Waste not

The pros and cons of what exactly are local government's "core activities" continue to be debated by the public in a somewhat desultory fashion, while it is obvious central government has long embarked on providing the statutory means by which local councils can shed what might once have been regarded as essential services in favour of the private sector.

Some of this activity has been populist political - Act New Zealand leader Rodney Hide's determination to cut "profligate" council spending comes to mind - but some also is ideological.

Lobbyists seeking the furtherance of private/public partnerships claim a rule of thumb that suggests if it is feasible and cost-effective to charge directly for a service, then it is not a "public good" for which the costs should be equally shared.

They claim a great many services provided by councils in 2010 are actually in the nature of "private goods", and could be provided more efficiently in partnership between councils and the private sector, or by the private sector alone.

In broad terms, this means the provision of water supplies and services, and roads, all funded on a user-pays basis.

The public, it is fair to say, have yet to be convinced; and indeed it is clear from recent statements by some politicians sensitive to that doubt that there is a wide gap to be bridged.

When the Minister for the Environment recently announced new regulations requiring "significant" water users to be metered within two years, he was at some pains to state that the measures would not include households using water for domestic purposes.

This is, however, something of a charade.

There can surely be no doubt now that potable water use for any purpose, be it domestic, industrial or agricultural, will eventually be governed by meters and charged for accordingly.

It is the most precious commodity sustaining human life, and it is getting scarcer as greater and greater demands are made upon the resource.

Like all commodities in such circumstances, its value is increasing.

A form a rationing is inevitable.

This process is already occurring in New Zealand.

In Central Otago, for example, proposals for a daily water allocation recommended for residents on drinking-water schemes is being widely discussed.

Metered charging for domestic use above a nominal allocation, though relatively exceptional at present, is sure to become universal in time.

Dunedin's strategic plans for water use, and the gradual installation of the street-side means by which water can be metered, mean a similar outcome for its citizens.

Few would argue that water for human consumption should be wasted; most would accept that the distribution of it should in equity be controlled.

The next issue, however, is where the control should lie.

Without metering, urban water supplies cannot be privatised; this, argue the critics, is the reason why metering is being installed, so water can be treated as a commodity and sold for a private profit.

This is actually far from the case.

Mr Hide's Local Government Amendment Act 2002 Amendment Bill, which has received its first reading in Parliament and will now be further considered in select committee, enables local councils to offer tenders to private companies to provide water services for up to 35 years, essentially a technical change since councils can already take that action, but only for a 15-year period.

He has argued that the change is necessary because 15 years is not sufficient to enable an adequate return on the economic life of water assets.

In other words, his Bill is designed to make the possibility of privately contracting water services more attractive.

But even if the Bill survives without radical change, it does not necessarily mean water services will be privatised.

Indeed, councils will retain control of services should they opt to have components contracted to private providers; the restrictions on the sale of council water services in the Local Government Act 2002 remain.

There are several hurdles councils have to jump before they can contract such services to the private sector, not the least of which is a requirement to consult communities beforehand, although the Bill as presently drawn - according to some interpretations - may threaten protections that require local government to retain control of ownership and management of water.

The Bill does, however, raise potential opportunities of particular relevance to Dunedin which, as the recently disclosed Three Waters strategy explained, claimed very large sums will have to be spent on infrastructure, such as underground pipes, in the next few decades to maintain services now at limited risk of collapse.

Does this mean charges for water supplies to households above a minimum? How much, if any, of this extremely large problem would turn out to be cost-beneficial to ratepayers if the means of solution was "privatised"? Is the private sector likely to be more efficient in delivering services? These are questions candidates for the next council should be asked and will have to eventually consider, if elected.