In support of the Three Waters Reform process, the Department of Internal Affairs has developed a high-level financial impact tool to give individual councils an indication of how the proposed transfer of water-related debt, assets and revenues may affect their financial position, credit ratings and/or financial covenants.
The Local Authority Indicative Financial Impact Tool has been developed to provide insights to local authorities with respect to:
- their financial position with the transfer of three waters assets and debt through reform;
- indicative key financial metrics and potential impacts to credit rating assessments to assess the ongoing financial sustainability of local authorities as a result of the reform; and
- the indicative support package allocation.
The tool includes three scenarios:
- The LTP scenario (the default) consists of pre-populated base inputs from local authorities’ draft/published 2021-31 Long-Term Plans (LTP); and
- Two further scenarios which offer councils the ability to input their own data and test their own assumptions.
As the model has to span a range of business, operating and accounting systems across the sector, it provides indicative analysis only and is designed to provide an initial view on the expected impacts given certain assumptions about water assets, debt and revenues. Should the reforms proceed as proposed, a thorough due diligence process will be undertaken to assess the actual assets, debt and revenues at the point of transfer on 1 July 2024.
Full details of the assumptions used and instructions on how to use the model are contained in separate tabs in the model. There is further explanatory information available in this document.
Please email the Three Waters Reform programme regarding any questions about the tool or associated matters.