Three Waters Reform Programme: Interaction with Rural Water Schemes

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Safer Water for Rural Communities

Foundational elements of the interaction with rural schemes

What is proposed in the reform system

Rural Water Frequently Asked Questions

Safe Water for Rural Communities

Watch and listen to Taumata Arowai Chief Executive Act Bayfield and Independent Chair of the Three Waters Steering Committee Brian Hanna discuss the interactions between rural water schemes, Taumata Arowai, and the Three Waters Reform Programme.

Read more about Rural Water Supplies and Three Waters Reform Programme: Rural water supplies – Fact Sheet – Three Waters Reform Programme [PDF, 153KB]

Video transcript  [DOCX, 52KB]

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Foundational elements of the interaction with rural schemes

The Three Waters Reforms are about ensuring all New Zealanders have access to safe, affordable three waters services that meet the expectations of communities now and into the future. We know that for some small/rural communities these services will become increasingly expensive into the future.

The three waters service delivery reform is proposing to reform council-owned drinking water, wastewater and stormwater supplies. It is not designed to reform privately owned supplies. It does not impact single household self suppliers.

However, the Government acknowledges there are a range of rural water schemes that provide a combination of drinking water and stock water to rural communities and/or supplies that have mixed ownership. Supplies of this nature exist throughout rural areas and are essential to the economy and local communities. Many were developed by central government funding in the 1970s, are funded and run by committees of farm users, and receive council expert assistance to run the supply.

As part of the October 2021 Government decisions, Cabinet agreed to establish a working group to consider the approach to transitioning rural community supplies. This group will work with officials from the Department and Taumata Arowai to support the development of policy options and advice, to inform what the future functions, duties and obligations of the new water entities should be in respect of rural community schemes.

The changing regulatory environment

Alongside the three waters service delivery reforms, the Government is progressing regulatory reform, including to the compliance, monitoring and enforcement of quality standards for three waters services. This includes the establishment of Taumata Arowai and the regulatory environment it will monitor through the Water Services Act.

The quality regulations have foundational principles that all New Zealanders deserve to have confidence in the safety of their drinking water and environmental performance of wastewater and stormwater networks, including those on rural supplies.

This means that the drinking water quality safeguards are being extended to all drinking water suppliers, including small rural suppliers. Some have raised concerns that this will place pressure on rural supplies and could lead to these schemes being stopped or altered leaving some communities without a service.

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What is proposed in the reformed system

An important principle underpinning the service delivery reforms is that councils will not be left with any residual services/obligations following the reform and transfer of their assets and expertise. This means obligations that currently sit with councils to deliver three waters services would transfer to the proposed water services entities. For example, specific obligations to make assessments of drinking water, wastewater, and sanitary services and to ensure communities have access to safe drinking water.

Where there are existing service delivery arrangements between councils and community/rural schemes, we would need to work together with all parties through the transition period to identify these and ensure the services continue in the future system with appropriate agreements in place with the new entities. For example, where private community operated services require technical assistance.

The Government proposals include setting out a series of operating principles in the legislation, to guide and inform how the water services entities deliver their objectives and functions.  These include principles of working with other suppliers and communities to ensure services are delivered that meet the needs of these communities.

In June 2021, Cabinet agreed that these operating principles would include:

  • developing and sharing capability and technical expertise – both internally, and across the wider three waters, development, control, and land-use planning sectors;
  • being innovative in the design and delivery of water services and infrastructure;
  • being open and transparent – including in relation to the calculation and setting of prices, determining levels of service, and reporting on performance;
  • partnering and engaging early and meaningfully with Māori, local government, and communities;
  • cooperating with, and supporting, other water services entities and infrastructure providers, local authorities, and the transport sector – including in relation to infrastructure planning, and development control and land-use planning processes;
  • understanding, supporting, and enabling mātauranga Māori and tikanga Māori and kaitiakitanga to be exercised – both within the entities and when engaging with iwi/Māori.

What assets would transfer – does this include rural schemes?

As above, privately owned schemes and supplies would not be transferred to the new entities. However, there are a range of rural water schemes that provide a combination of drinking water and stock water to rural communities and/or supplies that have mixed ownership. There are also a number of assets that form part of the wider system, such as natural environment assets, parks and wetlands.

The Government is proposing that only those council-owned assets necessary for the delivery of three waters services would be transferred to the new water service delivery entities.

While further work needs to be undertaken on which assets will transfer to the new entities, where an asset has a different primary use, such as a sports field that also acts as a stormwater asset in times of flood, this would remain with the council and a service agreement with the entity would be considered where appropriate.

Under current proposals, the Water Service Entities will not manage rural stock schemes, as the primary purpose is for farmers/private landowners to manage their stock.

Supporting Private/Rural Supplies into the future

The Water Services Act brings about a new regulatory approach. The Act will require all drinking water suppliers other than domestic self-suppliers to provide safe drinking water and meet New Zealand’s existing drinking water standards. This includes supplies in rural areas.

The Act includes specific obligations on councils to make assessments of drinking water, wastewater, and sanitary services operated by non-council suppliers and to ensure communities have access to safe drinking water. This includes assessing that each community in its district has access to drinking water services, and considering the implications of the assessment in relation to:

  • the territorial authority’s current and future infrastructure strategy and long-term plan;
  • the territorial authority’s district plan prepared under the Resource Management Act 1991; and
  • the territorial authority’s broader duty to improve, promote, and protect public health within its district in accordance with section 23 of the Health Act 1956.

Where a territorial authority finds a community does not have access to safe drinking water it must work with the community. Taumata Arowai and drinking water suppliers to find a solution to the problem.

With the quality regulations and introduction of Taumata Arowai, questions have been raised about where responsibilities would sit for supporting private water schemes or taking these on should they fail or need support following the reforms.

As above, should the reforms proceed as proposed, any obligations that sit with councils currently would transfer to the new entities. The Department is considering what, if any, additional arrangements might need to be put in place for the new entities to work with private schemes that require or ask for assistance.

Why are small/rural supplies being regulated now?

There has been longstanding poor compliance by small and rural supplies with drinking water standards in New Zealand. The drinking water standards in New Zealand reflect standards that are set by the World Health Organisation and remain unchanged through the quality reforms.

A Ministry of Health study found that an estimated 34,000 people each year become ill through consumption of unsafe drinking water. The Ministry of Health’s annual report on drinking water quality 2019 – 2020 reported compliance with standards as follows:

  • Supplies serving 501 – 5000 consumers – 43.8% compliance;
  • Supplies serving 101 – 500 consumers – 31.3% compliance
  • Compliance among supplies serving 100 consumers or less is unknown but is likely to be low.

Currently, under the Health Act regime, “rural and agricultural supplies” are defined as supplies used for stock water but provide drinking water to more than 25 consumers. These supplies are covered by guidelines – they do not have to meet drinking water standards.  However, most if not all of these supplies currently chlorinate their drinking water and many have additional treatment.

These supplies were always intended to meet drinking water standards when the Health Act was passed – the guidelines were an interim measure, but the work to bring them into the regime never occurred.

However, all aspects of the regulation of drinking water supplies must be tailored by Taumata Arowai according to the “scale, complexity and risk profile” of a supply. This means that new treatment options will be available to rural supplies that have not been allowed under the Health Act.

In particular, “point of entry” devices, which are UV and filter devices that treat drinking water where it enters a house, are explicitly allowed under the Water Services Act.  Devices like this are a simple, cost-effective way for small rural supplies to provide safe drinking water that meets standards.

Alongside that, the Act contains new, simple regulatory solutions.  For rural supplies, they will be able to comply with an “acceptable solution” which is a safe harbour arrangement. If a supplier complies with an acceptable solution, they will be deemed to have complied with the regime. An acceptable solution for rural and agricultural supplies has been developed specifically for these supplies, and an exposure draft is available online:  Acceptable solutions for rural supplier exposure draft

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Rural Water Frequently Asked Questions 

How will the service delivery reforms impact rural schemes?

As above, the three waters service delivery reform is proposing to reform council-owned drinking water, wastewater and stormwater supplies. It is not designed to reform privately owned supplies. It does not impact single household self suppliers.

However, the Government acknowledges there are a range of rural water schemes that provide a combination of drinking water and stock water to rural communities and/or supplies that have mixed ownership. Supplies of this nature exist throughout rural areas and are essential to the economy and local communities.

The Government’s current proposal is that only those council-owned assets necessary for the delivery of drinking water, wastewater or stormwater services would be transferred to the new water service delivery entities.

Where there are existing service delivery arrangements between councils and community/rural schemes, we would need to work together with all parties through the transition period to identify these and ensure the services continue in the future system with appropriate agreements in place with the new entities. For example, where private community operated services require technical assistance.

The Government proposals also include setting out a series of operating principles in the legislation, to guide and inform how the water services entities deliver their objectives and functions.  These include principles of working with other suppliers and communities to ensure services are delivered that meet the needs of these communities.

What does the Water Services Act do?

The Water Services Act provides a completely new approach that has been designed to overcome the existing problems with regulation of small and rural supplies.

All aspects of the regulation of drinking water supplies must be tailored according to the “scale, complexity and risk profile” of a supply, and new options will be available to small and rural supplies that have not been allowed under the Health Act.

Point of entry devices are explicitly allowed under the Water Services Act through acceptable solutions.  Devices like this are a simple, cost-effective way for small supplies to provide safe drinking water that meets standards. This is a way forward that has been received very positively by rural suppliers that have engaged with the reforms, as it means that drinking water that is used for stock or agriculture does not have to be treated to a high standard.

Other features of the Act that will be tailored to small / rural supplies are:

  • Where a supplier chooses to comply with an acceptable solution, they will not need to have a drinking water safety plan or a source water risk management plan.  This means an acceptable solution is a very simple way to comply.
  • Consumer complaints processes will not apply to small supplies – these will be targeted at publicly owned supplies.  The detail of consumer complaints processes will be set out in regulations.
  • Registration processes will be simple (filling out an online form) and it will be free to register;
  • There will be online templates and guidance specifically tailored to small / rural supplies; and
  • The regime allows persons to be “authorised” to carry out compliance work on behalf of Taumata Arowai – for example, plumbers might be authorised to install and test point of entry devices to comply with an acceptable solution.  Taumata Arowai is also working with other regulators to identify ways that compliance can be dealt with simply.

How does the Water Services Act affect rural and agricultural supplies?

The Act will require all drinking water suppliers other than domestic self-suppliers to provide safe drinking water and meet drinking water standards.  This includes supplies in rural areas.

What is the timeframe for the new regime to come into force?

The new regime will transition in over time. Drinking water suppliers that are currently registered under the Health Act will have a year to comply – this will include all public supplies and some large networked rural supplies, the significant majority of which are already treating their water.

Suppliers that are not registered under the Health Act will have:

  • until the end of year 4 following commencement of the Act to register with Taumata Arowai; and
  • until the end of year 7 following commencement to comply.

This means very small supplies will have several years to meet the standards. Taumata Arowai’s primary focus in the early stages of its existence will be ensuring larger municipal supplies meet the existing drinking water standards.  By the time small rural supplies come into the new regime, Taumata Arowai will have had time to fully develop its approach to with small suppliers.

This is a much better approach than abandoning small communities, and giving them no clear way forward to have safe drinking water.

What engagement has happened with rural suppliers to date?

There have been significant levels of engagement with the rural sector as part of the legislation development.

Department of Internal Affairs officials identified the need to ensure that the new regime is tailored to rural supplies at a very early stage in policy development – well before the Water Services Act was introduced to Parliament. The focus of the work has been on acceptable solutions, which are a simple way for suppliers to comply, along with point of entry devices, which are UV and filter devices that treat drinking water where it enters a house.

An advisory group was formed during the development of the Water Services Act and this included individuals with significant expertise in rural supply arrangements.  Alongside this, officials have worked with rural suppliers directly – this included field trips to rural supplies to understand how they operate and hear from farmers about challenges they face. During these meetings there was considerable support for an acceptable solution / point of entry approach. Many farming communities already employ point of entry devices, and said they would appreciate the certainty of knowing their arrangements were providing safe drinking water.

Taumata Arowai was formed in advance of the legislation specifically to understand the special characteristics of rural suppliers and engage with them. Taumata Arowai immediately formed a small and rural suppliers technical advisory group to work on options for rural supplier to comply with safety standards. 

This group includes suppliers and representative groups such as Federated Farmers and Irrigation NZ.  The work of the group has been very positive and constructive. An acceptable solution has been developed specifically for rural supplies as part of work with this advisory group, and an acceptable solutions for rural supplier exposure draft is available. Once the Water Services Act is enacted, public consultation on the acceptable solution is required.

What is an acceptable solution?

Acceptable solutions are part of these new arrangements. They provide a “safe harbour” for suppliers – if a supplier chooses to comply using an acceptable solution, they are deemed to have complied with their duties under the Act. A supplier that complies with an acceptable solution does not need a drinking water safety plan.

“Point of entry” devices, which are UV and filter devices that treat drinking water where it enters a house, are explicitly allowed under the Water Services Act through acceptable solutions. Devices like this are a simple, cost-effective way for small suppliers to provide safe drinking water that meets standards.

The approach is based on the Building Act, and plumbers and other tradespeople are familiar with the approach.

What is the current situation with small and rural supplies?

There has been longstanding poor compliance by small supplies with drinking water standards in NZ. The drinking water standards in NZ reflect standards that are set by the World Health Organisation, and apply in almost every country in the world.

The Ministry of Health’s annual report on drinking water quality 2019 – 2020 reported that:

  • Supplies serving 501 – 5000 consumers – 43.8% compliance;
  • Supplies serving 101 – 500 consumers – 31.3% compliance;
  • Compliance among supplies serving 100 consumers or less is unknown but is likely to be very low.

A Ministry of Health study found that an estimated 34,000 people each year become ill through consumption of unsafe drinking water.

When the existing regime under the Health Act was enacted in 2007, rural and agricultural supplies (which are supplies where at least 75% of the water goes to stock or horticulture) were always intended to come into the regime and comply with drinking water standards.  However, this was deferred indefinitely in 2012, and these supplies continue to be covered by Ministry of Health guidelines.

This is largely because detailed work was never completed by the Ministry of Health on simple, cost effective solutions such as point of entry filters that enabled drinking water to be treated at individual households.

Solutions of this nature are essential to rural/agricultural supplies. Treating water to drinking water standard that is used for stock or horticulture is both impractical and unaffordable.

What is the position under the Health Act (to be replaced by the Water Services Act)?

Under the Health Act regime, “rural and agricultural supplies” are defined as supplies used for stock water but provide drinking water to more than 25 consumers. These supplies are covered by guidelines – they do not have to meet drinking water standards. However, most if not all of these supplies currently chlorinate their drinking water and many have additional treatment.

These supplies were always intended to meet drinking water standards when the Health Act was passed – the guidelines were an interim measure, but the work to bring them into the regime never occurred.

Very small suppliers (serving less than 25 consumers) are not covered by the Health Act.

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