The future of County Councils A fork in the road?

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1 The future of County Councils A fork in the road?

2 Overview About MidCoast Water Reform agenda Current position Options for the future Challenges Where to from here?

3 About MidCoast Water MidCoast County Council proclaimed under S.387 LG Act on 2 nd Feb 1997 Took responsibility from 3 authorities NorthPower Water, Great Lakes Council and Greater Taree City Council, and later on, a fourth Gloucester Shire Council in 2011 Only county council in NSW providing water and sewerage services

4 Key statistics 10,000 sq.km catchment area 40,000 homes and businesses in 16 towns 2,000 km of water and sewer mains 5 water treatment plants 16 sewage treatment plants 10 recycled water schemes Supply 8 GL/a water and treat 6.5 GL/a sewage $70 million p.a. revenue

5 Principal objectives a) To be a successful business and, to this end i. to operate at least as efficiently as any comparable business; and ii. to exhibit a sense of social responsibility by having regard to the interests of the community in which it operates; b) To protect the environment by conducting its operations in compliance with the principles of ecologically sustainable development contained in section 6(20) of the Protection of the Environment Act 1991 (NSW); c) In respect of the supply of potable water, to protect public health by supplying water which is safe for drinking to its customers and other members of the public; and d) To provide sewerage services and facilities in a manner which will not impact adversely on the health of the local community or the wider public.

6 Benefits of our model Local government owned and governed by council representatives Area of operations defined within the boundaries of three catchments Can negotiate with water, natural resource, health and environmental regulators, which greatly assists its alignment to the various acts that impact and regulate MidCoast Water s business The scaling up, merging of staff and resources into one focussed business and segregation of funding from other local government services ensuring transparency in pricing and a commercial focus.

7 40 years of reform 1980 s Water reform commences First user pays tariffs introduced 1990 s 1992: First water authority corporatised Hunter Water Corporation 1994: COAG National Water Initiative 1997: Electricity reforms creation of MidCoast Water 2000 s 2007: NSW Best practice management guidelines for local water utilities 2008: Armstrong and Gellatly report into NSW local water utilities 2010 s 2011: National Water Commission and Productivity Commission reports 2011: MidCoast Water takes on Gloucester s water and sewerage services 2012 present: NSW Local Government reform and LG Act review

8 The fork in the road Our constituent councils were merged on 12 May 2016 Option 1: Separate local government owned water and sewerage utility Option 2: Merge MidCoast Water with the merged councils of Greater Taree City, Great Lakes and Gloucester Shire Councils Option 1 pursued the governance structure is more consistent with previous and current urban water reform processes

9 Our position It is MidCoast Water s position that a model of a self-governing water and sewerage utility should be retained. This approach delivers: A specialist essential services-focussed organisation Consistency with the articulated drivers for reform Alignment with national directions recommending regionalisation and specialisation Appropriate fiscal management for a water and sewerage business Equitable and affordable water and sewerage service for all Targeted planning, investment and management Strong compliance focus on key products and services Focus on the value and costs of water and sewage products and services encouraging efficiency of resource use and identification of markets for products and services Focus on borrowing for water and sewerage services capital investment

10 Our position A self-governing utility would be able to support other local water utilities in the future through the proposed Joint Organisation / Regional Alliance models. The ultimate legal structure (e.g. County Council, Joint Organisation, Local Government owned corporation) of the separate water and sewerage utility can be reviewed in further detail if this recommendation is followed.

11 Fit for the future? Recommendation 35 Establish new Joint Organisations and reconstitute existing County Councils as subsidiaries of new regional joint organisations NSW Government response The Government will consider the relationship between existing county councils, water utilities and JO s, with the aim of maximising the benefits of the new collaborative model while minimising the disruption to existing collaborative arrangements

12 What next? MidCoast Water formally write to the Minister for Local Government requesting a working group be formed with the objective of establishing MidCoast Water as a stand-alone self-governing, local Government owned water corporation using traditional corporate structures.

13 S.358 of NSW LG Act Criteria for LG corporations 1. Is the proposal consistent with the functions of the council or an existing service that the council provides? 2. Will the proposed entity be legally separated from the council? 3. Is the council currently financially viable? 4. What is the impact of the proposal on existing council staff? OLG Circular 07-49, 5 October 2007

14 Strategic challenges Will the county council model be supported in the long term? Financial sustainability asset management and dividends Industrial relations for a corporation Regulator relationships two masters in Local Government and DPI Water Powers and duties of a local water utility need to be preserved Joint organisations and regional water alliances Skills based water utility boards

15 Water utility powers and duties LG Act Ownership of works Catchment protection Entry onto land Plumbing and drainage Compulsory acquisition Water restrictions Powers relating to roads Penalty notices Fees and charges Development matters conditions, certificates, approvals Urban water requirements in Water Sharing Plans Best practice management and performance reporting Product liability Trade waste regulation

16 Other questions Differentiation between a corporation and a joint organisation Sharing of services with MidCoast Council Legislative framework Integrated planning and regional planning Who will be our shareholders? Payment of a dividend Core water services and integrated water management Regional water alliances Upper Hunter and/or Mid North Coast Impacts on staff Financial sustainability Governance model, including board membership

17 Future needs Need to preserve all of the benefits of our current model Need to modernise our governance framework particularly the interfaces between OLG (Integrated Planning & Reporting) and DPI Water (Best Practice Management) Look to opportunities for optimising scale and capacity

18 Where to from here? Working group to be formed with Office of Local Government and DPI Water representation MidCoast Water a potential pilot local government owned corporation MidCoast Council elections September 2017

19 Thank you Brendan Guiney Executive Manager Infrastructure Development MidCoast Water p e brendan.guiney@midcoastwater.com.au