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Speaker 1: Turns out councils may have underestimated how much they're going

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Speaker 1: to have to spend on upgrading their water systems. The

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Speaker 1: local Water Done Well model has come in nine billion

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Speaker 1: dollars higher than councils estimated under their own long term plans.

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Speaker 1: The heat Stolts is the mayor of Gisbon.

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Speaker 2: Morning ahead, good morning.

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Speaker 1: How is it that council's got this estimate so wrong?

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Speaker 2: So usually when councils do be planning or their ten

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Speaker 2: year planning, you would plan for those first three years

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Speaker 2: with asset management planning and the finances around that, and

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Speaker 2: then the next seven years and your ten year plan

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Speaker 2: will be less detailed. What we did here was to

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Speaker 2: take a proper look at the whole life of this project.

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Speaker 2: So I think it was more in detailed asset management

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Speaker 2: planning and also then the financial sustainability and the long

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Speaker 2: term affordability cost effectiveness that went into those costings.

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Speaker 1: Okay, So would you not think, though, if you're going

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Speaker 1: to just have a look at it kind of a

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Speaker 1: once overlightly look, which is fair enough, that you would

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Speaker 1: go more conservative and estimated estimated to the high side

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Speaker 1: rather than the low side.

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Speaker 2: What we compared these costings were with was our ten

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Speaker 2: year planning costings which we had before, So I think

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Speaker 2: we did more in depth planning, and there are different

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Speaker 2: economic regulations, different environmental standards though we had to take

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Speaker 2: into account. So I think we are comparing a ten

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Speaker 2: year plan that was not as in depth with something

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Speaker 2: that was really really detailed.

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Speaker 1: Yes, okay, but is this not the problem with what

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Speaker 1: has been going on at council level, which is that

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Speaker 1: councils do not properly understand how much money they have

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Speaker 1: to put into infrastructure and then it's a surprise when they.

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Speaker 2: Have to do it. We are definitely dealing with a

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Speaker 2: generation of under investment. I agree with what you're saying.

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Speaker 2: We do look at what we have to do, but

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Speaker 2: often it is shorter term planning. We look at three

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Speaker 2: year chunks of planning. Sometimes for asset management we do

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Speaker 2: look at thirty year planning, but the costings don't go

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Speaker 2: with that. So I agree with you, we do need

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Speaker 2: to have this longer term look. Also, we are now

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Speaker 2: able to borrow over the lifetime of these assets with

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Speaker 2: water and costings being of ring fence, so I do

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Speaker 2: think it is a smarter way of looking at these

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Speaker 2: longer term investments.

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Speaker 1: Okay, so in which case then there is some upside

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Speaker 1: to having the government involved here.

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Speaker 2: I think the government did a lot of planning to

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Speaker 2: make sure that our guard rails in place. We had

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Speaker 2: to have several hurdles that we had to jump over

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Speaker 2: in order to show that our plans are compliant. We

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Speaker 2: not only looked at finances and revenues sufficiency, but there

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Speaker 2: are also the economic regulation. We had to make sure

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Speaker 2: there's accountability requirements. We also had to look like stuff

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Speaker 2: at no privatization risk, no in appropriate transfer of control.

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Speaker 2: So I do think the government put in place requirements

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Speaker 2: that expect high level plans of us that our comities

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Speaker 2: deserve but also can afford in the long run.

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Speaker 1: Okay, Now we've ended up with thirty eight of the

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Speaker 1: councils combining their services into the twelve big entities, which

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Speaker 1: is kind of what we wanted. We wanted that consolidation,

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Speaker 1: and then seven of them are going along. Is this

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Speaker 1: roughly what we expected?

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Speaker 2: I think that's what we expected because we are all

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Speaker 2: so unique here in disbond. We are going in house.

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Speaker 2: We've always done that, We've invested over time, where then

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Speaker 2: we're in not too bad a position, but there are

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Speaker 2: smaller councils that really need that economy of scale to

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Speaker 2: go together. So I think what Minister What's got in

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Speaker 2: the end was what they were hoping for. But also

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Speaker 2: here that even though we are going in house, we

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Speaker 2: are setting up our structure that down the line we

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Speaker 2: can latch onto a bigger or a different CEO if

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Speaker 2: things change in the future.

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Speaker 1: All Right, Rahett, thank you very much, really appreciate time

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Speaker 1: at our head stots Local Government, New Zealand Vice President.

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