Hamilton City Council Water Supply

BEFORE THE BOARD OF INQUIRY

IN THE MATTER of the Resource Management Act 1991

AND

IN THE MATTER of a Board of Inquiry appointed under s 149J of the Resource Management Act 1991 to consider the application for resource consents by Watercare Services Ltd to increase abstraction of water from the Waikato River.

STATEMENT OF EVIDENCE OF ANDREW RICHARD PARSONS (HCC WATER SUPPLY)

Dated 18 June 2021

Instructing Solicitor: Michelle Hawthorne [email protected]

INTRODUCTION

Qualifications and experience

1. My full name is Andrew Richard Parsons. I am the Executive Director of Strategic Infrastructure for Hamilton City Council (HCC). I am authorised to provide this evidence on behalf of HCC.

2. I hold a Master of Management Studies (First Class Honours), a Postgraduate Diploma in Strategic Management (Distinction), a Bachelor of Civil Engineering (First Class Honours), and a New Zealand Certificate in Engineering (Civil).

3. I have been working at HCC since 1990 and have 30 years' experience in Local Government infrastructure planning and delivery. My experience has been gained whilst working for HCC on large growth-related projects, new infrastructure projects and through the provision of ‘Three Waters’ (comprising water supply, stormwater management and wastewater collection, treatment and disposal) and transport related engineering input into structure plans, subdivision, and land use consent applications.

4. I have experience across a wide portfolio, including consenting, design, and implementation of urban growth, Three Waters, and transportation solutions in partnership with major land developers, central government, and other strategic partners.

5. My current area of work includes representing HCC in the Government’s Three Water reform programme, major commercial developer negotiations and chairing the Waikato Region’s sub-regional water policy group. The latter is an initiative under the Future Proof growth project set

up by central government, Waikato-Tainui, tangata whenua, HCC, Waikato District Council, Waikato Regional Council (WRC), Auckland Council and Waipa District Council.

6. In my previous role as Development Manager for HCC, I was responsible for planning, managing the development of, and delivering, the capital programme for all growth-related infrastructure relating to transportation, and the Three Waters, comprising water supply, stormwater management and wastewater collection, treatment, and disposal.

7. Prior to the Development Manager role, I was HCC’s City Waters Manager and was responsible for all Three Waters and solid waste asset planning and operations. This included operational responsibility for the water and wastewater treatment plants, reservoirs, wastewater pump stations and the associated reticulation.

Code of conduct

8. I have read the Environment Court Code of Conduct for expert witnesses contained in the Environment Court Practice Note 2014 and agree to comply with it. I confirm that the opinions expressed in this statement are within my area of expertise except where I state that I have relied on the evidence of other persons. I have not omitted to consider materials or facts known to me that might alter or detract from the opinions I have expressed.

SCOPE OF EVIDENCE

9. My evidence will describe:

(a) The legislative, strategic, and policy instruments that shape HCC’s municipal water supply;

(b) HCC’s water abstraction consent, its water supply network (including current and planned infrastructure assets);

(d) HCC’s assignment of part of its water allocation to Watercare;

(e) HCC’s involvement in central government’s water reforms and sub- regional Three Waters initiatives;

(f) HCC’s interests in the health of the Waikato River and its relationship with iwi;

(g) HCC’s concerns arising from Watercare’s application; and

(h) The outcome that HCC seeks that serves the joint interests of Auckland, Hamilton, and Iwi.

SUMMARY OF EVIDENCE

10. HCC is required under the Local Government Act 2002 (LGA) to provide and maintain services to its communities, including network infrastructure, such as roads, water supply, wastewater and stormwater collection and management.

11. The municipal supply of potable water in Hamilton is shaped by national legislation, higher order planning instruments, as well as HCC’s strategies, policies, and plans. Together, they provide the direction, development

rules, funding and work programme that determine HCC’s activities in relation to potable water.

12. The Waikato River is the sole source of water for Hamilton City. In 2009, HCC obtained a 35-year consent from WRC to extract water from the Waikato River for domestic and municipal supply. The consent expires in 2044. The consent provides for increases in maximum daily take volumes. The final step allows HCC to obtain a maximum daily take volume of 146,315 cubic metres per day.

13. HCC recognises that Hamilton has a finite allocation of water for the provision of Municipal Water Supply and that there is an increasing need for sustainable and efficient use of natural water resources. Various measures that help supplement water sources or reduce consumption are undertaken by HCC to help alleviate potable water scarcity and to encourage and guide sustainable water use, including under bylaw, through metering of industrial and commercial supply, and through an Alert Level System.

14. In early- to mid-2020, the North Island experienced the worst drought in 50 years, a one in 200-year event, and one of New Zealand’s worst on record. In Auckland, the drought severely depleted Watercare’s stored water resources. HCC agreed to assist Watercare by immediately applying for its next step up to 125,000 cubic metres per day, and then allowing Watercare to use, on a temporary basis, the unused balance between HCC’s actual daily water take and its new maximum daily take volume of 125,000 cubic metres per day, provided HCC water users and the health and wellbeing of the Waikato River are protected.

15. HCC agreed to assist Watercare by immediately applying for its next step up to 125,000 cubic metres per day, and then allowing Watercare to use, on a temporary basis, the unused balance between HCC’s actual daily

water take and its new maximum daily take volume of 125,000 cubic metres per day.

16. In July 2020, central government launched the Three Waters Reform Programme – a three-year programme to reform local government Three Waters service delivery arrangements. Underpinning the programme is the recognition that local government is facing significant and urgent challenges in the provision of these services including funding infrastructure deficits, complying with safety standards and environmental expectations, building resilience to natural hazards and climate change into Three Waters networks, and supporting growth. I am HCC’s lead and executive sponsor on all matters relating to the reform programme.

17. HCC has a statutory obligation to give effect to Te Ture Whaimana, the primary direction setting document for the Waikato River and activities within its catchment. HCC is concerned to avoid over-allocation of the Waikato River which may have a profound negative impact on the flow of the river and, as a consequence, the whole ecology of the Waikato River itself.

18. HCC recognises and supports the special relationship that Maaori have as kaitiaki of the Waikato River. Waikato-Tainui and HCC have a Joint Management Agreement which records the shared exercise of functions, duties, and powers that give effect to the central aim of the restoration and protection of the health and wellbeing of the Waikato River for future generations. Given this co-management relationship, HCC supports the position of the Waikato iwi in this proceeding.

19. The evidence provided by Mr Haarhoff makes clear that before 2044, HCC will require a renewed consent which will need to extend the allocation beyond 146,000 cubic metres per day. To address the growth projections out to 2065, it is estimated that the maximum water demand will be in the range of 159,000 cubic metres per day to 184,000 cubic metres per day.

He notes that applying the same water demand assumptions to the Hamilton-Waikato Metropolitan Spatial Plan (MSP) area, by 2065 the total water demand is estimated to be approximately 217,000 cubic metres per day.

20. Watercare’s evidence is that all of the applications presently in the queue can be granted in full and remain within the Coastal Marine Area (CMA) allocable flow limit. While that may be the case, given the water demand for HCC and the MSP area in the medium and long-term, it is likely that there will be insufficient water to allocate to HCC to service its growing population.

21. Based on these figures, HCC has an interest in, and is concerned about the ongoing allocation of water from the Waikato River. Allocating additional water to Watercare as sought in its application will likely impact on HCC’s ability to obtain a renewed and extended water take consent as required to service the growing population and to meet the directives in the National Policy Statement on Urban Development 2020. HCC is concerned about the potentially significant impact that this will have on economic growth in Hamilton and the wider Waikato Region and on the wellbeing of those living in Hamilton and the broader MSP area.

22. It is not HCC’s preference to see the Watercare application declined. HCC recognises that Watercare has an immediate need for water in the short- term. HCC seeks an outcome which sees the immediate needs of Auckland met, while preserving allocable flow for the medium to long-term to enable HCC to meet its needs over this extended timeframe.

23. HCC considers that, through the relief it seeks, these issues can be resolved in a way that serves the joint interests of Auckland, Hamilton, and Iwi.

HAMILTON WATER SUPPLY

Statutory duties

24. HCC is required under the Local Government Act 2002 (LGA) to provide services to its communities, including network infrastructure, such as roads, water, wastewater and stormwater collection and management. In accordance with its obligations under s 130(2) of the LGA and s 69S of the Health Act 1956, HCC provides water to the City and is required to maintain that supply.

Strategic Drivers and policies

25. The municipal supply of potable water in Hamilton is shaped by national legislation and higher order planning instruments, as well as HCC’s strategies, policies, and plans, the New Zealand Drinking Water Standards, guidance from Water New Zealand and resource consents.

26. In particular, in managing its activities around the Waikato River, HCC must give effect to the National Policy Statement for Freshwater Management 2020 (NPSFW) and its central concept of Te Mana o Te Wai which refers to the fundamental importance of water and protecting the health of freshwater.

27. Critical local instruments, plans, and policies that direct HCC’s service delivery approach to the management and operation of potable water include:

(a) Te Ture Whaimana o Te Awa o Waikato – the Vision and Strategy for the Waikato River (Te Ture Whaimana);

(b) The Joint Management Agreement between HCC and Waikato Raupatu River Trust dated 10 February 2012;

(d) HCC’s Water Supply Bylaw 2013 (Water Supply Bylaw);

(e) HCC’s Long-Term Plan (LTP);

(f) HCC’s Water Conservation Demand Management Plan 2020;

(g) HCC’s Water Loss Implementation Strategy;

(h) HCC’s Energy Management Policy;

(i) HCC’s Asset Management Plans;

(j) HCC’s 30-year Long-Term Infrastructure Strategy (LTIS);

(k) HCC’s Hamilton City Water Supply Master Plan (Water Master Plan); and

(l) Design Standards derived from the Regional Infrastructure Technical Specifications for Water Supply (RITS), the Water Supply Bylaw, the NZ Fire Service Fire Fighting Water Supplies Code of Practice, and the Water Master Plan.

28. Together, they provide the direction, development rules, funding and work programme that determine HCC’s activities in relation to potable water. Some of them are discussed further below.

29. Future strategic drivers include climate change, legislation changes, growth within Hamilton City, sub-regional growth and integration of servicing options, and design standard changes.

HCC’s water take consent

30. The Waikato River is the sole source of water for Hamilton City.

31. In 2009, HCC obtained a 35-year consent from WRC to extract water from the Waikato River for domestic and municipal supply (AUTH 113941.01.03) (HCC consent). In October 2014, the conditions of consent were amended following the granting of an application under s 127 of the RMA. In February 2019, a further s 127 application was granted incorporating industrial water abstraction and use consents into the main HCC consent. The HCC consent expires in November 2044.

32. The consent provides for increases in maximum daily take volumes as follows:1

Time period Maximum Daily Max Take Rate Take Volume (cubic metres per (cubic metres) second) Date of commencement of 105,000 2.06 this consent – 30 November 2014 1 December 2014 – 30 116,315 2.29 November 2020 1 December 2020 – 30 125,315 2.47 November 2026 1 December 2026 – 30 133,315 2.63 November 2032 1 December 2032 – 30 140,315 2.76 November 2038 1 December 2038 – expiry of 146,315 2.88 consent

1 HCC Consent, Condition 5.

33. HCC can apply to WRC every 6 years to move to the next step and increase the maximum daily take volume approved for that step. The ‘stepped’ take volumes were based on growth forecasted at the time of consent. This stepped approach ensures that, as the city grows, so does the amount of water HCC can take from the river to meet increased demand. It also allows other users of the Waikato River access to the water on a short to medium-term until such time as the population within Hamilton grows to necessitate the additional take authorised by the consent.

34. Last summer, HCC used a peak water abstraction of approximately 93,000 cubic metres per day and in July 2020, secured a step up to a maximum daily take volume of 125,315 cubic metres per day. By taking this step up, HCC was able to facilitate the temporary assignment of water to Watercare as described later in my evidence.

HCC water supply network

35. HCC’s reticulation network currently supplies a population of approximately 181,467 people.

36. Water from the Waikato River is treated at the HCC Water Treatment Plant (WTP) which has a current peak production capacity of 106,000 cubic metres per day, which results in a maximum daily abstraction capacity of 111,000 cubic metres per day.

37. The reticulation network is currently divided into seven pressure zones, six single-reservoir zones and one large zone which is serviced by three reservoirs and two associated pump stations.

38. The City currently has reservoir storage capacity of 124,000 cubic metres. A total of 82,000 cubic metres of storage shortage is anticipated by 2061. This is planned to be addressed by the construction of an additional 6 reservoirs. The aim is to provide 1.15 peak day storage volume across the

network. The timing for the new reservoirs is triggered by actual growth in housing and employment activities within each reservoir zone. The proposed additional capacity proposed meets the forecasted RITS demands.

Hamilton City Water Supply Master Plan 2020

39. HCC has a City Wide Strategic Water Supply Master Plan dated 19 August 2020, which provides a framework to address the current technical requirements needed to meet current and future demand from growth. The Master Plan is revised every three years in order to inform successive LTPs based on actual growth and demand , completed investment projects, and in alignment with the Water Supply Activity Management Plan.

40. The Master Plan forms funding recommendations for HCC’s LTP and informs the LTIS. The Master Plan captures Hamilton’s forecasted growth from 2021 to 2061.

41. The Master Plan provides dates when implementation decisions are required. A major issue is local government funding and financing constraints. While some key water projects are unfunded in the draft 2021-2031 LTP, their respective key decision dates align with the timing of the future LTPs and therefore the final funding decisions for these projects are yet to be determined.

LTP

42. In the proposed 2021-2031 LTP, HCC plans to invest significantly to upgrade, replace, or provide new infrastructure for growth. The following table provides details of what is planned for water supply infrastructure:

Category Year 1-5 Year 6-10 Demand Management $19.5M of which $1.6M of which zones $14.6M is funded $200K is funded

Network Renewals $29.7M fully $32.9M fully (replacing aging assets) funded funded Planning $1.5M fully funded $908K fully funded (e.g. modelling and master planning) Water Metering $801K of which $23.4M unfunded $430K is funded Operational funding to $3M funded $3.39M funded support water demand management (e.g. leak detection, night flow analysis, demand management planning)

WATER CONSUMPTION MANAGEMENT

43. In the 2019-2020 fiscal year, on average, Hamilton’s residential water use was 200 litres/person/day2. In Water New Zealand’s report of its 2019- 2020 national performance review of HCC, it said:3

This is the most efficient residential water use reported in the district in the last six years (the period for which trended data was available) and nearly 20% lower than the average residential water efficiency reported in the 2016 year of 246 litres/person/day.

44. HCC has a Water Conservation and Demand Management Plan 2020 (WCDMP) that provides background information and an analysis of water management in Hamilton and presents a plan for improved water demand management. The WCDMP recognises that Hamilton has a finite allocation of water for the provision of Municipal Water Supply and that there is an increasing need for sustainable and efficient use of natural water resources. Various measures that help supplement water sources or

2 Water New Zealand: National Performance Review – Hamilton City Council 2019-2020. Calculated by dividing the population by total volume of water supplied minus network losses and non-residential water use. 3 Paragraph 1.2.

reduce consumption are undertaken by HCC to help alleviate potable water scarcity and to encourage and guide sustainable water use.

45. In addition to the measures undertaken directly by HCC, the community also manages water demand through self-regulation which has proved to be effective in reducing demand over many years. I will cover this in more detail in paragraphs 51 and 52.

Water Supply Bylaw 2013

46. The Water Supply Bylaw sets rules for managing Hamilton’s water demand and addresses:

(a) Water supply;

(b) Water quality;

(d) Compliance with resource consents and the Ministry of Health Drinking Water Standards of New Zealand;

(e) Responsibilities for maintenance;

(f) Responsibilities for the prevention of water loss and wastage; and

(g) Who can access the supply.

47. In particular, the Water Supply Bylaw ensures that the water that HCC has been allocated is efficiently and effectively used including through enabling metering, flow restrictions, restrictions and prohibitions on water use, and regulating water leakage.

Three Waters Connections Policy

48. From June 2019 until August 2020, in an effort to manage water consumption in Hamilton, HCC restricted the grant of water permits for new industrial activities which demanded greater than 15 cubic metres per day. The restriction largely applied to wet industry due to the high daily volumes required to service such activity. Proposals for new high-volume users required approval from full Council on a case-by-case basis.

49. In August 2020, in partnership with Waikato Tainui, Ngaati Hauaa, internal stakeholders, sub-regional partners and industry, HCC developed the Three Waters Connections Policy. The objective of the policy is recorded in the purpose section as follows:

The objective of this Policy is to provide administrative certainty in the way that Hamilton City Council:

a) manages requests for new service connections to the water, wastewater and stormwater networks;

b) manages requests for new bulk water supply connections to the water network by Waikato and Waipa District Council; and

c) Charges for water, wastewater and stormwater network connections and services.

50. The policy introduced new water assessment criteria focussed on driving water efficiency and protecting the network against issues of compliance and levels of service. The criteria prioritises allocation to various categories of water users including domestic, commercial, and agricultural. The policy provides that HCC will only supply Three Waters services to high water users by a written supply agreement. In considering whether to grant supply to a new high-water user, the policy requires HCC to have regard to:

(a) Adherence to the principles of the policy;

(b) Consistency with the relevant planning and regulatory mechanisms;

(d) The level of investment by the applicant and the duration of agreement;

(e) The extent to which water efficiency is planned and can be monitored;

(f) The extent to which mitigation of network capacity effects is required; and

(g) The extent to which the service provides for compliance with HCC’s resource consents.

Self-regulation

51. HCC implements a water conservation initiative, part of the wider programme for water management in Hamilton. The campaign educates members of the community to help them understand the current issues around water supply and the part that they can play to help manage them.

52. There are three main components to this programme which is delivered on a sub-regional basis with Waipa District Council:

(a) Smart Water Summer Water Campaign The campaign runs intensively throughout summer. It includes an Alert Level System, with Level 1 being a voluntary restriction on the use of outdoor water systems such as sprinklers and hand-held hosing between certain hours, moving up to Level 4 which is a

mandatory ban on non-essential outdoor water use. HCC has found this ‘collective responsibility’ approach to be effective in reducing the consumption of water. Level 4 water restrictions have never formally been required; however, level 3 restrictions have been used twice since the Alert Level System was implemented in 2008, initially in 2013 and again in 2020.

(b) Smart Water website (www.smartwater.org.nz) This is a one stop dedicated water conservation website that includes water saving tips, dedicated sections on education and workplaces, and educational-based interactive games, videos, and resources. Residents can report water wasters or subscribe to a water restrictions email alert.

(c) Smart Water Year-Round Campaign - We value wai in the Waikato This includes a series of resources and initiatives that are offered to the community, education sector, and workplaces to support, guide, and educate people in sustainable water use.

Meters

53. HCC’s Water Supply Bylaw requires all water supply for commercial, industrial, and extraordinary use to be metered.

54. HCC does not currently require universal water meters for residential use as:

(a) It is seen by some stakeholders within the community as a first step towards charging for water;

(b) Hamilton’s residential water use has progressively become more efficient in the last six years, as rated by Water New Zealand in HCC’s

most recent annual national performance review (average daily residential water use was identified as a ‘performance measure to celebrate’); and

(c) There is a high level of compliance by the Hamilton community with the Alert Level System during times when there are issues or concerns with water supply.

55. In any event, universal water metering is recommended in the Water Master Plan with funding proposed for that purpose. An installation project is proposed to start in 2025. This is also provided for in the 2021 LTP, but funding has not been approved. A funding decision will be required in the 2024 LTP.

Water loss

56. HCC has an established water loss management programme which aims to provide better understanding and management of network water losses. The programme includes the progressive establishment of infrastructure to segregate the network into Water Demand Management Areas.

57. The outcome of the 2019/20 national performance review benchmarking exercise undertaken by Water New Zealand compares the most recent calculated level of water loss for Hamilton for 2019/20 to other water suppliers in New Zealand, as well as providing a comparison with the performance bands detailed in the Water New Zealand Water Loss Guidelines (2010). I refer to the graph included as Attachment 1.

TEMPORARY ASSIGNMENT OF HCC’S TAKE TO WATERCARE

58. In early- to mid-2020, the North Island experienced the worst drought in 50 years, a one in 200-year event, and one of New Zealand’s worst on record. According to NIWA, much of the North Island of New Zealand including Hamilton, Auckland, Whangarei, Whitianga, Tauranga, Whakatane, Napier, and Taupo had their driest January to April on record4. Nearly all of the North Island reached “hot spot status”, when soils were ‘severely drier than normal’. The drought was prolonged, lasting from January 2020 to July 2020. The Ruakura rain gauge at Hamilton recorded the driest year since records began in 19055.

59. As the drought developed, HCC activated its Alert Level System which escalated as follows:

Date Alert Level

11 December 2019 - 13 January Level 1: Use Sprinkler systems 2020 between 6am-8am and 6pm-8pm. Hand-held hosing can be used anytime.

14 January 2020 – 5 February 2020 Level 2: Use sprinkler systems on alternate days between 6am-8am 6 March 2020 - 28 April 2020 and 6pm-8pm. Hand-held hosing (During Covid Alert Level 4 can be used anytime. lockdown)

6 February 2020 – 5 March 2020 Level 3: No use of sprinklers. Hand-held hosing only.

4 https://www.stuff.co.nz/environment/climate-news/300004696/drought-rainfall-lowest-ever-in-much- of-north-island; https://www.stuff.co.nz/national/119474878/drought-conditions-in-upper-north-island- rival-one-of-countrys-worst-droughts-on-record--niwa 5 WRC website: Rainfall readings.

60. In Auckland, the drought severely depleted Watercare’s stored water resources. Water levels in Auckland fell below 50 percent for the first time in 25 years. Facing a water supply crisis in Auckland, Watercare put restrictions in place in May 2020.

61. In addition to its other water sources, Watercare is authorised to take a maximum of 150,000 cubic metres per day from the Waikato River when the 7-day rolling average flow at Rangiriri is less than 328.3 cubic metres per second, which increases to 175,000 cubic metres per day when it is equal to or greater than this amount.

62. Still in urgent need of additional water resources due to the drought, Watercare reached out to HCC and requested that it consider allowing Watercare to use part of its water consent allocation from the Waikato River.

63. HCC agreed to assist Watercare by immediately applying for its next step up to 125,000 cubic metres per day, and then allowing Watercare to use, on a temporary basis, the unused balance between HCC’s actual daily water take and its new maximum daily take volume of 125,000 cubic metres per day, provided HCC water users and the health and wellbeing of the Waikato River are protected (assignment agreement).

64. On 18 June 2020, Watercare commenced taking additional water under the emergency powers in s 330 of the RMA. I understand that Watercare ceased its take under s 330 immediately, once it secured the 25,000 cubic metres per day assignment from HCC on 24 July 2020 under the assignment agreement. One year has been completed under the assignment agreement with Watercare and, subject to HCC’s discretion, a further two years are available under the terms of the agreement.

65. During the period of October 2020 until April 2021, Watercare utilised a total volume of 2,677,833 cubic metres of water under the assignment agreement. The average daily volume utilised by Watercare under the assignment agreement during the October 2020 to April period was 12,632 cubic metres per day.

WATER REFORM AND WATER POLICY

Central government initiatives

66. In July 2020, central government launched the Three Waters Reform Programme – a three-year programme to reform local government three waters service delivery arrangements. Currently, 67 different councils own and operate the majority of the Three Waters services across New Zealand. Underpinning the programme is the recognition that local government is facing significant and urgent challenges in the provision of these services including funding infrastructure deficits, complying with safety standards and environmental expectations, building resilience to natural hazards and climate change into Three Waters networks, and supporting growth.

67. The programme intends to reform Three Waters services into a small number of multi-regional entities with a bottom line of public ownership. What form this takes is being worked through.

68. The reform programme is being progressed through a steering committee, which is providing collaborative oversight of the programme that brings together central and local government expertise and experience. It assists with engaging with local government, iwi/Maori, and other water sector stakeholders on options and proposals.

69. At the 10 June 2021 Council meeting, HCC resolved to provide feedback to Local Government New Zealand that stated its support for the development of regional and national solutions to managing water.

70. I am involved in the reform programme as HCC’s lead and executive sponsor on all matters relating to the reform programme for HCC.

71. I currently have a small team of experts (finance, operations, and communications) supporting me and Hamilton’s elected members, as HCC considers and formulates its position on government announcements and other matters relating to the reform programme. Typically, this work involves support for political engagement with partner councils, local government New Zealand, or cabinet ministers.

72. At an executive level, I also represent HCC in a 16-council consortium across the Waikato and Bay of Plenty. This consortium is focused on being prepared and ready for the government reform. Examples of the type of work undertaken by the consortium include preparing:

(a) Financial proposals – to ensure sufficient debt and funding capacity to deliver on service level expectations, estimation of transition costs, and consideration of quick wins;

(b) Procurement proposals – to ensure that a multi-regional infrastructure pipeline is well developed, and the supply chain is informed and supported; and

(c) Asset Management proposals - to ensure that asset management systems are aligned and integrated with other core enterprise systems.

Sub-regional Three Waters initiative

73. During 2019, the Future Proof sub-regional water policy group commenced work on a Three Waters programme business case under the Treasury Better Business case model for the Hamilton to Auckland corridor. The Strategic Business Case, the first of five cases under the Treasury model, was in December 2019.

74. The strategic case sets out the case for change in municipal water, wastewater, and stormwater management in the Waikato and Waipā River catchment. Changes are needed because of:

(a) Increasing freshwater quality standards and the desire for ‘Best for River’ environmental and social outcomes;

(b) Forecast population increases and changes in land use;

(d) Concerns around community affordability.

75. The strategic case is part of the Sub-Regional Three Waters Project, which responds to Te Ture Whaimana, Future Proof objectives, government policy changes in water standards and management, and local policy direction such as Healthy Rivers/Wai Ora: Proposed Waikato Regional Plan Change 1 – Waikato and Waipā river catchments.

76. The strategic case is intended to support development of a programme business case for a collaborative strategy and long-term investment in Three Waters management and delivery in the sub-region, unconstrained by territorial boundaries.

77. The strategic case identified that the challenges associated with the current approach to Three Waters servicing are consolidated into four main areas:

Lack of integrated management

(a) There is a lack of integrated catchment management and urban waters long-term planning. There is an absence of a common vision and agreed future outcomes that are unconstrained by territorial boundaries. Insufficient application of both mātauranga Māori and conventional science methods, and inadequate funding provisions is resulting in inefficient near-sighted decision making and the degraded health and wellbeing of the Waikato River.

Historic decisions resulting in degraded environment and relationships

(b) Inconsistent, short-term, and boundary-driven regulatory, planning, and investment decisions on land use and urban water resource management have contributed to cultural disconnect, degraded water quality, poor ecosystem health and over-allocated resources. As a consequence, the relationships our communities have with the Waikato River and the ability of Waikato River iwi to exercise mana whakahaere or conduct their tikanga and kawa have been severely compromised.

Poor infrastructure planning and inconsistent regulatory oversight

(c) Reactive infrastructure planning practices, coupled with inadequate regulation and compliance and inconsistent management practices, standards, and performance expectations, have led to a variable urban water system performance across the region. This has adversely impacted the health and wellbeing of the Waikato and Waipā rivers.

Infrastructure investment deficit

(d) There are significant affordability challenges, as well as maintenance, operational, and resource (skill) capacity issues, in the sub-regional Three Waters space. These are driven by a legacy of underinvestment in urban water systems; infrastructure reaching end of life; increasing regulatory requirements and environmental expectations; and climate change impacts and greater growth demands. Combined, this has created a significant investment deficit within the sector.

78. The strategic case identified that, while local authorities have budgeted for significant investment in their Three Waters services in their 2018-2028 Long-Term Plans, the level of funding currently in place is unlikely to satisfy regulatory obligations, or adequately respond to current and future growth pressures and long-term environmental expectations. As a result, valid concerns exist around the sustainability of local government funding and people’s ability to pay.

79. The strategic case also identified an urgent need to re-evaluate, redesign and deploy urban water management solutions and delivery mechanisms that meet the objectives of Te Ture Whaimana, rise to the challenges facing communities, unlock economic potential, and deliver environmental, cultural, social, and economic benefits.

80. All of these initiatives bring into sharp focus the importance of taking a long-term integrated approach to the allocation of the water resource within the Waikato River.

HEALTH OF THE RIVER AND RELATIONSHIP WITH IWI

81. As a local authority in the Waikato River catchment, HCC has a duty to protect the health and mauri of the Waikato River for the communities within the City and the wider sub-region. This means safeguarding freshwater and drinking water quality.

82. HCC also has a statutory obligation to give effect to Te Ture Whaimana, the primary direction setting document for the Waikato River and activities within its catchment. In particular, HCC strives to uphold the Vision set out in Schedule 2 to the Act, as follows:

A future where a healthy Waikato River sustains abundant life and prosperous communities who, in turn, are all responsible for restoring and protecting the health and wellbeing of the Waikato River, and all it embraces, for generations to come.

83. HCC is concerned to avoid over-allocation of the Waikato River which may have a profound negative impact on the flow of the river and as a consequence, the whole ecology of the Waikato River itself.

84. HCC recognises and supports the special relationship that Maaori have as kaitiaki of the Waikato River. Waikato-Tainui regard the Waikato River as te tupuna awa (the ancestral river), representing the mana (authority) and mauri (life force) of the iwi. These values are paralleled by the very significant value the wider community places on the Waikato River as both a defining feature and critical resource for Hamilton.

85. On 12th February 2012, Waikato-Tainui and HCC entered a Joint Management Agreement. The Joint Management Agreement provides for an enduring relationship through a shared exercise of functions, duties, and powers that give effect to the central aim of restoration and protection of the health and wellbeing of the Waikato River for future generations.

Given this co-management relationship, HCC supports the position of the Waikato iwi in this proceeding.

GROWTH AND POTENTIAL SHORTFALL

86. In his evidence, Mr O’Dwyer refers to the strategic importance of Hamilton and the role that it plays in New Zealand’s current and future prosperity which has been recognised by central government, and Auckland Council through the Hamilton to Auckland Urban Growth Partnership and the formulation of the Hamilton to Auckland Corridor Plan and the MSP. He states that the economy and population of Hamilton is projected to grow significantly over the next 30 years. The MSP area is forecast to grow to approximately 428,038 by 2065.

87. Mr Haarhoff’s evidence makes clear that before 2044, a renewed consent for HCC will be required which will need to extend the allocation beyond 146,000 cubic metres per day. To address the growth projections out to 2065, it is estimated that the maximum water demand will be in the range of 159,000 cubic metres per day to 184,000 cubic metres per day. He notes that applying the same water demand assumptions to the additional MSP area, by 2065 the total water demand is estimated to be in the range of 217,000 cubic metres per day.

88. I refer to Figure 8 in Mr Tom Bassett’s evidence, which shows the future seasonal allocation scenario. Mr Bassett explains that Figure 8 shows that all the applications presently in the queue can be granted in full and remain within the CMA allocable flow limit. This position appears to have been confirmed in the evidence of Mr Cameron King for WRC.

89. While that may be the case, given the water demand for HCC and the MSP area in the medium and long-term, it is likely that there will be insufficient water to allocate to HCC to service its growing population.

90. I say this because my enquiries with WRC indicate that there is a strong correlation between what is allocated now, with what will be allocated in the medium to long-term. In other words, there are low rates of surrender of existing allocations, and high rates of renewal of existing allocations. While I was unable to secure precise detail of these rates from WRC, I was provided with a summary of recent “claw-backs” which is set out in the email from Mr Brent Sinclair from WRC to me dated 10 June 2021. This email is included as Attachment 2.

91. Based on this pattern, if the existing allocations set out in Figure 8 were carried forward into the medium-term, say 2044, there will likely be insufficient allocable flow to grant HCC’s application for additional water.

92. On the basis of these figures, HCC has an interest in, and is concerned about the ongoing allocation of water from the Waikato River. By allocating additional water to Watercare as sought, this will likely impact on HCC’s ability to obtain a renewed and extended water take consent as required to service the growing population and to meet the directives in the National Policy Statement on Urban Development 2020.

93. HCC is concerned about the potentially significant impact on economic growth in Hamilton and the wider Waikato Region and on the wellbeing of those living in Hamilton and the broader MSP area.

94. Should the Waikato River be fully allocated (or close to fully allocated) resulting from the granting of the Watercare application, in my opinion, based on the evidence of Dr Fairgray, the effects on the Waikato Region and Hamilton City and the associated economies has not been adequately addressed in Watercare’s application or in their evidence.

HCC’S FUTURE ADDITIONAL WATER TAKE APPLICATION

95. At the 18 March 2021 meeting, elected members resolved to have HCC staff develop a water allocation application to WRC to meet the City’s expected long-term water demand. Staff were to report back to the elected members for approval of the application prior to lodgement.

96. For the following reasons, development of a water allocation application in an earlier timeframe was not considered warranted:

(a) HCC’s 2009 consent has a 35-year term;

(b) A hypothetical new application for additional water (with a 35- year term) made prior to the Watercare 2013 200MLD application would have extended HCC’s security of supply by only a few years, potentially 5 years at best. This is not considered a material timeframe in the context of operating a growing metropolitan city; and

(c) Conversely, a hypothetical new application for additional water after the Watercare 2013 200MLD application, and recognising there are other applications in the queue for consideration by WRC, would have meant that HCC would be forced to seek an over-allocation of the Waikato River. This is not an outcome that is aligned with Te Ture Whaimana.

97. Nevertheless, in the context of what is now an increasingly urgent contest for this resource, HCC is now committed to formulating a new water allocation application which it intends lodging with WRC within the next 24 months.

RELIEF SOUGHT BY HCC

98. It is not HCC’s preference that the Watercare application be declined. HCC recognises that Watercare has an immediate need for water in the short- term, and that meeting this need is critically important in both a regional and national context. However, as explained above, HCC will need more water in the future to meet the growing demand in Hamilton and the MSP area, and this must be a consideration in the current context.

99. Watercare’s application indicates that Watercare only intends to use the additional take ‘as necessary’. It further indicates that alternative water supplies will be brought on-line over time to meet projected demand in Auckland.

100. Accordingly, HCC’s position is that Watercare’s reliance on the Waikato River should gradually be reduced, consistent with the assurances given in the application and in the evidence of Mr Bourne and Mr Fisher on behalf of Watercare. However, this is not sufficiently addressed in the consent conditions that have been proposed by Watercare.

101. In light of the potential shortfall in water supply, granting long-term resource consents for water abstractions would lock in unsustainable water use. The large volume of water sought means that the full allocation may not be utilised for some time with the consequence that this water will not be available for allocation. With HCC’s existing consent expiring in 2044, it makes sense to broadly align the expiry of the Watercare allocation with this timeframe so that the ongoing needs of the Auckland population

and those living within the MSP area can be considered in an integrated manner.

102. For these reasons, HCC seeks that Watercare’s consent be limited to a duration of 20 years. It also seeks a requirement embedded in the consent that alternative sources for water supply will be explored and implemented by set deadlines. I am also aware that consent conditions can be formulated to gradually reduce the consent holders’ reliance on the resource over time, effectively a ‘sinking lid’. I support this approach as it creates a ‘real world’ accountability around Watercare’s signalled intent to secure an alternative long-term water supply.

103. Watercare recognises that securing an alternative water source is an inevitability. The relief sought by HCC simply means that Auckland’s immediate water needs are met for the foreseeable 20 years while requiring Watercare to advance its alternate service/source scenario by approximately 10 years under HCC’s recommended approach. The broad economic impact on the Waikato Region is mitigated and Watercare will face the incremental financing cost of delivering its 30-year investment 10 years earlier than otherwise planned. This represents a balanced and sustainable mitigation of effects in the context of the likely cost of finance versus the cost to the Waikato Regional economy. I note Dr Fairgray addresses these economic impacts in more detail.

104. The details of the proposed consent conditions are explained in the planning evidence for HCC presented by Mr Ian Mayhew, and I rely on his expertise.

105. HCC seeks an outcome which sees the immediate needs of Auckland met, while preserving allocable flow for the medium to long-term to enable HCC to meet its needs over this extended timeframe, all in a manner which ensures that the health and wellbeing of the river is restored and protected.

106. HCC considers that, through the relief it seeks, these issues can be resolved in a way that serves the joint interests of Auckland, Hamilton, and Iwi.

Andrew Richard Parsons 18 June 2021

ATTACHMENT 1

7. Reliability

Interruptions to water supply

Peak wet to average dry weather flow ratio at wastewater treatment plants The bars show the flow weighted average for participants with multiple treatment plants. The grey dashes show maximum and minimum values.

Infrastructure leakage index The Infrastructure leakage index shows the ratio of Current Annual Real Losses to Unavailable Annual Real Losses. Corresponding performance bands, contained inWater New Zealand, Water Loss Guidelines, 2010 are shown on the figure.

8 Poor leakage management

4 Possibilities for further improvement

2 ILI ( infrastructureFurther losses leakage below index this (=CARL/U level may ARL)) be uneconomic (W SE1h) unless there are shortages

0 T a u p o W a i p a C l u t h a N a p i e r T i m a r u S e l w y n T a s m a n R o t o r u a D u n e d i n H a s t i n g s H a m i l t o n S t r a t f o r d T a u r a n g a S o u t h l a n d A s h b u r t o n M a s t e r t o n W h a n g a r e i Invercargill W h a k a t a n e Kapiti Coast W aim akariri Christchurch H o r o w h e n u a M arlborough Central O tago New Plym outh South W airarapa W ellington W ater Palm erston N orth Queenstow n-Lakes

46 Current annual real losses (litres/property/day)

Average age of water pipelines (years)

Average age of wastewater pipelines (years)

Average age of stormwater pipelines (years)

Percentage of water pipelines assessed as poor or very poor condition Determined by the proportion of water supply pipelines assigned a condition grade of 4 and 5.

Percentage of wastewater pipelines assessed as poor or very poor condition Determined by the proportion of wastewater pipelines assigned a condition grade of 4 and 5.

Percentage of stormwater pipelines assessed as poor or very poor condition Determined by the proportion of stormwater pipelines assigned a condition grade of 4 and 5.

Proportion of water supply network not yet assigned a condition grading

Proportion of wastewater network not yet assigned a condition grading

Proportion of stormwater network not yet assigned a condition grading

ATTACHMENT 2

From: Lachlan Muldowney To: Melissa Thomas Subject: FW: Follow up post our conversation on Water Allocation Date: Friday, 18 June 2021 4:24:08 PM Attachments: image306426.png

______

LACHLAN MULDOWNEY BARRISTER

P +64 7 834 4336 M +64 21 471 490 Chambers Panama Square, 14 Garden Place, Hamilton Postal PO Box 9169, Waikato Mail Centre, Hamilton 3240 www.lachlanmuldowney.co.nz

From: Andrew Parsons Sent: Thursday, 10 June 2021 4:09 pm To: Lachlan Muldowney Subject: FW: Follow up post our conversation on Water Allocation

Andrew Parsons Executive Director | Strategic Infrastructure

DDI: 07 838 6896 | Mob: 021 791612 | Email: [email protected]

Hamilton City Council | Private Bag 3010 | Hamilton 3240 | www.hamilton.govt.nz Like us on Facebook Follow us on TwitterThis email and any attachments are strictly confidential and may contain privileged information. If you are not the intended recipient please delete the message and notify the sender. You should not read, copy, use, change, alter, disclose or deal in any manner whatsoever with this email or its attachments without written authorisation from the originating sender. Hamilton City Council does not accept any liability whatsoever in connection with this email and any attachments including in connection with computer viruses, data corruption, delay, interruption, unauthorised access or unauthorised amendment. Unless expressly stated to the contrary the content of this email, or any attachment, shall not be considered as creating any binding legal obligation upon Hamilton City Council. Any views expressed in this message are those of the individual sender and may not necessarily reflect the views of Hamilton City Council.

From: Brent Sinclair Sent: Thursday, 10 June 2021 3:50 pm To: Andrew Parsons Subject: FW: Follow up post our conversation on Water Allocation

Hi Andrew,

This is the email I sent to iwi partners when I was asked what contributed to the reduction in allocation sought which meant there was no longer a queue. I hope this is of some assistance.

As Donna noted, we just noted in this email the more significant changes, but as a matter of course when we consider a replacement consent, a key aspect is whether the allocation is required and represents and efficient use of water.

Cheers, Brent

Brent Sinclair | ACTING DIRECTOR | Resource Use WAIKATO REGIONAL COUNCIL | Te Kaunihera ā Rohe o Waikato P: +6478590823 M: +6421894314 F: facebook.com/waikatoregion Private Bag 3038, Waikato Mail Centre, Hamilton, 3240

From: Brent Sinclair Sent: Thursday, 25 March 2021 3:04 PM To: Taipu Paki ; Eugene Berryman-Kamp ; Manaaki Nepia ; Gannin Ormsby ; Maria Tuwharetoa Cc: Jo Bromley ; Roger Lewis Subject: Follow up post our conversation on Water Allocation

Kia Ora Koutou,

Thanks for your time last week when we caught up briefly to talk about the recent media release we shared that identified several large applicants seeking consent to take water from the Waikato River has amended their applications, which has changed the situation from where there was more water being sought than the Regional Plan identifies as being available for allocation, to where there is now less water being sought than is available to allocate.

I mentioned at the time that this situation has not only arisen due to these major changes to several large consent applications, but there had also been reductions in the amount of water allocated to consent holders when their replacement consent applications had been processed, or reviews had been undertaken of existing consents. You were interested to know more about these other reductions.

Unfortunately our database hasn’t been set up in a way that records data on both the amount of water requested and the amount granted to make that comparison easy. What it does is record the final amount that has been authorised. That said, I have asked the team to check the details of the more significant reductions that they re-call processing in recent times. There will no doubt be other reductions not included in the information below and so you could view this as a conservative estimate. That said, I think your interest was in the more significant ones and those are shown here:

Significant Recent Reductions in Volumes Sought in Application Wairakei Pastoral – 71 MLD (application withdrawn in its entirety) Wairarapa Moan – 60 MLD (reduction of application from 90 to 30 MLD) Watercare Services Ltd – 50 MLD (reduction of application from 200 to 150 MLD) I & YJ Hawkes – 3.75 MLD (application withdrawn)

Significant Recent Reductions in Consented Daily Volumes Waipa District Council – 18.4 MLD Taupo District Council – 6.4 MLD AFFCO NZ Ltd – 20.5 MLD Fonterra Limited (Te Rapa) – 15 MLD Wairakei Golf Course and Resort – 0.55 MLD J and L Pease Ltd – 1.7 MLD Southall Farm Partnership – 1.7 MLD Daniel Cullen Family Trust - 0.9 MLD Agreserach (Ruakura) – 1.7 MLD

The bottom four in this list are all irrigation consents.

As I noted the other day, even though we are now in the position where there is more water available for allocation under the Regional Plan provisions than we have applications seeking water, for each and every consent application we process we assess whether the take volumes applied for are reasonable and justified. This is regardless of the size or purpose of the take.

I hope this has been helpful.

Whist I have you, one other update that will be of interest to all, but likely to be of particular interest to Taipu and Manaaki. I have asked the team to put together a short summary of what we know about the large fire that took place at the Tuakau Meat Processing site the night before last. We had staff attend the incident during the night and again yesterday. The initial information I have is that there was no discharge associated with the fire fighting exercise that has entered the River. I understand that water used to fight the fire was directed to ponds on the site. I will ensure that a more full summary is provided as soon as possible.

Nga mihi

Brent

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