2. Water

2.1   Problem Definition

Many of the problems identified, if considered in isolation, are not necessarily symptomatic of an issue that is too large or complex for a regional council, or represent institutional failure to deal with the issue.  It is when these problems are considered as a whole that it is apparent to the Review Group that significant, active central government intervention is not only warranted, but urgent.  In summary:

• There is national risk of failure to act and get an effective framework for managing water.
• There is national benefit if water is managed effectively.
• There is massive complexity of the water challenge.
• The scale of the issue and response is too large for local government and therefore requires active central government intervention.

2.1.1 Water Management

Scale and Complexity of the Water Challenge

There is general recognition that the Canterbury Region is of fundamental importance to the nation’s well-being and that this depends critically on water. It is also recognised that:

• Climate change forecasts indicate a possible reduction in availability of supply from rainfall and soil moisture loss.
• Current demand for water and water-related resource consents is not taking place within a clear strategy.
• The regulatory institutions appear to be unable to respond appropriately to the situation.

There are many, and at times conflicting, stakeholders with legitimate interests in water in Canterbury; some have statutory roles in managing or using water, others seek protection of the water, and others wish to develop water infrastructure for economic gain.

The Canterbury Region contributes a significant percentage of the nation’s electricity generation. In addition, it has an estimated 2.62 million hectares of land in agricultural and horticultural production (as at June 2008). This represents 23% of New Zealand's total farm area. The region has 50% of New Zealand's grain, seed and fodder crops, 44% of tussock grasslands and 14% of all grasslands.

The Region has a large and growing share of the dairy trade.  It had the second largest number of dairy cows being milked of any region in 2008 (634,000), representing about 15% of the national herd.  The Region has experienced the greatest increase in the number of dairy cows since 2002, growing by 239,000 cows (an increase of 60.5% of Canterbury’s herd) between 2002 and 2008 (Statistics NZ, Agricultural Production Statistics 2008).  The increases in Canterbury contributed to 47% of the national increase in numbers of dairy cows being milked between 2002 and 2008, i.e. Canterbury increased by 239,000 and national herd increased by 506,000. 

There is significant opportunity for future agricultural development in Canterbury.  Unlocking this potential need not conflict with sound sustainable management of the resource and the operation of high quality standards.  It is however contingent on competent strategic long-term planning of the water resource.  The storage of water required for future development would mitigate the impact of prolonged drought conditions both on agriculture and ecological systems, and enable farmers to introduce more intensive (and water dependent) production systems.

The current situation is made more complicated and urgent by the impacts of a changing climate.  Climate change may increase the amount of water available at times of high flow due to increases in flow from the Alps.  This may present opportunities for water supply management, for example through water harvesting.  National Institute of Water and Atmospheric research notes that flows in Alps-fed rivers are likely to increase in winter and spring and decrease in summer and autumn since there is expected to be increased winter precipitation (especially rain).  Flows in lowland streams in the east are likely to decrease with the drier local climate.  This highlights the importance of strategic water management.  Managing the seasonal and spatial distributional water issues, in effect storage and supply, is key to Canterbury’s future resilience and development. 

Lack of Progress in Managing Water in the Past

The lack of an operative region-wide planning regime in Canterbury has led to uncertainty, increased costs, and time delays not only for resource consent applicants, but also submitters, community and environmental groups as well as the public generally.  Over-allocated catchments, increasing numbers of resource consent applications, and forecast impacts of climate change make the issue more important and urgent.  The current importance to the national economy and future potential of Canterbury agriculture add further weight to the need to ‘get it right’.

ECan has a number of specific operative regional plans, but the overarching resource management plan for the Region, the Natural Resources Regional Plan (NRRP), appears 'stuck' in its First Schedule process.  ECan is developing (we believe correctly) more specific Regional Environmental Flow Plans.  If these Environmental Flow Plans are notified prior to the NRRP being fully operative (which is likely to take some years due to decisions not being released until late 2010 and then the appeals process), it will unsettle things further from a sequencing, consistency, efficiency and prioritisation perspective.  The length of time taken to complete the proposed Natural Resources Regional Plan is, we understand, unprecedented in New Zealand.  ECan does not believe the RMA can provide the statutory framework for effective water management in the Region, despite the fact that other regional councils with water management challenges do have operative planning frameworks (we accept that these are not as significant in scale but are still basically similar in nature).

ECan has a history of setting timeframes for planning and not meeting them.  An example provided by external stakeholders is the Waipara River and Tributaries Surface Water Allocation Plan.  Some consent applicants were encouraged by ECan to voluntarily put their applications on hold in 2004 to allow ECan to prepare an allocation plan to achieve a consistent allocation approach when the consent applications were processed.  Indications were provided that the Plan might be notified to allow the consents to be processed in 2004 or 2005.  The Plan has been continuously delayed with ECan missing self imposed deadlines, and as a result potential applicants are still waiting for the Plan to be adopted by the council and notified.  In the meantime the consent applications remain on hold.

Timeframes for processing resource consents particularly, but not exclusively, on significant projects have been excessive.  We recognise improvements in this area have been achieved recently and discuss them in more detail later in the Report.  We have also heard from many external parties that the consenting process is adversarial and expensive for applicants and submitters, and there is a perception of intransigence from ECan officers to accept perspectives that differ from their own, including appointed Hearings Commissioners and the Environment Court (we address this later in the Report).

Concerns of recreation and conservation interests over the adequacy of river flows have resulted in a nationally unrepresentative number of Water Conservation Order applications / inquiries; this instrument being inappropriately grasped by some stakeholders as a proxy for planning (in the absence of plans).  Water Conservation Orders are no more strategic a planning tool than resource consents.

2.1.2 Institutional Failure

Environment Canterbury’s handling of water issues in the absence of any future-looking strategic framework as to how water should be promoted, developed, protected and managed, represents a significant risk nationally.  The institutional response from ECan to the water challenge has been inadequate.  In the Review Group’s opinion this has driven many of the current RMA-related problems.  ECan has created real policy confusion and inertia, particularly in relation to water, and we do not believe it will improve without central government intervention. 

We are aware that the Canterbury Water Management Strategy (CWMS) is intended to address the lack of a region-wide strategic planning framework.  We recognise that there is still a great deal of work to be undertaken in turning the strategic vision into tangible outcomes,  While the collaborative approach is supported the implementation of the Strategy is problematic, with or without supporting legislation.  We would expect that the institutional changes we are recommending would adopt aspects of the Canterbury Water Management Strategy to retain the positive momentum in the Region following its development. We address this later in this Review.  There are a number of dimensions to the institutional failure to manage water effectively.

Territorial Authority Relationships

There are significant issues with territorial authority (TA) relationships, as evidenced by the letter from the Region’s Mayors to the Minister for Local Government that (in part) triggered this investigation.  The relationships between ECan and TA’s has historically been less than ideal with tensions going back to the local government amalgamations of 1989.  The Review Group acknowledges the efforts made by the new Chair to improve relationships with TA’s and other key stakeholders (this was confirmed by Mayors and other stakeholders in the course of the interviews). However, despite that effort, the Mayors deeper concerns raised in their letter remain. This was confirmed at the meeting the Review Group had with Mayors and CE’s at Ashburton.  It should also be noted that the disproportionate dominance of Christchurch City within the Canterbury Region is not reflected in statutory representation at regional level. This fuels political disquiet that seems to trickle down into both territorial and regional government.

The worthy principles of involvement, collaboration and ‘no surprises’ set out in the Triennial Agreement have become compromised.  The reasons for this cannot be attributed to solely to the behaviour of either ECan or the TA’s.  They arise from a mutual relationship breakdown.  Notwithstanding the above, there are examples where ECan and individual TA’s are working together collaboratively.  The Review Group is aware of regular meetings of executives from ECan and each TA that seek to improve collaboration and resolve issues.  We address TA relationships in more detail in Section 4 of this Review.

On a more positive note, ECan and the territorial authorities in Canterbury (with the exception of Waitaki District Council) have endorsed the CWMS.  Indeed, the CWMS has been driven by the Mayoral Forum out of frustration with the lack of progress in advancing water management issues in the Region.  This is positive, although some of the CE’s and Mayors spoken to through this Review process continue to mistrust ECan’s intentions (some believe ECan will “hijack” the CWMS process and implement the way it sees fit regardless of the Mayoral Forum’s position).  We note that the Waitaki District Council has provisionally withheld its support for the CWMS subject to certain matters being satisfactorily addressed, including confirmation that zonal committees will have the power to grant resource consents¹. 

Poor stakeholder relationships

Consistent and serious concerns were raised regarding the nature and quality of engagement with applicants/submitters, particularly for large complex consent applications or through RMA plan development (the NRRP in particular).  Of particular concern to the Review Group is that the issues raised by external parties were consistent in nature, and differ quite strongly from the perspectives of ECan staff when asked about their organisation.  Relationships with major applicants canvassed by the Review Group are universally poor.  There is clearly a major perception gap between internal and external views of ECan. 

Political Process

There is a general perception from external stakeholders that the political dimension at ECan has inhibited effective decision making.  The council has historically been evenly balanced, which is broadly reflective of a pro- environment – pro-development split of its constituency.  This of itself is not necessarily an inhibitor of effective decision making, but governance is an issue that was raised by almost all external parties interviewed.  There is a consistently held view that councillors are so polarised at times that they are dysfunctional as a group.  Our investigations revealed that while ECan is meeting its obligations under the LGA it has been unable to establish a firm planning framework (especially with regard to water matters) which flows through to poor relationships and decisions under the RMA.  The review Group is of the view that the complexity and conflicting aspects of managing water has been a significant diversion that has resulted in there being not enough leadership, and the Council has been too busy protecting individual / Party perspectives and has failed to pay sufficient attention to leading the Region.

The review found that the process for debating strongly opposing views has been marred by poor behaviour and long standing grievances in some cases. A recent example of poor behaviour is the way that individual politicians responded to the December 2009 findings of the Office of the Auditor General (OAG) regarding conflicts of interest at councillor level for the setting of water user charges². 

Lack of Balance between Economic, Social, Cultural, and Environmental Perspectives

A commonly held perception from some ECan staff and many of the external stakeholders spoken to is an imbalance between environmental, economic, social and cultural perspectives.  When interviewed by a member of the Review Group, the CEO stated that “our title is Environment Canterburyand this is what we stand for – protecting the environment”, this despite the wider function of the council under the LGA and RMA. 

One stakeholder group interviewed considers that“ECan takes a ‘protector of the environment’ rather than an ‘integrated management’ interpretation to their role, i.e. they undertake rigorous environmental analysis in decision making rather than fully evaluate the available options to come up with win-win solutions that satisfy social, environment, economic and cultural components.” 

A resource consent decision³ on groundwater consents in the Rakaia – Selwyn area highlighted this issue:“In effect, the [ECan] Officers adopted almost an "advocacy" role in terms of seeking the decline (until very late in the piece) of all of the consents…  We observe that while the Officers are entitled to express opinions as to what they consider the effects might be on granting some or all of the consents, it is not their role to decide the applications… Finally, we note that where a recommendation is made this requires the recommending officer to consider each application in the context of the particular aquifer and area it relates to and to also consider beneficial effects as well as potential adverse effects. It is apparent, that none of the Regional Council Officers have undertaken that exercise…”

This lack of balance in decision making has, we believe, inhibited the ability of ECan to strategically manage water in the Region.  On the other hand, recent Council papers the Review Group examined dealing with policy matters contained appropriate economic and social analysis alongside environmental impact analysis.  We note that Councillors interested in development support the use of sound economic advice in developing policy.  The Review Group is of the view that the balance that may be embodied in policy does not necessarily flow through to consideration of consents.

Waitaki Plan Implementation

Previous central government intervention for water management in the Waitaki catchment led to the establishment of the Waitaki Water Allocation Board, tasked with creation of a water allocation plan that we understand to be robust and generally supported by external stakeholders.  We have been told by multiple external stakeholders, and some staff that ECan has failed to adequately implement the Plan for the Waitaki prepared by the Waitaki Water Allocation Board.

Adequacy of the RMA

Many of the ECan staff and Councillors spoken to stated that the RMA is a major part of the failure to have effective water management in the Region.  Environment Canterbury’s primary concern is that it can’t manage water under the RMA, claiming that the RMA is designed for managing adverse effects of individual applications rather than managing for cumulative effects such as the impact of groundwater draw off from Canterbury plains aquifers on the flows in lowland streams. 

In the opinion of the Review Group, and as successfully demonstrated by several other councils, the RMA already provides an adequate framework, as such there is nothing stopping Environment Canterbury from accomplishing now, within existing regulatory frameworks, what it claims cannot be achieved.  In the opinion of the Review Group the problem does not exist within the RMA but rather with implementation of the RMA at the regional and district levels in Canterbury.  The RMA provides the tools necessary and it is the duty of the councils to determine the capacity and set sustainable limits for their resources, as well as determine those causes that have adverse effects of those resources.  ECan’s position both reflects and contributes to its focus on managing primarily by consents rather than through the better use of the planning provisions of the RMA.
There are other regions in New Zealand which face strong pressures around fresh water not unlike those facing Canterbury.  Hawke’s Bay is another Region which has conflicting demands on limited freshwater resources and is facing increasing numbers and severity of drought.  Unlike Canterbury, however, Hawke’s Bay Region has operative plans in place which enable successful freshwater management, demonstrating that it can be done under the RMA.  However, the issue in Canterbury is an order of magnitude greater in size and complexity (hydrology, vested interests and economic consequence) than any other region.  We do not believe that ECan will, in the future, change its position regarding the RMA.

2.2  Potential Solutions

The desired outcome for the Canterbury Region is a planning framework that ensures the environmental health of natural resources while enabling continued sustainable economic development and social and cultural wellbeing.  This requires the sustainable allocation and use of water resources in a way which provides for the needs of the primary sector, electricity generation and other major water users, while ensuring the needs of ecology, community, tangata whenua, recreation, and other interests are provided for – this is not easy.  A long-term sustainable planning framework would, when implemented, provide this,

We have considered three options for institutional change:

1. Creation of a Canterbury Regional Water Authority (our preferred option)
2. Replacement of Environment Canterbury with a Commission, and the ‘call-in’ of a regional water plan to be prepared by a ministerially appointed Board of Inquiry.
3. Implementation of the Canterbury Water Management Strategy.

We examine each of these three options in the following sections.

Option 1: Canterbury Regional Water Authority

Our preferred option is the establishment of a Canterbury Regional Water Authority.  We believe the problems discussed above require active central government intervention through the establishment of a new specialist entity that will give on-going attention to issues of water management in the region.  As noted previously, these will be enduring issues.  We discuss the rationale for this compared with other options later in this Report, but believe this is the most likely to achieve the improvements in water management and governance necessary in Canterbury. 

We see four separate but related parts to the overall solution, each of which we address in more detail below:

1. Special legislation is required.
2. Replace ECan Council with a temporary Commission to manage the necessary organisational change in addition to providing the ongoing governance functions currently carried out by councillors.
3. Create a new statutory agency - the Canterbury Regional Water Authority (CRWA) which would:
   1. Prepare and implement a plan for water for the Region, with a balance of economic, environmental, social and cultural perspectives.
   2. Ensure that the positive work already undertaken in developing the CWMS is maintained as much as possible, and that the CRWA aligns with other central government initiatives such as any recommendations of the Land and Water Forum, and the proposed National Policy Statement for Freshwater Management, and any future National Environmental Standards.
   3. Execute the RMA water-related functions currently undertaken by ECan.
4. Transitional arrangements.

Special Legislation

Reluctantly, the Review Group has concluded that special legislation will be required.  The scale and nature of the problem was not anticipated by either the LGA or RMA, so it is not appropriate to rely on the statutory intervention provisions of either (or both) statute: 

• The LGA is the Act that establishes a local authority and the establishment of the formal accountability arrangement between Councillors, Chief Executive’s and officers.  No other Act can intervene directly in this relationship. 
• Under Section 254 of the LGA the Minister may appoint a review authority to “review, consider, and report on the performance of a local authority”, either generally or in relation to a specified matter.  Intervention should be considered only if there is prima facie evidence of serious failure, mismanagement or mis-governance on the part of the local authority in carrying out its statutory responsibilities.  We note that this power has not been used before under the LGA.  This Section involves a number of process steps that would have to be followed and would run the risk of this Review Group and an LGA appointed review essentially considering the same issues twice, at taxpayers expense.  This would lengthen the time required for making any changes, and would cut across the October 2010 local government election cycle. 
• Section 255 of the LGA allows the Minister of Local Government to appoint a Commission if the local authority is unable to perform because it cannot hold meetings owing to the lack of a quorum or if the local authority requests it. The first part is not relevant in this case and the Review Group thinks it unlikely that ECan will request a Commissioner on their own volition.
• The RMA (section 25) allows the Minister for the Environment to appoint 1 or more persons (including any officer of the public service) to exercise or perform all or any of the functions of the local authority.  These functions are specified in section 30 and 31 of the RMA.  This provision would remove the function from the council but would not remove the council itself.  The RMA creates a dual relationship between the Minister’s appointed person(s) and the chief executive and officers and between the council and chief executive officer, which creates real issues in terms of effective governance and accountability.  The Review Group considered such an approach (except for a short period of time) would therefore be de-stabilising.  This option would also cut across the local government elections in 2010.

For these reasons the Review Group recommends the use of urgent legislation to replace the present Council with Commissioners.

The legislation needs to:

• Recognise the national significance of water (including value, scale, complexity, and urgency of the need for a management framework).
• Replace the Council with a Commission for a period to be determined by the government.  The Commission would be responsible for managing the change to ECan, and transitioning functions to the new entity in addition to providing the ongoing governance functions currently carried out by councillors.
• Create a new entity with functions and responsibilities to be defined in legislation.
• Identify the structure and makeup (e.g. skills, experience etc) of an appointed Board to govern the entity.  Require review of governance arrangements after 3-5 years.
• Provide for transitional funding arrangements.
• Require the creation of a plan for water, and define the timing for creation of the plan.  The plan should:
  • ensure appropriate weighing of economic, environmental, social and cultural needs with respect to water management in Canterbury
  • allow for prioritisation of specific uses in different areas (e.g. irrigation, electricity generation, recreation, etc), as well as preservation, protection and conservation
• Transfer the water-related functions and staff of ECan (e.g. consenting, monitoring, enforcement, scientific investigations etc) to the new entity.
• Recognise that there will be land – water integration issues that will require cross-agency (ECan – CRWA and CRWA - TA) interaction.  Integrated resource management is a key feature of the RMA, and cross-jurisdictional management will be an important element of the new approach to water management.
• Require RMA / LGA documents to give effect to the Plan (e.g. other (non-water related) Regional plans, the Regional Policy Statement, district plans, Long Term Council Community Plan’s (LTCCP’s)).
• Include a transition period until the new Plan is in place.

We consider that this legislation should be prepared as a matter of urgency, and that the Ministry for the Environment working in consultation with the Department of Internal Affairs, other government departments and stakeholders in Canterbury, should be the lead agency.  From a practical perspective, special legislation may be best prepared in two tranches:

1. A brief statute prepared under urgency that replaces the Council with a Commission.  We believe this could occur fairly quickly, and that it is important to undertake that change as quickly as possible following acceptance of the Review Groups recommendations.
2. A more substantive statute establishing the CRWA and making the remainder of the changes recommended above.  The Commission should continue in its role until local body elections are held, at a date to be determined by the government.  It is important that the work of the Commission is not negatively constrained by statutory deadlines.

It is important to note that other legislative and policy reform relevant to water and the Canterbury Region is ongoing and should be considered when developing this legislation, including:

• RMA Phase Two reforms are due to be enacted late 2010 or early 2011 and may impact water management.
• The Land and Water Forum is due to report back to government later in 2010 and is likely to have recommendations that impact water management in New Zealand.
• Electricity sector reforms, especially the proposed Tekapo A and B power station asset transfer between Meridian and Genesis.
• The Minister of Agriculture has been closely engaged throughout the development of the CWMS including provision of staff support to the Strategy development.  Officials are considering legislative options needed to give effect to the CWMS.  If the recommendations of this Review are accepted, the legislative change should be incorporated into this work. Much of the work already undertaken through CWMS development would therefore be incorporated into the Plan. 

Commission to replace Council

The Review Group recommends that the present Council be replaced by a Commission (perhaps three members) that would drive through the change management and prepare the ECan Council for its new role in time for elections at a date to be determined by the government.  Features of the Commission will include:

• The Commission will not be permanent, but will manage through the period of organisational change.  We believe that excluding water, the council functions as an effective body, and that the best outcome for the Region is for locally elected politicians to run ECan.
• Its role will be to restructure ECan, including:
  • manage the institutional change effectively
  • maintain the operation and responsibilities of the ‘rump’ of ECan until the new council is elected
  • transition water functions to CRWA, working closely with the CRWA Board to ensure effective transition of staff and functions
  • implement other Review Group recommendations regarding the broader performance of ECan, if deemed appropriate
  • Prepare a plan for the future management, funding and governance of ECan, post-transition of functions to the CRWA, and after elections.  This plan will incorporate aspects of the CWMS and align with other central government initiatives related to water.
• Skills / experience required will include:
  • Governance
  • Change management
  • Organisational assessment and design
  • Relationship management and stakeholder management
  • Policy implementation.

Create the Canterbury Regional Water Authority

There is a need to create an entirely new specialist entity.  The Canterbury Regional Water Authority (CRWA) is warranted due to:

• The importance and enduring nature of the issue to the Region and the Nation.
• The complexities involved in balancing the competing interests.
• The likely timeframes involved with the allocation of water rights.
• The demonstrated inability of ECan to manage water in the past.
• Institutional failure on the part of ECan in respect to water.

The CRWA would assume responsibility for all of the RMA-related functions of ECan related to the management of freshwater in the Region. Other statutory functions relevant to water, such as flood protection (carried out under the Soil Conservation and Rivers Control Act 1941) could stay with ECan.  The ongoing governance structure of the CRWA could be reviewed after three to five years.

The CRWA would be established under its own Act of Parliament, and would be governed in the first instance by a professional board appointed jointly by the Minister for the Environment and the Minister of Local Government.  Ideally, the Chair should be a respected person with the necessary credentials from within the Region.  As noted above, the review after three to five years could include consideration of a different governance model - such as a mix between appointed and elected members.

The Review Group is conscious that, in recommending the creation of a specialist body, there will be cross-agency integration issues in the Region. However, we believe that this can be minimised through the following key features:

• The CRWA should have the characteristics of a regional authority albeit with a special purpose.  This would have the advantage of greater local ownership and stakeholder buy-in than a central government entity.  It should have an appointed Board for a defined period, then potentially transition to a model with a mix of elected and appointed members (similar to District Health Boards or Catchment Boards operating under the Soil and Water Conservation Act).
• Statutory (RMA) functions and staff of ECan regarding water will transfer to the CRWA.
• The role of the CRWA will include a mix of economic development, environmental protection, social and cultural needs (as with the current RMA test).
• The CRWA will be required to create and implement a plan for water for the Canterbury Region (including irrigation, electricity, other major water users, recreation and tourism, conservation, fisheries, non-use values etc).  The Board will be responsible for developing the Plan, which will include the matters normally considered under RMA planning documents, as well as economic development.  The Plan:
  • will be completed within a defined period
  • will be given effect to via RMA plans (including district plans) and the Local Government Act – e.g. LTCCPs
  • will integrate with other regional plans (including the remaining sections of the NRRP) and the CWMS for issues such as non-point source pollution that are related to both land use and water quality
  • will, where appropriate, draw on the proposed NRRP and CWMS in informing plan and policy development
  • will identify, balance and prioritise uses (including non-use of water in some areas)
• The Ministry for the Environment will have an ongoing role in monitoring the implementation of the CRWA’s activities, including evaluating the effectiveness of implementation of its plan. 
• Standard consultation, hearing, review and appeal rights that apply under the RMA would apply to the CRWA.
• The legislation will provide for reserve powers of the Minister for the Environment and Minister of Local Government as is currently provided for in the RMA and LGA respectively.
• The funding source should be predominantly that which currently funds ECan (including the rating base and user charges).  The Government should consider whether there is any need for central funding during the transition period and on an ongoing basis.  Ongoing costs could be potentially mitigated through establishment of shared services with ECan.

Transitional Arrangements

The urgency of the current situation in Canterbury means it is not acceptable to wait until the CRWA has been created before moving forward with water planning in the Region.  There are a number of options available to ensure ECan has a more effective, albeit temporary water management framework in place.  Our preference is Option 1 below:

1. The Minister for the Environment require, using section 25A of the RMA, ECan to complete a plan within a specified period.

Although the NRRP has been extensively criticised for the time it has taken to advance to the current stage it is so far through the process, with all the costs incurred to date, that we believe it needs to be completed as quickly as possible.  The most time-efficient transitional arrangement would be to require ECan to select those specific sections of the NRRP pertaining to water allocation and water quality that are the most critical in term of the issues they are dealing with and have the decisions on the submissions completed and released as quickly as possible.  The decisions on the NRRP are not due to be released until August 2010.  In the opinion of the Review Group, this is too long (and we note that there is no guarantee that August 2010 deadlines will be met) and would not meet short term transitional requirements. 

The Minister for the Environment should require this to be completed within three months, which would have the desired effect of forcing completion of the priority sections more quickly than might otherwise occur.  We recommend that the decisions on the submissions be drafted and released as soon as possible – in stages if necessary to get the critical (highest priority) sections operative as quickly as possible.  Officers should draft the written decisions (and match to each submitter) that have been made by the Hearings Panel.  The Hearing Panel can then review them to ensure they reflect their decisions. This will assist with the speed and efficiency of the issuing the decisions on the submissions.

Given the urgency of the need to have an operative regional plan (albeit for a transitional period) in place very quickly, and taking into account our recommendation that the CRWA be responsible for preparing an overall water management plan for the region, we recommend this option. 

2. The Minister for the Environment could appoint, under section 25 of the RMA, a person(s) to replace specific RMA-functions of ECan, and direct that person to prepare a plan for water.

This would be similar to option 1 above, but replace the current Hearings Panel with an appointed expert(s) to develop a Plan.  This would not be the most time-efficient means of getting a transitional arrangement in place and may cause procedural difficulties given the process is already well underway.  We do not consider that the current Hearings Panel has been the main cause of the slow progress of the NRRP to date, so do not recommend this option.

Option 2:  Replace Environment Canterbury with a Commission and ‘call-in’ a Plan

An alternative option we have considered, but do not favour, would not involve the establishment of a separate entity but would retain water functions within ECan.  This would involve the following elements:

• Replacement of the Council with an appointed Commission.
• The Minister for the Environment to use his ‘call-in’ powers to require the creation of a regional plan for water via an appointed Board of Inquiry.
• Once the Board has completed a plan, ECan to implement the plan, but ongoing governance to be provided by the commission, not elected councillors.

Replace Councillors with an Appointed Commission

This option would replace the current Council with a Commission.  The Commission would be responsible for:

• Ongoing governance roles for all ECan functions.
• Supporting an appointed Board of Inquiry in its development of the regional water plan, and ensuring subsequent implementation of the plan.
• Implementing other Review Group recommendations regarding the broader performance of ECan, if deemed appropriate.

The Review Group has considered the thresholds for appointing a commission under the Local Government Act and appointing a person (or persons) to replace specified functions under the RMA.  There is uncertainty as to whether the threshold has been met under the Local Government Act, and do not consider that the RMA would be the appropriate legislative vehicle to permanently replace Council with a commission.  This option would therefore require special legislation as per Option 1.

We believe that with the exception of water, the council functions as an effective body (in some areas the Review Group considers ECan to be well ahead of most other local authorities), and that the best outcome for the Region is for the Council; to continue to discharge responsibility for all other functions other than water. This option would not achieve that outcome.

Minister for the Environment ‘Call-In’ a Regional Water Plan

Under the 2009 amendments to the RMA, the Minister is able to appoint a Board of Inquiry to prepare a plan.  We consider that this would result in a very similar outcome from a planning perspective to that discussed above.  The Plan:

• Would be completed within a defined period.
• Would be given effect to via RMA plans (including district plans) and the Local Government Act – e.g. LTCCPs.
• Would, where appropriate, draw on the proposed NRRP and CWMS in informing plan and policy development.
• Would consider and balance environmental, economic, social and cultural perspectives.
• Would identify, balance and prioritise uses (including non-use of water in some areas).

The ongoing implementation of the plan would be the responsibility of ECan.  We have already expressed our concerns about the willingness and ability of ECan to implement a plan it was not responsible for preparing.  The Commission would remediate this, but our observation in speaking with staff is that institutional resistance at staff level (as evidenced by the Upper Waitaki Plan implementation) would be strong.

Advantages of this option include that disruption within ECan would be significantly less than with our recommended option, that the cost of creating a new entity would be avoided, and that cross-agency integration issues the CRWA would face would not occur.  The urgency of the current situation in Canterbury means it would not be acceptable to wait until the Board of Inquiry had completed a plan before moving forward with water planning in the Region.  The same transition option discussed above is considered appropriate. 

Option 3:  Implement the Canterbury Water Management Strategy

A third option we have considered but do not recommend, is for central Government to support, through legislative change and potentially funding, the Canterbury Water Management Strategy.  The institutional structure outlined in the CWMS would stand, and zonal committees overseen by a regional committee would develop and oversee implementation of plans.  Support would be provided through a separate entity.

The CWMS has recently been developed, and is being promoted by ECan as a successful example of non-statutory collaboration between multiple stakeholders.  The Review Group agree.  This collaboration is recognised as a significant achievement, especially given the troubled nature of water management in recent years.  The Review Group however has questions as to whether our concerns with the CWMS will prevent it from being a viable alternative to the establishment of a Canterbury Regional Water Authority.  We believe that the best outcome is to dovetail the work undertaken to date for the CWMS with the institutional reform proposed, and to have the new CRWA responsible for adopting the appropriate process and content elements of the CWMS.  Some of the issues we believe will impact the CWMS as a stand-alone answer to Canterbury’s water problems being implemented include:

• There appears to be no RMA linkage with existing and future policy and planning documents at both regional and territorial levels.  We are unclear how it is intended that zonal committee decisions will be implemented given an existing (legally binding) policy and planning framework, including public input through the First Schedule process (plan development) and submissions on notified resource consents provided for under the RMA. 
• The Natural Resources Regional Plan, Waimakariri River Regional Plan Change 1 and Hurunui Water Conservation Order are three examples of existing (albeit proposed) RMA instruments that will potentially ‘stand in the way’ of the CWMS being implemented.  We believe the CWMS and ECan’s regulatory (RMA) framework suffers from a basic disconnect.  Having the CWMS decision-making sit outside the RMA Schedule One processes poses significant risk, especially if decisions would then be given effect to through district and regional plans, and resource consents, as some ECan staff assume.
  The CWMS contemplates removing consents as an option for more effectively allocating water (if it is deemed a better option is available for a consent holder).  This is a property rights issue and we believe would be difficult to address through legislative change without setting precedent for the rest of the country.
• There are challenges regarding the proposed 3-way partnership between Ngāi Tahu, ECan, and the Crown in the CWMS.  Specifically, Ngāi Tahu considers a 3-way relationship inappropriate when the Treaty provides for the relationship between the Crown and Ngāi Tahu.  Ngāi Tahu supports the collaborative approach of the CWMS but implementation won’t clarify the Ngāi Tahu - Crown partnership.  The CWMS is not capable of implementing Ngāi Tahu issues, therefore the RMA would remain the backup for Ngāi Tahu.
• The CWMS proposes a collaborative approach, which we believe stands a very high risk of failure once it moves toward implementation.  There are too many competing interests, with entrenched views, that could derail the process without the backup of a statutory means for decision making should collaboration be unsuccessful.  Our earlier comments regarding Waitaki District Council provisionally withholding support for the CWMS are illustrative of the challenges of collaborative decision making.
• There is a complex governance and decision making structure, with the zonal committees overlain by the Regional Committee.  It is unclear how the process of final decision making will work in practice, especially if the Regional Committee disagrees with an approach from a particular zonal committee.  We have questions around the rights of appeal given this is a document outside the RMA.  The make-up of zonal committees (and the Regional committee) is of concern to external stakeholders, as are the decision making processes (i.e. who makes decisions, and how binding are decisions given it is occurring outside the RMA).  The governance structure will not enable a whole of Region approach.  It will be difficult to get full agreement across the Region and the tension between ECan, TA’s and major stakeholders will continue.

2.3   Advantages and Disadvantages of Each Option

The Review has carefully weighed up the advantages and disadvantages of each of the options. Option 1 is the clearly favoured option because:

• The issues involved with the management of water in Canterbury are of national significance, and are enduring, complex and controversial.  Failure to resolve them will be to the detriment of both the Regions and the Nations well-being.
• As a consequence, the issues require the on-going attention of a specialist body with the required capability at all levels in the organisation -- board, executive and technical.  The creation of the CRWA provides the opportunity to build an organisation with the capability to address the issues.  We emphasise that the CRWA should incorporate appropriate aspects of existing ECan plans, and the CWMS rather than create a plan from scratch.
• The additional costs associated with the establishment of a new entity can be minimised through appropriate shared services arrangements and would be small when weighed against the potential benefits.
• Option 1 recognises that ECan has performed relatively well in respect of the discharge of functions other than water and that it should continue to be responsible for those functions.

2.4   Water-Related Recommendations

Water Recommendation 1: Establish, under its own Act of Parliament, a new entity for managing water in Canterbury, the Canterbury Regional Water Authority, together with appropriate transitional arrangements.

The new Act should:

• Recognise the national significance of water in the Region.
• Identify the purpose, role and functions of the CRWA, which should include a mix of economic development, environmental, social and cultural factors.
• Identify the structure and makeup (skills, experience etc) of an appointed Board to govern the CRWA.
• Require the creation of a strategic plan for water, and define the timing for creation of the plan.  The plan should:
  • Balance economic, environmental, social and cultural needs for water in Canterbury
  • Allow for prioritisation of specific uses in different areas (irrigation, electricity generation etc), water trading, conservation etc.
• Transfer the statutory water-related functions of ECan (consenting, monitoring, enforcement, scientific investigations etc) to the new entity.
• Recognise that there will be land – water integration issues that will require cross-agency (ECan – CRWA and CRWA - TA) interaction.
• Require RMA / LGA documents to give effect to the Plan (e.g. other (non-water related) regional plans, the Regional Policy Statement, district plans, LTCCP’s).
• Include a transition period until the new plan is in place.
• Include an on-going ongoing role in monitoring the implementation of the CRWA’s activities, including evaluating the effectiveness of implementation of its strategic plan. 
• Be funded from the sources that currently funds ECan (including the rating base and user charges). The Government should consider whether there is any need for central funding for any part of the process during the transition period. 

Water Recommendation 2: Replace ECan with a Commission to manage the organisational change. 

We also recommend a separate statute be passed as a matter of urgency to replace the Council with a Commission.  The primary function of the Commission would be to oversee the separation of functions and funding associated with the management of freshwater from ECan to the CRWA.  This will require a Commission with considerable change management expertise.  Pending the establishment of CRWA, the Commission would also be charged with progressing planning associated with the management of freshwater.

Water Recommendation 3: Transitional arrangements to provide an operative framework in the short term. 

The most time-efficient transitional arrangement would be for the Minister for the Environment to require ECan under section 25A of the RMA to produce a plan within a defined period.  This would require selection of specific sections pertaining to water allocation and quality that are the highest priority and development of an urgent work programme to sections of the NRRP through the First Schedule process as quickly as possible.