Three Waters – Big Changes Proposed for Water Management in NZ

While the management of New Zealand’s water has previously been the domain of 67 local councils, full-scale water reform by the Government is proposed to consolidate this into just four powerful entities. Central Government considers this is necessary to ensure all Kiwis have access to safe, reliable and affordable water – local authorities are not so sure.

The three water networks – drinking water, wastewater and stormwater – are essential to our communities. However, our current systems around the country face challenges with the growing population, climate change and stringent environmental obligations. The Government estimates that half of Aotearoa’s sewage systems need to be upgraded in the next decade and wants to ensure that public health hazards like the 2016 Havelock North campylobacter outbreak are not repeated. Over 8000 people were infected by the 2016 contamination – making thousands sick, leaving some permanently disabled and causing four deaths.

It is estimated by the Government that up to $110 billion could be needed within the next 30-40 years to maintain and upgrade the systems. The Government believes it simply is not feasible for Councils to shoulder this burden independently.

What is the Government’s Proposal?
It is proposed that four regional bodies will be set up to oversee Council owned water infrastructure. The boundaries of the four entities will be multi-regional and grouped according to population and physical size:

• Entity A: Auckland and Northland
• Entity B: Central North Island (stretching from the Bay of Plenty to Taranaki)
• Entity C: East Coast of the North Island and the top of the South Island (including Tasman, Nelson and Marlborough)
• Entity D: The remainder of the South Island

The entities will be created by legislation setting out a range of objectives, powers, functions and responsibilities, which will have the goal of providing safe, affordable and efficient water services to New Zealanders. The entities will be able to access long term financing agreements that would not be possible for debt-constrained councils, but will remain publicly owned.

The new system also proposes to involve iwi and Māori at a level not seen previously. Local authorities and mana whenua are proposed to have 50/50 joint oversight over the entities through the establishment of regional representative groups and the legislation, with the goal to give effect to both the Treaty of Waitangi and the freshwater principles in Te Mana o te Wai.

One of the concerns that the Government seeks to address through this model is managing the cost of upgrades to the infrastructure. It is intended that economic regulation will ensure that water rates are manageable, and shared evenly across the country.

Local Government Concerns

This ‘even spread’ of water infrastructure cost is the source of much of the local government concern with the proposal. While most councils agree that investment is needed, some councils have invested diligently in to their water systems and fear that the reforms will result in a loss of these assets, without proper compensation, while councils with higher water infrastructure needs stand to benefit. Further, those districts who need the most significant upgrades will be subsidised by rates paid by other districts who may already have high rates bills that have funded the infrastructure in their district. On top of this, the reform is intended to take an ‘all in’ approach meaning it will be compulsory, and individual councils will not have the option to opt out.

The Government has responded to these concerns by announcing a ‘no worse off’ package, intending to cover any short-term losses incurred by local authorities during the reform process, with $500 million allocated to that package.

However, council and public opposition to the proposals continue to gain traction and publicity. Auckland Council has launched a public consultation process on the proposal, with findings to be provided to the Government in March. Three District councils (Whangārei, Timaru and Waimakariri) have filed an application in the High Court seeking a declaration of what ‘ownership’ means in the context of three waters infrastructure. If that definition is found to equate to a conventional form of ownership, it would potentially require the Government to compensate councils for the infrastructure when transferred. Meanwhile, thirty mayors and councils around New Zealand have signed a letter to the Prime Minister seeking a meeting over the mandated three waters restructure.

It appears that these actions may be having the desired effect of delaying the Government’s plans and providing more time to consider the proposal and iron out some of the many issues raised by local government and others. The Government’s aim is to have the four water service entities operational by mid-2024, and the bill giving effect to the reform was set to be introduced to Parliament by the end of the year. However, the Government announced last Thursday that it was delaying the introduction of the bill to allow the working group formed to advise on how the four water entities governance would work, and to give feedback on an exposure draft of the bill. That exposure draft is also intended to be released to the public in due course.

If you have any queries regarding the three waters reform do not hesitate to contact us.