recognise that one size will not necessarily fit all.

There are clearly a number of challenges confronting the providers of water and wastewater services.

New Zealand is an internationally competitive economy, and businesses are more than ever focusing on reducing the costsinvolved in doing business - and this includes the costs of water and wastewater services.

Businesses are also seeking innovative methods of doing business, and are looking for more individualised services from water and wastewater suppliers to meet their specific needs.

Some areas of New Zealand, for example, Auckland's North Shore and the popular Tauranga region, are experiencing rapidpopulation growth. This places enormous pressure on existing infrastructure.

Other areas are confronted by a fall in population, and a decreasing ability to fund the necessary maintenance and upgrades of infrastructure assets.

There is also growing pressure on service providers to managethe environmental effects of service delivery. People will not accept low quality environmental outcomes - nor will they accept low quality water standards.

There is also an increasing level of sophistication in the consumer market with consumers demanding to know more about the costs of providing services and the value of the services they receive, so that they can make informed choices.

The review team is making good progress. We have received many letters supporting the review, and offers for assistance from a wide range of sector stakeholders.

Involvement by sector stakeholders - particularly local government - and access to their experience and skill is crucial. Only at this level can we hear first hand the issues confronting this sector, and get an accurate picture of the variety of circumstances around the country and the broad range of approaches currently being taken by local authorities - from very hands on within house, to arms length and contracted out.

In conclusion, there are a number of challenging issues facing the sector and these can only be addressed with a unified effort. I encourage all stakeholders to participate where ever possible throughout the review process.

The next opportunity for input will be a public discussion document due for release in March/April. I strongly encourage local authorities, others involved in service delivery, customers, and interest groups to take the opportunity to make a submission - thus ensuring a useful and comprehensive outcome from the review.

As I said earlier, the world is changing and we must rise to thechallenges. Reliable, high quality water services delivered effectively and efficiently are an essential ingredient for a successful and productive economy.

We must move forward towards our vision of New Zealand being the best place in the world to do business, the best place in the world to live and prosper - for all New Zealanders.