Rates Pressures and Water Reform: What Local Water Done Well Will and Won’t Fix for Carterton

Carterton's water infrastructure faces rising pressure as the district responds to ageing assets, growth demands, and tighter compliance standards. Photo: Wairarapa Times-Age.

The recent Stuff article “Urban ratepayers to cop double-digit rates rise” captured a growing concern across Carterton: the mounting cost of maintaining essential infrastructure and the disproportionate burden on urban ratepayers. It is a timely discussion, especially as Carterton District Council (CDC) weighs whether to join a council controlled organisation (CCO) under the Local Water Done Well (LWDW) reform, alongside neighbouring Wairarapa and Tararua councils.

Joining a new regional water services entity may seem like the solution to these financial challenges. After all, LWDW aims to create scale, reduce costs, and ensure more efficient and compliant water service delivery. However, while LWDW offers a clear long-term path to sustainability, it will not solve Carterton’s immediate depreciation funding problem.

The Sunk Cost of Past Underfunding

The issue lies in legacy funding decisions. In 2012 and again in 2018, CDC made political choices not to fully fund water asset depreciation. As a result, its depreciation reserves are significantly depleted, leaving a gap that must now be addressed. Council has recently adopted a policy to phase in full depreciation funding from 50 percent to 100 percent over two years. This is a local decision, independent of LWDW, and means urban ratepayers will face steep rates increases regardless of whether CDC joins the proposed CCO.

The current pressure on urban ratepayers is therefore not caused by water reform but rather by the need to make up for nearly a decade of underfunding. The shift to full depreciation funding is critical to restoring financial sustainability but understandably creates immediate cost impacts, particularly where water assets are concentrated, as they are in urban areas.

What LWDW Can Offer

Despite not addressing the legacy depreciation gap directly, LWDW remains a valuable and necessary reform for Carterton and similar sized councils. The proposed joint water services entity would allow CDC to:

  • Share future investment costs across a wider base, reducing volatility in capital planning;

  • Access greater financial capacity, including enhanced borrowing power through the Local Government Funding Agency (LGFA);

  • Adopt structured, long-term asset planning with stronger governance and compliance; and

  • Reduce future rates spikes through coordinated regional funding and cost smoothing.

Importantly, the CCO would operate under a requirement to fully fund depreciation by 2028, creating a more disciplined and transparent financial framework. While the immediate pressures from past decisions remain CDC’s responsibility, joining a larger, professionally managed entity offers long-term resilience, affordability, and regulatory certainty.

Balancing Short Term Pain with Long-Term Reform

The current rates increase in Carterton highlights the cost of past inaction, but also reinforces the need for durable solutions. LWDW will not undo the past, but it can help councils like Carterton avoid similar challenges in the future. That includes avoiding the need to fund major upgrades in isolation, navigating new regulatory standards alone, or facing reputational risk from rates volatility without the benefits of coordinated, region-wide decision-making and long-term planning.

As CDC moves toward adopting its Draft Annual Plan in May and continues public consultation on joining a joint water services entity, it is worth reinforcing that LWDW is not a quick fix but it is a critical investment in long-term infrastructure and financial health.

The Role of Voters

This situation also serves as a timely reminder of the importance of local elections. While we do not have the full context behind the 2012 and 2018 decisions to underfund depreciation, those choices have had long-term consequences that are now impacting ratepayers. Voters should take care to understand the financial implications of council decisions and the long tail of infrastructure policy because, eventually, the costs resurface.

With the next local government elections scheduled for October 2025, there is a valuable opportunity for the community to engage on these issues and help shape the direction of future infrastructure planning and investment.

Toni Kennerley