NELMAC could be a loser to 3 WATERS

By Max Frethey LDR reporter

Some of Nelmac’s water services delivery functions may be transferred to water Entity C as part of the Government’s Three Waters reforms, a move Nelson Mayor Nick Smith calls an “injustice” that raises questions about the future of the business.

Nelmac, Nelson’s signature environmental contractor and a council-controlled trading organisation, is contracted by Nelson City Council to deliver water services to the city. Smith said in his mayor’s report, to be put before councillors on Thursday, that it was expected that Nelmac would not be directly affected by the Three Water reforms and would instead contract to the new water services entity rather than to council.

However, Nelson Council was recently advised by Heather Shotter, the executive director of the Department of Internal Affairs’ Three Waters National Transition Unit, that Nelmac’s water services delivery functions will transfer to Entity C.

“I was shocked and surprised,” Smith said. “I think it’s overreach by the Three Waters transition team.” Nelmac’s annual turnover is $43 million, and has assets worth $21 million and equity of $12 million.

Its water services division accounts for more than 50 of its 300 staff, a third of its turnover, and approximately $2 million of plant and assets. “I was also taken back by how disruptive and damaging it will be to the Nelmac business,” Smith added.

“If this change proceeds, I worry about [Nelmac’s] future.”

If Nelmac’s staff, equipment, and systems involved in water services are transferred, there will be a significant flow-on effect as these people and equipment are also part of Nelmac’s work across the region in parks and reserves, conservation, pest control, landscape, and construction.

In addition to the potential impact in other areas, the report indicates Nelmac will need to substantially restructure and make some staff redundant to try and make it viable.

“The bill doesn’t say that they have to take these assets,” he said. “So, that’s where our starting point should be, just getting into dialogue with the chief executive of Entity C and with the Transition Unit to make sure they understand what the implications are for us locally.”

While O’Neill-Stevens added that an ideal situation would be for Nelmac to retain its assets and contract to Entity C rather than council, that also raises problems if the entity chooses not to contract to Nelmac in the future, which could be a worse outcome.

“And that’s where I really think we need to be having a conversation to make sure we’re getting the best possible outcome given the circumstances we’re in,” he said. “At the end of the day, we do need to make sure that we’re acting in the best interests of the city.”

As for Nelmac itself, board chair Rob Gunn said in a statement he was “deeply concerned” by the development and that Nelmac is “actively seeking clarity” from the Three Waters National Transition Unit.

“The Board and Nelmac Kumanu senior leadership are working proactively and quickly through the issues, with our number one priority being to protect our future continuity and people’s livelihoods,” he says.

“We will continue to focus on our communities, who rely on us and the critical services all our teams provide.”

Public Interest Journalism funded through NZ On Air

3 Waters proposal puts the future of NELMAC in question.

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