The Minister of Local Government, Hon Kieran McAnulty, announced changes to water services reforms on Thursday 13 April 2023.
The changes are designed to strengthen the connection between local communities and their water services provider while ensuring affordability of services for households.
Moving to 10 water services entities
The water services that are currently run by 67 councils across New Zealand will be combined into 10 publicly owned, specialised water service entities, rather than the four entities originally proposed.
The entities will be closely based around existing regions, enabling them to be better connected to the communities they serve.
The entities will be owned by local councils on behalf of the public, but will be operationally and financially independent from them.
This enables the entities to fund the significant long-term investment required in water services infrastructure.
For consumers, this means an improved quality of service and improved affordability of water services, compared with the increase in water charges likely under a continuation of the current water service delivery model.
Governance and local voice
Each water services entity will be governed by a professional board, with members appointed for their competencies and skills.
Local voice will be enhanced through the regional representative group for each entity, which provides strategic oversight and direction to the entity boards.
Under the 10-entity model, every territorial authority owner – and therefore every community – will be represented on their respective entity’s regional representative group.
There will continue to be an equal number of mana whenua and council representatives on the entity’s regional representative group.
Under te Tiriti o Waitangi/the Treaty of Waitangi, mana whenua have the right to participate in decisions that relate to water services. Iwi/Māori also have responsibilities as kaitiaki to protect Te Mana o te Wai, the health and mauri of our water.
Staged start date for water services entities from 2025
With more water services entities it will take more time to set them up.
Therefore, the 10 new entities will ‘go live’ in a staged approach, from early 2025 to 1 July 2026, rather than the original start date of 1 July 2024 for all entities.
Change to ‘better off’ funding for councils
The first $500 million of Crown-funded ‘better off’ funding for councils is unaffected by the decision and will continue as planned.
The Government has decided not to move ahead with the $1.5 billion second phase/tranche of better off funding for councils to ensure the water services entities are able to operate sustainability.
There have been mixed views on the proposed better off funding package, including strong views from some local authorities that this funding should be made available for investment into water infrastructure rather than for council investment more generally.
With smaller entities, it is important to ensure their balance sheets are not over-burdened by avoiding placing any more debt on them than is necessary.
Increasing the number of entities will have increased establishment costs for the entities. If water services entities are required to bear these increased costs, they will find it more challenging to raise borrowing to increase rates of investment in water infrastructure.
Given the above, the second $1.5 billion tranche of ‘better off’ funding can no longer be justified.
The $500 million ‘no worse off’ funding package for councils will remain in place, which will ensure that no council is left worse off as a result of the costs and financial impacts of the transition process.
Implementing the changes
Legislation will be required to give effect to the Government’s changes to water services reforms.
The Government intends to introduce and pass legislation to allow for these changes before this year’s election. This will be subject to the Parliamentary timetable and processes, and include the opportunity for public feedback.
The changes do not have any significant impacts on the water services legislation that is currently before Parliament.
The Water Services Legislation Bill and the Water Services Economic Efficiency and Consumer Protection Bill will continue on their current timetable.
Feedback provided on these Bills is being considered by the Finance and Expenditure Committee and any changes in response to feedback will be progressed through the select committee process.
The Finance and Expenditure Committee is due to report back on 8 June 2023.
Find out more:
Our Council’s action on water reforms
We are one of 33 Councils who have signed up as a member of “Communities 4 Local Democracy, He hapori mo te Manapori”.
This is a local Government
action group that was formed to respond to communities’ serious concerns about the Government’s mandated Three Waters Reform model and the implications of this proposed legislation. “Communities 4 Local Democracy” says it’s committed to working with Central Government
so all New Zealanders have access to safe drinking water and that all communities continue to have a say on the use of assets purchased on their behalf, using ratepayers' funds.
This decision was made at a special Council meeting on 6 April 2022, as part of our position on the government’s Three Water Reforms. The resolution was five passed five votes to four.
Becoming a member of this action group is non-binding and our Council can opt to withdraw as a member anytime.
Currently there are 32 other Councils affiliated.
You can read the full report here.
Meanwhile, the Working Group on Representation, Governance and Accountability of the new Water Services Entities reported back to the Minister for Local Government with 47 recommendations, which you can read here.
The Government
has signaled its bottom lines are:
- the entities remain in public ownership,
- the entities have balance sheet separation from their local authority owners,
- good governance,
- and that any new model should protect/promote iwi/Māori rights and interest.
In February 2023, our Council put in submissions to the:
The reforms had initially been progressed through a voluntary partnership-based approach, and in 2020, our Council agreed to opt into the early stages of the reform package. This did not commit our Council to further reform or to transfer of assets.
Our Councillors have since been listening closely to our communities, and the very clear message they’re getting is that we must hold the line on our water infrastructure staying in our local ownership.
Our Council relayed our communities’ key positions through a formal feedback process in October 2020. Shortly afterward, the Government
announced the reforms would be forced through.
Our Council continues to listen to community opinion and input on the next stage of reform, in order to advocate strongly on behalf of our communities, and to ensure we retain whatever local powers are possible.
Through the next stage of the reform programme, our Council intends to fight for:
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Water and water-related infrastructure assets to remain in local ownership
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Local voices to have a place in planning and service delivery
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Assessments about our district to be made on rateable household property numbers, rather than usually resident population
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Local determination of the entity boundary that is most appropriate for our district, based on community feedback
Our Council signed up to the first phase in August 2020, which came at no commitment to opt in or out to further phases and has allowed our Council to be part of the discussions regarding this reform. It also allowed our Council to receive nearly $5M in funding, which has been allocated to the Whitianga Water Meter Project. This does not constitute our Council's support of the reform proposals.
If you have questions regarding this reform, feel free to contact our Council at threewaters@tcdc.govt.nz.
At the Local Government
NZ (LGNZ) Conference in mid-July 2021, the Government
announced a $2.5 billion package for Councils as part of its Three Waters Reform.
The package has three financial components:
- Support for local Government
to invest in communities’ wellbeing. This part of the investment totals $2 billion, with $500 million being available from 1 July 2022. It will be allocated between Councils, according to a nationally consistent formula, reflecting population (75 per cent), deprivation (20 per cent) and land area (5 per cent).
- Targeted support to ensure no Councils are financially worse off as a result of transferring their three waters assets. This is designed to protect Councils from any negative financial consequences of the asset transfer.
- Cover of reasonable transition costs. This is intended to make sure Councils' service delivery (including water services) during the transition, isn’t compromised by the work needed to make the transition happen. It is also noted that staff who work primarily on water will be guaranteed a role at the new water service entities
Where you can find more information on the reform
You can see the overview of the programme here.
You can also read more information on the reform programme on the DIA and LGNZ websites.