Frequently Asked Questions

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What has been decided about the three waters reform?
Why is this needed?
What will this cost to fix?
How long have we known about these challenges?
What has led to this situation?
Why will these new water providers be better than the current system?
How is the Government supporting communities through these reforms?
What will be the costs to households / ratepayers?
Will communities still own the water infrastructure?
How can communities be sure these assets will not be privatised?
Will communities be able to input into the new entities?
How can communities be sure they will get a fair deal?
What will these reforms mean for iwi/Māori?
What are the new opportunities for iwi/Māori?
How will the reforms impact on Treaty settlements?
What will it mean for council water workers?
Are there other advantages to these reforms?
When will public consultation on the reforms occur?
What alternative reform options has the Government considered?
What has changed as a result of council feedback (out of the eight-week period)?
Will there be a loss of (local) control/influence over water assets/services?
Is the Government selling council / local assets?

Three Waters Reform: key questions, essential facts

What has been decided about the Three Waters Reform?

The Government will put forward legislation for New Zealand’s three water services – drinking water, wastewater and stormwater – to be managed by four new publicly owned water entities, replacing the services currently managed by 67 councils.

Why is this needed?

This reform is needed to ensure all New Zealanders can enjoy safe, affordable and sustainable drinking water, wastewater and stormwater services – now and in the future.

The signs of a system at breaking point are all around us: regular or permanent boil-water notices,  broken pipes, outdated sewage plants, environmental harm, and poor resilience to climate change. Addressing these issues is essential for the health and well-being of our communities and our environment.

We cannot risk potential repeats of the Havelock North campylobacter outbreak that made more than 5,000 residents sick and is thought to have killed four people from drinking public water supplies. An estimated 34,000 New Zealanders get sick from drinking water annually.

What will this cost to fix?

The investment needed to fix our failing systems and to build and maintain the required infrastructure in the future has been estimated at between $120 billion and $185 billion over the next 30 years. This will be beyond the reach of many communities.

How long have we known about these challenges?

For more than 20 years, successive governments have talked about New Zealand’s water infrastructure problems without fixing them, including conversations with local government. Reports from several sources in the intervening years have pointed to the need for urgent reform.

What has led to this situation?

Historical underinvestment by councils in water infrastructure, increasing public expectations, stricter water safety and environmental regulations, the need to account for growth, and building resilience to climate change and seismic events have all contributed towards these very steep affordability challenges.

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Why will these new water providers be better than the current system?

These new water providers will have the significant advantages of:

  • superior long-term financing arrangements through balance-sheet separation from debt-constrained councils;
  • spreading costs across larger areas over time;
  • operational efficiencies;
  • the ability to plan, fund and deliver more resilient and reliable water infrastructure across regions and communities;  
  • developing and maintaining workforce capability and capacity through more sustainable career pathways in the water industry into the future.

How is the Government supporting communities through these reforms?

Around  $3 billion is being provided to the local government sector to continue investing in three waters infrastructure and to support the move to these new entities. This funding includes:

  • a three waters infrastructure investment for councils of $523 million, announced in July 2020;
  • an investment of $2 billion into the future for local government and community wellbeing, consistent with the priorities of both central and local government, announced in July 2021; and
  • an allocation of up to around $500 million to ensure that no local authority is in a materially worse position financially to provide services to its community as a direct result of the reform.

In addition, a $296 million contingency package to support transition and establishment of the new water services providers was announced in Budget 2021.

This will ensure we continue to finance critical services during transition, allow local authorities to invest in their communities, and guarantees all councils will be better off as a result.

What will these reforms mean for communities?

All communities in New Zealand will benefit by receiving better quality water services while all paying less than they would without reform.

Rather than piecemeal solutions, comprehensive, system-wide reform is needed to achieve lasting and sustainable benefits for the local government sector, our communities including iwi/Māori, and the environment.

What will be the costs to households / ratepayers?

The analysis shows that without reform the cost per household could be between $1,900 and $9,000 per year over the next 30 years, depending on location. With reform, costs are projected to range between $800 and $1,640. This represents a much lower average cost per household.

Will communities still own the water infrastructure?

The Government is not confiscating, buying or selling assets, just proposing to introduce a better, safer, more cost-effective way of ensuring that our communities have good-quality water services for generations to come.

The communities that have paid for existing assets will continue to receive these services. The underground pipes are staying where they are.

Councils will collectively own the water services entities providing services for their district, on behalf of their communities.

Communities will therefore retain an influence on three waters assets and services through their council and through other consumer and community interest forums.

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How can communities be sure these assets will not be privatised?

Continued public ownership of these water services is a bottom line for the Government. Safeguards against future privatisation will be written into legislation to maintain ongoing ownership of the new entities by local authorities elected by communities. Beyond that, the Government will make communities the ultimate guardians of public ownership through a public referendum with any future proposal for privatisation requiring 75 per cent of votes in favour to carry it.

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 involvement of iwi/Māori, with councils, in the strategic oversight and direction of the entities will enhance these protections.

The new water authorities will exist to ensure safe, affordable, resilient and environmentally responsible supplies of water services for their communities rather than to turn a profit.

Will communities be able to input into the new entities?

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.

How can communities be sure they will get a fair deal?

A water watchdog in the form of an economic regulation regime will ensure that appropriate investment in these services is maintained and that water users pay fair and reasonable prices for them.

What will these reforms mean for iwi/Māori?

The reform provides a step change for iwi/Māori to participate in the delivery of three water services.  These include a range of new legislative protections, joint oversight arrangements and mechanisms to enable local expression of Te Mana o Te Wai.

What are the new opportunities for iwi/Māori?

There are several new areas of opportunity for iwi/Māori:

  • Oversight – Mana whenua will participate in the joint oversight of the new entities.  Representative interests will need to be determined by Māori for Māori through a Kaupapa Māori process. In some entity areas these processes have begun. More detail on this will be available over the coming months.
  • New entity operation – The proposed water services entities will be required to have significant cultural and local expertise. This will provide local opportunities for Māori to participate in the new delivery arrangements.
  • Te Mana o Te Wai – the reform will provide for local expression of Te Mana o Te Wai that will enable development of Mauri frameworks, application of mātauranga Māori measurement or any other expression that iwi decide is relevant to them.
  • Local opportunities – Economic analysis projects that the reforms will create 6,000 to 9,000 jobs over the next 30 years and that reforms will grow GDP by $14 billion to $23 billion over the next 30 years.  Iwi/Māori will have the ability to participate in delivery of this investment in local infrastructure.

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How will the reforms impact on Treaty settlements?

The core principle is that redress set out in Treaty settlement legislation will continue to apply and, where relevant, be explicitly provided for in the new regime.

It is expected that protection for current Treaty settlements will be within the suite of establishing legislation.

What will it mean for council water workers?

Council employees that primarily work on water services will be guaranteed a role with the new water service entities that retain key features of their current role, salary, location, leave and hours/days of work.

Economic analysis projects that the reforms will create 6,000 to 9,000 jobs over the next 30 years.

Are there other advantages to these reforms?

The analysis indicates that the reforms will grow GDP by $14 billion to $23 billion over the next 30 years.

When will public consultation on the reforms occur?

The Government has taken a decision to progress the reforms nationally. It is therefore appropriate that public consultation on these reforms occurs nationally rather than via local government.

There will be several opportunities for public consultation over the coming years as the reforms are expected to involve multiple pieces of legislation to implement. Progression of this legislation will include the opportunity for public submissions via the select committee process. We anticipate the first of these pieces of legislation to be introduced to Parliament this year.

The Ministry of Business, Innovation and Employment is also expected to release a discussion document on the economic regulatory regime and consumer protections in October 2021.

This public consultation is in addition to the Government’s ongoing work with councils, iwi and industry to refine the design features of the reforms and work through transition to, and establishment of, the new entities. 

What alternative reform options has the Government considered?

The issues facing New Zealand’s three waters system have been known about and avoided for more than two decades. Funding historical infrastructure deficits, meeting future costs associated with rising safety and environmental standards, supporting growth and building resilience to natural hazards and climate change has left councils facing urgent challenges in the provision of these services that can no longer be deferred or ignored.

The Government has been investigating potential options for addressing these for four years using the best of international and local expertise – and has robustly tested the options with oversight and guidance of the joint Central/Local Government steering committee.

This includes assessing options such as central government funding for the status quo, sector-led shared service delivery and regional models, introducing a national centralised fund similar to the NZTA-type model, and regulatory reform alone. The Water Industry Commission for Scotland also assessed 30 different aggregation scenarios ranging from two to 16 entities.

The Government have not been presented with any alternative proposals that would deliver the range of objectives and ambitions we are seeking to achieve for all New Zealanders or do so in a way that could be applied across the country without resulting in large geographic differences in service delivery outcomes and cost.

For many of parts of the country, alternatives would likely be unsustainable and unaffordable. Experiences in overseas jurisdictions also demonstrate that political compromises regarding the number of entities can lead to subsequent, costly rounds of further reform.

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What has changed as a result of council feedback (out of the eight-week period)?

The constructive feedback from councils through the 8-week engagement period has helped identify areas for refinement of the new entities – such as in the area of representation and accountability.

The Government continues to work in good faith with local government to refine the outstanding details of the reforms design, particularly when it comes to local government  and community influence and interaction with the new entities. 

Cabinet has agreed to establish three technical reference groups, similar to the Stormwater Technical Working Group, that will include, iwi and local government experts. These groups will help refine the reform proposals with regard to oversight and accountability; rural supplies; and the resource management interface.

This further work will be conducted within the government’s reform bottom lines of good governance, partnership with mana whenua, public ownership and operational and financial autonomy.

Will there be a loss of (local) control/influence over water assets/services?

Water services will remain in the ownership of the community they are serving. Continued public ownership of three waters water services and infrastructure is a bottom line for the Government.

Several protections have been built into the recommended approach to safeguard against any possible future ownership changes. These increase the protections over current arrangements. Oversight will be shared through a local Representative Group made up of local councils and mana whenua – which will set expectations for the entity and select an independent panel to appoint an entity board.

Each entity will be required to engage with communities in a meaningful and effective manner on all key documents and report on how consumer and community feedback was incorporated into decision-making.

Is the Government selling council / local assets?

The Government is not confiscating, buying or selling assets, just proposing to introduce a better, safer, more cost-effective way of ensuring that our communities have good-quality water services for generations to come.

Contact us

If you have any queries, please email: 3waterssteeringgroup@dia.govt.nz or ThreeWaters@dia.govt.nz

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