Many councils are unable to rise to the challenge required to provide drinking water, drainage and sewerage to new and higher standards.
Faced with these challenges the government has required all councils to consult their communities about what to do, with strong encouragement for collective responses and moving water to combined Council Controlled Companies (CCOs).
Four councils around Otago — the Central Otago District Council, Gore District Council, Clutha District Council and Waitaki District Council — have agreed to consult their ratepayers with their preferred option being getting together to form one CCO.
There are statements in the consultation documents which tell us that there is insufficient expertise and capacity within the four councils to manage what will be required for an in-house model.
We should believe them when they tell us they do not have the required expertise around water services.
But this begs the question, why should we think they are capable of setting up an organisation to take their place?
There are questions to be asked around local input and fairness.
Some places have paid higher rates for many years to improve the quality of water in their town. Some may have an influx of tourists and trouble with the resident population paying for water.
The plan with this new CCO would be that, for example, all Central Otago money should be used in Central Otago.
But why should some of the townships subsidise others who have not sorted their water out and paid less rates for many years as a consequence?
It may be fairer to say, for example, that money taken from Ranfurly should be spent in Ranfurly.
If the rates are taken from all and spent in the places of greatest need the smaller places will never seem like a priority.
There are also private water schemes which deal with their own water issues. If they are taken over by the new CCO they are likely to be much more expensive.
Oturehua has its own water company. The water it delivers is very much cheaper than other areas because locals look after it on a voluntary basis (this reminds us of one of the reasons bigger is not always better).
Water per household costs about $300 per year, compared with the average in the Central Otago district of five times that amount.
If Oturehua was brought into the new CCO it would not be fair to charge five times the amount just because when a council company does things it just costs more.
If some areas are unable to manage because of tourist-related issues, it would be fairer for the government to provide the shortfall rather than small distant townships.
Another question we should be asking is how to avoid the Wellington Water issues.
The bald assertion by the participating councils in Otago that it will be cheaper and more efficient to get together overlooks entirely the problems that can come from creating a large, mostly unaccountable entity.
Wellington Water was set up giving each contributing council the same shares, the same votes and the same accountability, which is to say very little.
Wellington has no control of its asset register. If it wanted to ask for more information, especially around what had been going wrong, it had to convince the other councils to want that too.
Wellington Water is set up to contract out its contracting out functions. This means that the rules councils may have around tender processes to ensure as far as possible that the best work is being done for the best price seem to be totally absent.
Reports produced around what was behind the problems suggested Wellington Water may have been paying three times the amount other councils were paying for some services.
When money was made available by Wellington City Council to fix particular problems, the money was paid out despite the problems not having been fixed.
Throughout New Zealand there has also been a tendency for councils to call their contractors "partners".
For example, a local council in Otago has recently advised us it would soon start "the procurement process for a build partner".
There is absolutely no way you will get the best out of a contractor by calling them a partner. All that is likely to happen is when you want them to do the job they were contracted to do you will find yourself unable to contemplate suing them once you have called them your partner.
We need to be asking how we can avoid these problems. We need to have accountability from any new CCO formed. This will require some independent oversight body or expertise.
It seems with Wellington Water as an example that a bigger organisation may still not have the expertise to provide robust tender processes, good value for money and accountability when things go wrong.
But at the moment we can reflect on the advice from councils around Otago that they do not themselves have expertise and capacity around these issues.
Let us at least ask someone who does.
And limit the avoidable costs a mega CCO could bring.
• Hilary Calvert is a former Otago regional councillor, MP and Dunedin city councillor.
