Three Waters Reform Programme

The Government is reviewing how to improve the regulation and supply arrangements of drinking water, wastewater and stormwater (three waters) to better support New Zealand’s prosperity, health, safety and environment. Most three waters assets and services, but not all, are owned and delivered by local councils.

The Three Waters Review is a cross-government initiative led by the Minister of Local Government. Other involved agencies and portfolios include: Health, Environment, Finance, Business Innovation and Employment, Commerce and Consumer Affairs, Primary Industries, Climate Change, Infrastructure, Civil Defence and Emergency Management, Housing and Urban Development, Transport, Conservation, and Rural Communities.

When did this begin?

The Review, beginning in mid-2017, ran in parallel to the latter stages of the Government Inquiry into Havelock North Drinking Water, which was set up following the campylobacter outbreak in 2016. Up to 5500 people were ill as a result and four people are thought to have died from associated causes.

The initial findings of the Review were consistent with many of the Havelock North Inquiry’s findings, and raised broader questions about the effectiveness of the regulatory regime for the three waters, and the capability and sustainability of water service providers.

Effective three waters services are essential for our communities

• Our health and safety: depends on safe drinking water, safe disposal of wastewater and effective stormwater drainage.
• Our prosperity: depends on adequate supply of cost effective three waters services for housing, businesses and community services.
• Our environment: depends on well managed extraction of drinking water, and careful disposal of wastewater and stormwater.

The Government’s preference is to create four water entities across New Zealand. Those entities would replace 67 separate councils (or their agencies) which currently manage their district three waters services independently.

The entity proposed for the Ashburton District would cover the Ngāi Tahu takiwa (all of the South Island excluding all or some of Nelson, Marlborough and Tasman).

Ownership of the entity would remain with all participating Councils (mandated by legislation) and there would be protection to ensure the water entities do not become privatised without a public referendum with a 75 percent threshold.

The map shows the proposed entity (entity D) that our district would be in.

Memorandum of Understanding (MoU) - AUGUST 2020

In August 2020, the Government signed a Memorandum of Understanding with all local authorities around the country, including our Council. It’s important to note this does not bind our Council to any future agreements or decisions, it simply adds us to the ongoing conversation.

As part of that conversation, Council was granted $8 million - Council added $1.4m and that has now resulted in planned work on the Ashburton Relief Sewer project being brought forward. The project will be finished by March next year and help future-proof the town’s wastewater pipelines to cope with population growth in the next decades. The Government's $8m came from the stimulus package described below.

Three waters infrastructure stimulus package - 8 JULY 2020

On 8 July 2020, the Government announced a funding package of $761 million to provide immediate post-COVID-19 stimulus to local authorities to maintain and improve three waters infrastructure, support reform of local government water services delivery arrangements, and support the operation of Taumata Arowai. Information about this work, including updates, media releases and background documents, is available on the Central/Local Government Three Waters Reform Programme webpage.

Three waters regulatory reform - 27 JULY 2020

On 27 July 2020, the Water Services Bill was introduced to Parliament (an announcement by the Minister of Local Government is available here: New water services bill for safe drinking water 28 July 2020). The Bill contains all of the details of the new drinking water regulatory system, and provisions relating to source water protection and Taumata Arowai’s wastewater and stormwater functions.

The Bill and its progress can be viewed on the Parliament website here: Water Services Bill

A second, complementary Bill, the Taumata Arowai – Water Services Regulator Bill, sets out Taumata Arowai’s objectives, general functions, and operating principles, and establishes Taumata Arowai as a Crown agent.

Three waters mandate - 27 OCOTBER 2021

On 27 October 2021, Minister of Local Government Nanaia Mahuta announced that Government's proposed Three Waters Reform Programme will become mandatory effective 1 July 2024, creating a new four-entity structure that would manage water services across New Zealand.

The multi-region water entities would remain owned by participating local councils in their area (see image below), protected against privatisation by a provision requiring a referendum with a 75% majority voting in favour. They would be governed and managed by people appointed by an independent panel, itself appointed by a representative group of local council and mana whenua representatives.

Consultation with communities would be required when developing strategy, investment plans and proposed prices or charges, similar to what councils do now. The entity’s financial and operational autonomy would allow them to borrow, free from local government debt restrictions.

But the water entities would not pay their owners any dividends.

And an economic regulator would be established to ensure good financial performance by the four water monopolies. That would sit alongside Taumata Arowai, the new drinking water regulator, that was created to take over from the current drinking water regulator, the Ministry of Health.

Councils' water assets, and accompanying debt, would be transferred to the new entities.

Ashburton District would become part of an entity that covers most of the South Island. A regional representative group of 12 (made up of six local authority and six mana whenua appointees) would appoint an independent selection panel that in turn appoints board members for each entity.

According to figures provided by the company commissioned by the Government to look at reform, Ashburton ratepayers pay an average of $610 for water and wastewater services. If we continue to deliver those services, the expectation is that the figure in 30 years’ time will be around $8690 per serviced property, in today's dollars. If we have an entity which covers most of the South Island, that figure will instead be $1640.

Does this sound right? Council has serious reservations about these numbers. They are based on a number of assumptions that are completely different to the reality of how Council assesses the assets' condition, renewal programme and management regime. They are based on a formula driven by population, population density and area rather than the actual reality of our infrastructure.

As a Council we have heavily invested in our water infrastructure and security on behalf of our community and with our environment in mind.

Our water-related assets and services are a big part of Council business and over the past 20 years we’ve invested millions in high quality water infrastructure and planned work programme to keep it that way.

We have a 30-year strategy to fund these assets for our community and around $103 million is allocated in the Long Term Plan to invest in drinking water safety upgrades, improve our wastewater treatment and stormwater infrastructure and ensure a strong renewal programme.