Three Waters Reform
About Three Waters reform
The Government has mandated changes to the way drinking water, waste water and storm water are delivered in our communities. With major challenges ahead for the three water services (collectively known as Three Waters), the changes aim to ensure all New Zealanders have access to safe, reliable and affordable water services, while taking better care of our environment.
During August and September 2021, Councils reviewed and assessed information on the Government’s proposal. The model would see the responsibility for Matamata Piako district’s three waters services transferred to a regional entity comprising 22 councils from the Waikato, Bay of Plenty, Taranaki and top of the central North Island. The entity would remain in public ownership.
At the end of September 2021 we provided feedback to the Government outlining our concerns with the model and indicated that we would not support the proposal in its current form.
After considering the feedback from all local authorities, Local Government Minister Nanaia Mahuta confirmed on 27 October 2021 that the Government will push ahead with its preferred Three Waters reform plan - mandating changes to water services nationally. This decision is counter to the Government’s earlier promise to give Councils the choice of opting in or out of the reform in December.
*This page will be updated as more information about the Government's reform is received.
Frequently Asked Questions
The term “three waters’’ refers to drinking water, waste water and storm water.
This is a term used within government and local government and includes the regulation, ownership and governance of assets, how they are managed, and how these services are delivered.
Three waters across New Zealand are under strain.
An outbreak of gastroenteritis in Havelock North in August 2016, resulted in four associated deaths and an estimated 5000 people getting sick. The subsequent Government Inquiry into Havelock North Drinking Water identified 51 recommendations to address failings in the delivery, compliance, monitoring and enforcement of drinking water in New Zealand.
At the same time, the 'Three Waters Review' commissioned by the Government in mid-2017 found similar issues across the drinking water, wastewater and storm water systems. This Review also raised broader questions about the effectiveness of the currently regulations for the three waters, and the capability and sustainability of water service providers.
This has convinced the Government there is a need to change how we deliver three waters in NZ.
All New Zealanders deserve safe, reliable and affordable water services that support good health and sustainable environmental outcomes.
But, the government believe that Aotearoa’s drinking water, wastewater and stormwater—our three waters—networks are facing a crisis and will continue to do so without big changes.
The government have identified the following issues across NZ:
- There are risks to human health and the environment in parts of the country.
- There is evidence of inadequate levels of central and local government compliance, monitoring and enforcement in some places.
- There are capacity and capability issues relating to asset management and governance of water infrastructure and/or services.
- There are funding and affordability challenges in some areas – driven by a range of factors, including
- community expectations/aspirations and regulatory requirements relating to water quality, treatment and management
- a need to replace aging infrastructure
- increasing demand for water infrastructure in high-growth areas
- declining numbers of ratepayers in areas with falling populations
- high seasonal demand on water services due to tourism
- providing additional affordable housing and development capacity
- protecting freshwater and marine environments
- shoring up three waters systems against climate change and natural hazards
- delivering regional economic growth
The Government has looked into the reforms undertaken in Australia and Scotland to see what could be possible in New Zealand.
Scotland managed to reduce operating costs by 40% while increasing investment, service levels, environmental performance, customer and employee satisfaction. This was achieved by operating at scale (creating larger entities, with enough drinking water connections allocated to gain economies of scale).
While there are differences between countries, the government believes we could achieve similar results in New Zealand by creating four entities to manage 3 waters. These were identified based on scale and population size -
Entity 1 - Northland and Auckland
Entity 2 - upper central North Island, Waikato, Bay of Plenty and Taranaki
Entity 3 - east coast and lower central North Island, Wellington and top of the South Island
Entity 4 - rest of the South Island
Government has signalled that the new entities will officially begin operating from 1 July 2024. Local authorities will remain responsible for these services until then (with details of any transition period still to be confirmed).
Under the current government proposal, Councils would be the 'owners' of the entity, on behalf of their communities – this would be a 'no shareholding' ownership with no financial recognition of ownership.
A Regional Representative Group made up of local authority members and mana whenua would set expectations for the entity and select an independent panel to appoint the entity board.
These board members would govern the entity and appoint a CE who would manage the staff and operations.
No. In fact, further safeguards against future privatisation are being developed, making it more difficult to privatise than it is now. Continued public ownership of three waters services and infrastructure is a bottom line for the Government. Legislation will be developed specifying that the Councils within each water services entity would be the owners of the entity, with any future proposal for privatisation requiring 75 per cent of votes in favour in a public referendum.
Additionally, any surpluses would have to be reinvested in water services to address significant infrastructure deficits, making the entities an unattractive proposition for investors. The proposed new entities would not return a dividend or any other financial incentive to their owners, making them very unattractive to future private buyers.
This would create a new and pointless cost for households. Transferring the assets to the new entities means the Councils still collectively own them, and the communities that paid for them would still benefit from those assets. Charging the new entities for them would mean they need to recover the costs from their consumers - which would mean communities being asked to pay again for assets they already own.
Transferring the three waters assets will give the new entities equity, which will enable cost-effective borrowing so they can continue to invest in improving the infrastructure.
While there would be no pay out to councils on the handover of their three waters assets, all associated debt would be transferred with the assets (e.g. while the new entities may own the assets, they will also take on the outstanding debt for those assets)
Rural and small suppliers will have three years from the enactment of the Water Services Bill to carry out an assessment and put measures in place to ensure safe drinking water.
Depending on the number of locations supplied, the changes could be as simple as putting a UV filter on their water system or adding chlorine before water reaches the taps.
A key building block of the reform will be a partnership with tangata whenua, in accordance with the principles of the Treaty of Waitangi.
The reform is also aimed at delivering the outcomes of Te Mana o te Wai, a set of principles co-designed with iwi/Māori to lift the water quality of our streams, rivers and lakes.
A partnership brings the opportunity to incorporate the value of mātauranga Māori (Māori knowledge) alongside western systems to facilitate the best outcomes for New Zealand communities. The reform provides an opportunity to start this process side-by-side.
We recognise and support the need for iwi/Māori to work alongside council to ensure that any reform doesn’t adversely impact existing rights and interests.
Public consultation will occur at a national rather than local level.
The Water Services Entities Bill will set out how the Government plans to deliver drinking water, waste water and storm water and will be introduced to Parliament in December 2021. There will be several opportunities for public consultation over the coming years including public submissions via the select committee process starting in early 2022.
Once set up the water entities will have to directly consult with their customers, businesses, and residents on their strategic direction, investment priorities, their prices and charges to a level that will likely exceed the current requirements on local government.
The Government announced on 27 October 2021 that they will be mandating changes to the way drinking water, waste water and storm water are delivered in communities across New Zealand.
We are awaiting further information from government about the process from here and what involvement we can have to make sure we get the best outcome for our community.
Project Timeline (tentative guide)
Govt. to establish representation and accountability working group
End October 2021
National Transition Unit engagement with local authorities begins
Water Services Entities Bill (Bill 1) introduced to Parliament
$17.2 million better-off funding available for MPDC
Water Services Entities Bill (Bill 2) introduced
Economic regulation legislation introduced to Parliament
Report back of Water Services Entity Bill
Economic regulation legislation enacted
New entities takes responsibility for delivering water services
From the day of transition* (1 July 2024) our total income would reduce but there would also be a reduction in outgoings. We would continue to break even, and therefore remain viable without Three Waters in the equation.
Our ability to borrow money would increase under the reform.
*The assessment assumes we will continue to deliver on our 2021-2031 Long Term Plan (LTP).
More links will be added as new information is made available.
Water Servies Entities Bill
- Water Services Entities Bill
- Factsheet - overview
- Factsheet – governance, accountability and consumer engagement
- Factsheet – ownership and protections against privatisation
- Factsheet – transitional arrangements
- A quick overview of Three Waters Reform (June 2022) - DIA
- View the dashboard data from the review
- View the full reports released in June 2021
- Learn more about the new water services regulator Taumata Arowai
- Three Waters reform programme website
- Learn more about the Three Waters reform - DIA website
- Find out about the Water Services Act