Three Waters Reform

Overview

The Government is considering how best to regulate and deliver the three waters - drinking water, wastewater and stormwater services - across New Zealand – Otherwise known as the Three Waters Reform.

Central Government’s Three Waters reform aims to significantly improve the safety, quality, resilience, accessibility, and performance of drinking water (wai), wastewater (wai para), and stormwater (wai āwhā) services in a way that is affordable for New Zealanders now and into the future.

At the moment 67 different councils, including Horowhenua, own and operate the majority of the country’s water services. However, councils face a number of challenges to deliver these in an affordable way into the future, including ageing infrastructure, growth and the impacts of climate change.

The Government’s reform is mandating that all Council’s water services be split into four larger public entities. Horowhenua would be in Entity C (Eastern-Central) with 21 other councils. This entity will have about 1 million water connections and covers the top of the South Island (Nelson and Tasman), the Greater Wellington Region, the lower/eastern half of the Horizons Region (Horowhenua, Manawatū, Palmerston North and Tararua), the Hawke’s Bay Region, the Tairāwhiti Region, and Chatham Islands.

This is a big issue for all Councils and one we are taking very seriously to ensure a good outcome for Horowhenua.

We will keep this page updated as the reform progresses, and there is extensive information on the websites of the Department of Internal Affairs’  and Local Government New Zealand

Entities map

three-waters-Reform-entities-map.jpg

Water Services Entity Bill

The Government has introduced to Parliament the first piece of legislation to make these changes – the Water Services Entities Bill. The Bill sets out the ownership, governance, accountability arrangements relating to these entities and includes essential provisions for ongoing public ownership and engagement, and safeguards against future privatisation.

The Bill also provides for transitional arrangements relating to the establishment and governance of the new entities; strategic direction, planning and reporting; employment; and the oversight powers of the Department of Internal Affairs during establishment.

The legislation ensures communities will have a say in the running of the new water organisations through council and iwi oversight, while giving them the financial and operational independence they need to get on with the job.

This bill is set to have its second and third readings in Nov/Dec 2022, after which the bill will be enacted and the entities will be sanctioned. 

 

Why reform is being considered?

  • In 2016, Havelock North's water became contaminated and many people in the township fell ill, with a number of deaths. This sparked the Government to examine the regulatory and delivery environment for "three waters" services (drinking water, wastewater and stormwater).
  • The government subsequently established Taumata Arowai, a new water services regulator, to administer and enforce a new drinking water regulatory system. Once Taumata Arowai is fully functional, it will oversee and administer an expanded and strengthened drinking water regulatory system and oversee the environmental performance of wastewater and stormwater networks.
  • The Government has also looked at the way water services are delivered across the country (around 85% of the country has drinking water delivered by Councils. The rest are on private supplies).
  • Through this process, the Government commissioned an analysis from Water Industry Commission for Scotland (WICS) which estimates New Zealand would need to invest between $120 billion to $185 billion in its three waters infrastructure over the next 30 years to meet drinking water and environmental standards and provide for future population growth.

 

The current challenge

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

 

 

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 worked 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 happened so far?

  • Last year, Horowhenua District Council (along with every other Council in the country) signed a Memorandum of Understanding (MOU), agreeing to work with the Government on water reform. That didn’t require Horowhenua District to agree to opt into the reform.
  • Thereafter, we received $4.3 million from the Central Government Three Waters Stimulus package. We allocated $520,000 of this funding to improve water, stormwater and wastewater at marae across the district, with the remainder allocated to other water related projects.
  • We, along with other councils reviewed WICS (Water Industry Commission of Scotland) data and information provided by the DIA and considered the implications for their Councils, the city and the people who live and work here. No decisions are required.
  • Central Government then confirmed they will proceed with the Water Services Entity Bill. At the same time they 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. For the Horowhenua District this equates to $19,945,132 that we will be eligible to apply for.
  • To support the early stages of the Three Waters Reform and the proposed transition, Councils have received requests for information (RFI) from the Department of Internal Affairs(DIA) National Transition Unit (NTU) and are responding accordingly.

 

What’s happening next?

We, alongside every other Council across the motu are working through information and requests for information pertaining to the Three Waters Reform transition process.

We will keep this page updated as the reform progresses and more information becomes available.

There is also extensive information on the websites of the Department of Internal Affairs’  and Local Government New Zealand

 

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

 

Communities 4 Local Democracy - He hapori mō te Manapori

As Councils around New Zealand work to understand the scale of three waters changes and plan for transition, many are questioning whether the proposed reform is doing enough to consider the communities that they have long served.

Communities 4 Local Democracy - He hapori mō te Manapori formed in response to serious concerns about the Government’s Three Waters reforms, as local councils consider the implications of the proposed legislation – in particular losing control of approximately $60 billion of community owned assets across the whole country.

Our Council has joined the call for a rethink on the path forward for Three Waters Reform and are part of the collective of 31 Councils known as Communities 4 Local Democracy.   

The collective agree that some form of change is needed and the current three waters operating model is not fit for purpose or sustainable, but have come together with a shared view that the reform is complex and that not one size fits all.

The growth our community is facing, coupled with regulatory pressure and the need to think differently about how we respond to Climate Change, means we need to step up and be prepared for three waters to be delivered in a different way. 

Horowhenua District Council are committed to working in good faith with the government on behalf of our community to ensure that the Three Waters Reform delivers infrastructure outcomes that maintain community voice, ownership and accountability.

 

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