Three Waters Reform

Overview

In July 2020, the Government launched the Three Waters Reform Programme – a major, intergenerational project.  The three-year programme is aimed at ensuring New Zealand’s three waters, our drinking water, wastewater and stormwater – infrastructure and services are planned, maintained and delivered so that these networks are affordable and fit for purpose.

What’s the problem?

Councils currently own and operate three waters services, which cover drinking water, wastewater and stormwater. More investment is needed in water infrastructure to meet the environmental and public health aspirations of our communities. The Government has estimated that dealing with years of systemic failure will require an investment of between $120 to $185b over the next 30 years.

This scale of investment would be extremely challenging for councils to fund on their own. Climate change will only exacerbate this challenge.

3 Water Reform icon - Significant investment needed.

  Significant investment needed in water infrastructure

3 Waters Reform icon - Councils can't carry future costs.

  Councils can’t carry future cost

3 Waters Reform icon - The current system.

 

The current system lacks:

  • Economic regulation
  • Consistent data collection
  • Enforcement of standards

Government’s proposed solution

The Government has told us it wants to deliver water services more cost effectively. It also wants to deliver them in an equitable and sustainable way.

It proposes changing the whole system:

3 Waters Reform icon - A new water regulator.

  A new water regulator called Taumata Arowai will be operational from November 2021

3 Water Reform icon - A small number of large specialist water service entities.

  A smaller number of large, specialist water service entities

3 Waters Reform icon - Water services are delivered.

 

Water services are delivered on a significantly larger scale

3 Waters Reform icon - Water entities remain.

  Water entities remain publicly owned

3 Waters Reform icon - Water service providers meet standards.

  Water services providers meet standards or face significant penalties for non-compliance

3 Waters Reform - Entities have strong strategic links.

  Entities have strong strategic links to councils and mana whenua

Impact on councils

The Government’s proposal would mean significant change to the delivery of water services. For a start, councils would shift their focus from delivery to kaitiakitanga (guardianship) of water services. Requirements on local authorities to ensure safe drinking water for private and community supplies would transfer to new entities.

For most councils, removing water-related debt from their balance sheets would improve their financial position. It would potentially create more opportunity to focus on delivering wellbeing to their communities.

3 Waters Reform icon - Three waters kaitiakitanga.

  Three waters kaitiakitanga (guardianship) focus

3 Water Reform - Water related debt.

  Water-related debt removed from balance sheet

3 Waters Reform icon - Increased capacity.

  Increased capacity to borrow to fund community services

Impact on the community

The Government has been working with Councils to collate the necessary data to build a clear understanding of three water services in their districts and forecast out what the changes will mean for their communities.

In the Horowhenua District the average household cost per annum for the Financial Year 2021 (FY2021) is $1,150.  It is anticipated that by 2051 without reform this will grow to $2,950 and with reform to $1,260. There are also positive implications for GDP and employment growth in the district.

For more information about what these changes might mean for your household’s three waters service costs visit the Te Tari Taiwhenua | Internal Affairs local dashboard (Note: To show the Horowhenua District Council dashboard, please select the '>' arrow shown at the bottom of the screen until you reach page 5, then at the top of the screen select the down arrow to scroll through and select 'Horowhenua District Council'. The same process can be followed for page 6.).

What’s happening next?

Council’s across New Zealand are working to understand the information released on the nature of the challenges facing the sector, the case for change, and the proposed package of reforms, including the recently announced support package, and how these may affect them and their communities.

We’ll be identifying issues of local concern and provide feedback to Local Government New Zealand (LGNZ) on what these are and suggestions for how the proposal could be strengthened.

We'll keep you updated as more information becomes available. 

Government information

For an overview of the Three Waters reform programme visit the Te Tari Taiwhenua | Internal Affairs website

Government support package

In July 2021, Government announced a $2.5 billion support package to assist the sector through the transition to the new water services delivery system and to position the sector for the future.

There are two broad components to this support package:

  • $2 billion of funding to invest in the future of local government and community wellbeing, while also meeting priorities for government investment (the “better off” component).
    $500 million will be released from 1 July 2022 and the remainder ($1.5 billion) will be available from 1 July 2024. For the Horowhenua District this equates to $19,945,132. Council will only be eligible for this if we decide to opt-in.
  • $500 million to ensure that no local authority is financially worse off as a direct result of the reform (the “no worse off” component). This includes an up to $250 million provision to support councils to meet the unavoidable costs of stranded overheads associated with the transfer of water assets, liabilities and revenues. The remainder of the no worse off component will be used to address adverse impacts on the financial sustainability of territorial authorities.

For more information view the Te Tari Taiwhenua | Internal Affairs website - Three Waters Reform Programme