Three Waters Reform

Three Waters Reform background

UPDATE: DECEMBER 2023

In December the Government agreed to repeal the previous government’s water services legislation. The Government is calling its plan for water services, Local Water Done Well.

Cabinet agreed to introduce a repeal bill that will restore council ownership and control of water infrastructure and services. The bill made the following changes:

All legislation relating to water services entities will be repealed (Water Services Entities Act 2022, Water Services Entities Amendment Act 2023, and Water Services Legislation Act 2023).

Previous legislation related to the provision of water services will be reinstated (including local government legislation).

What this means for Council

This means whilst we are waiting to understand how Local Water Done Well will impact on our service delivery and infrastructure delivery, Council is continuing on a business-as-usual basis.

Our current position within the 2021-31 Long Term Plan (LTP) will be revisited in the 2024-34 LTP to ensure will live within our financial constraints.

This may mean a lessening of infrastructure design whilst still ensuring environmental compliance or deferment of some projects.

Council will remain agile to regulatory change whilst ensuring our levels of service and public health obligations are maintained through our resource consent commitments.

Waters reform under the previous Government

In August 2016, there was a widespread outbreak of gastroenteritis in Havelock North, which saw about 5, 500 residents falling ill, 45 being hospitalized, and possibly three dying. Following this, in September 2016, the government lodged a formal Inquiry into the outbreak, finding that the campylobacter bacterium from sheep feces likely entered their aquifer, which was thought to be safe from contamination.

From mid-2017, the Government started the Three Waters Review to find ways of improving the regulation and supply arrangements of drinking water, wastewater and stormwater (three waters) to better support Aotearoa New Zealand’s prosperity, health, safety and environment.

Then, in July 2020, the Government launched the Three Waters Reform Programme: three-year programme to reform three waters service delivery arrangements. The basis for this reform was to deal with the challenges of having ageing, often non-compliant infrastructure against the cost of replacing, renewing, or upgrading our infrastructure to compliance as well as climate change and natural hazards resilience. The Government’s position is that current arrangements will not be able to address these intergenerational challenges and that transformational reform is required.

The Three Waters Reform Programme has four key outcomes:

safe, reliable drinking water
better environmental performance of wastewater and stormwater services
efficient, sustainable, resilient and accountable multi-regional water and sewage services
making it affordable for future generations

Waikato District Council is one of 67 councils currently managing the three waters service delivery for their respective districts. The Government is proposing to consolidate this into four, publicly owned, water service entities, who will have to ensure accessibility to safe and affordable water services for all New Zealanders. These entities will be called Entity A, Entity B, Entity C, and Entity D. The Government’s view is that the water service entities will be able to meet water quality standards more consistently throughout Aotearoa New Zealand and at a lower cost than the individual councils. Economic modelling done by the Government suggests that the cost to households for waters services in 2051 will be $4300 without reform, compared to $1220 with reform.

Council will continue to manage and deliver these services until 1 July 2024, when three waters transfer over to the water service entities. Waikato District Council, along with another 21 councils, will fall under the purview of Entity B.

Department of Internal Affairs Engagement period

Between 1 August 2021 – 30 September 2021, Te Tari Taiwhenua (Department of Internal Affairs), Local Government New Zealand, and Taituarā sought feedback from Council on the following:

engage with and understand the large amount of information that has been released on the nature of the challenges facing the sector, the case for change, and the proposed package of reforms, including the recently announced support package
potential impacts of the proposed Three Waters Reform on Waikato District Council, our communities, and our ratepayers
identify on local issues unique to our district and suggest ways of addressing these to the Government

Council did not formally commit to any decisions regarding the reform, citing lack of clarity on many important factors, which you can find in our submission here.

Submissions from other councils can be found here.

As a result of feedback provided by Councils, in January 2022, the Department of Internal Affairs established three independent working groups to refine the elements of the Three Waters Reform programme. These groups are:

Working group on Representation, Governance and Accountability of new Waters Services Entities
The Planning Technical Working Group
The Rural Supplies Technical Working Group

The working groups are now meeting regularly, and the public can read relevant meeting papers on the Department’s website here.

Waters reform progresses

In 28 September 2021, the Water Services Act passed legislation, establishing Taumata Arowai as Aotearoa New Zealand’s dedicated water regulator. In October 2021, Cabinet made the decision to progress with the waters reform.

Taumata Arowai

On 15 November 2021, when the Water Services Act 2021 came into effect, Taumata Arowai was established as Aotearoa New Zealand’s dedicated and independent drinking water regulator. Taumata Arowai replaces the Ministry of Health’s function as regulator. However, the Ministry will continue to work with Taumata Arowai as they continue to be responsible for drinking water policy.

Taumata Arowai will be in charge of the developing and enforcing the new Drinking Water Standards. Any water supplier will liaise directly with them. Suppliers that were registered with Ministry of Health prior to 15 November 2021 fall within the purview of the Water Services Act (2021) and are automatically transferred to Taumata Arowai’s database.

Unregistered drinking water suppliers have been allotted up to four years to register with Taumata Arowai and seven years to provide a Drinking Water Safety Plan or to comply with an Acceptable Solution as an alternative. However, suppliers intending to supply drinking water after 15 November 2021 must register with Taumata Arowai before commencing the supply.

If you are a water supplier, please head over to Taumata Arowai’s website for information on your responsibilities.

The Department of Internal Affairs, regional councils, the Ministry of Health, the Ministry for the Environment, and Taumata Arowai will still collaborate in different roles as part of the three waters delivery framework as shown below.

Water Service Entities

Waikato District Council falls under Entity B.

The structure of the Entities are as follows:

The Entities will be owned by local authorities in their boundaries on behalf the communities each local authority services through a shareholding model. The shareholding is calculated on population. Each council is given 1 share for every 50, 000 residents.

Entity B has a total of 33 shares to distribute. Waikato District Council has been allocated 2 shares based on a population of 85, 900, which will be reviewed every 5 papers to reflect population changes.

The Entities cannot financially profit from local authorities, must be operationally and financially independent of local authorities, and will borrow in their own right.

Structure of Water Service Entities

The Government has introduced the Water Services Entities Bill to implement its decisions to establish the four water service entities across Aotearoa New Zealand from July 2024.

The Water Services Entities Bill is the first in a suite of legislation to enact the three waters reforms. It 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 privatization.

The Entities will have a two-tier governance structure: a regional representative group and an operational board.

At the strategic level, regional representative groups will provide regional and local level direction and oversight, including joint monitoring of the water services entities Each regional representative group will consist of between 12 and 14 members, with half of its members appointed from mana whenua within its region, and half from territorial authorities.

Regional advisory panels may be established by the regional representative groups to provide them with advice about how to perform or exercise their duties, functions, and powers.

At the operational level, the water services entities will appoint independent, skills based, professional boards. These independent boards will run the day-to-day management of the entities and oversee the maintenance and renewal of water infrastructure. The board will consist of between 6 and 10 members who collectively have the appropriate skills to manage the infrastructure and service delivery and be directly accountable to the regional representative group.

More information about the Water Service Entities Bill, the Water Service Entities, their governance, ownership, accountability, protections against privatization, and consumer engagement responsibilities is available on Te Tari Taiwhenua (Department of Internal Affairs) website.

Water Service Entities Bill Factsheets