The term “three waters’’ refers to drinking water, waste water and storm water.

This is a term used within government and local government and includes the regulation, ownership and governance of assets, how they are managed, and how these services are delivered. 

Three waters across New Zealand are under strain.

An outbreak of gastroenteritis in Havelock North in August 2016, resulted in four associated deaths and an estimated 5000 people getting sick. The subsequent Government Inquiry into Havelock North Drinking Water identified 51 recommendations to address failings in the delivery, compliance, monitoring and enforcement of drinking water in New Zealand.

At the same time, the 'Three Waters Review' commissioned by the Government in mid-2017 found similar issues across the drinking water, wastewater and storm water systems. This Review also raised broader questions about the effectiveness of the currently regulations for the three waters, and the capability and sustainability of water service providers.

This has convinced the Government there is a need to change how we deliver three waters in NZ. 

All New Zealanders deserve safe, reliable and affordable water services that support good health and sustainable environmental outcomes.

But, the government believe that Aotearoa’s drinking water, wastewater and stormwater—our three waters—networks are facing a crisis and will continue to do so without big changes.

The government have identified the following issues across NZ:

• There are risks to human health and the environment in parts of the country.
• There is evidence of inadequate levels of central and local government compliance, monitoring and enforcement in some places.
• There are capacity and capability issues relating to asset management and governance of water infrastructure and/or services.
• There are funding and affordability challenges in some areas – driven by a range of factors, including
  • community expectations/aspirations and regulatory requirements relating to water quality, treatment and management
  • a need to replace aging infrastructure
  • increasing demand for water infrastructure in high-growth areas
  • declining numbers of ratepayers in areas with falling populations
  • high seasonal demand on water services due to tourism
  • providing additional affordable housing and development capacity
  • protecting freshwater and marine environments
  • shoring up three waters systems against climate change and natural hazards
  • delivering regional economic growth

The Government has looked into the reforms undertaken in Australia and Scotland to see what could be possible in New Zealand.

Scotland managed to reduce operating costs by 40% while increasing investment, service levels, environmental performance, customer and employee satisfaction. This was achieved by operating at scale (creating larger entities, with enough drinking water connections allocated to gain economies of scale).

While there are differences between countries, the government believes we could achieve similar results in New Zealand by creating four entities to manage 3 waters. These were identified based on scale and population size -

Entity 1 - Northland and Auckland

Entity 2 - upper central North Island, Waikato, Bay of Plenty and Taranaki

Entity 3 - east coast and lower central North Island, Wellington and top of the South Island

Entity 4 - rest of the South Island

Government has signalled that the new entities will officially begin operating from 1 July 2024. Local authorities will remain responsible for these services until then (with details of any transition period still to be confirmed). 

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

The Government believes communities will retain an influence on three waters assets and services through their council and through other consumer and community interest forums. (Consumer protection measures are being developed.)

A Regional Representative Group made up of local authority members and mana whenua would set expectations for the entity and select an independent panel to appoint the entity board. 

These board members would govern the entity and appoint a Chief Executive who would manage the staff and operations.

No. In fact, further safeguards against future privatisation are being developed, making it more difficult to privatise than it is now. Continued public ownership of three waters services and infrastructure is a bottom line for the Government. Legislation will be developed specifying that the Councils within each water services entity would be the owners of the entity, with any future proposal for privatisation requiring 75 per cent of votes in favour in a public referendum.

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 proposed new entities would not return a dividend or any other financial incentive to their owners, making them very unattractive to future private buyers.

This would create a new and pointless cost for households. Transferring the assets to the new entities means the Councils still collectively own them, and the communities that paid for them would still benefit from those assets. Charging the new entities for them would mean they need to recover the costs from their consumers - which would mean communities being asked to pay again for assets they already own.

Transferring the three waters assets will give the new entities equity, which will enable cost-effective borrowing so they can continue to invest in improving the infrastructure.

While there would be no pay out to councils on the handover of their three waters assets, all associated debt would be transferred with the assets (e.g. while the new entities may own the assets, they will also take on the outstanding debt for those assets)

Rural and small suppliers will have three years from the enactment of the Water Services Bill to carry out an assessment and put measures in place to ensure safe drinking water.

Depending on the number of locations supplied, the changes could be as simple as putting a UV filter on their water system or adding chlorine before water reaches the taps.

A key building block of the reform will be a partnership with tangata whenua, in accordance with the principles of the Treaty of Waitangi.

The reform is also aimed at delivering the outcomes of Te Mana o te Wai, a set of principles co-designed with iwi/Māori to lift the water quality of our streams, rivers and lakes. 

A partnership brings the opportunity to incorporate the value of mātauranga Māori (Māori knowledge) alongside western systems to facilitate the best outcomes for New Zealand communities. The reform provides an opportunity to start this process side-by-side.

We recognise and support the need for iwi/Māori to work alongside council to ensure that any reform doesn’t adversely impact existing rights and interests.

Public consultation will occur at a national level rather than local level.

The Water Services Entities Bill sets out how the Government plans to deliver drinking water, waste water and storm water and was introduced to Parliament in mid 2022. The public can make submissions on this and other related legisation via the select committee process.

Once set up 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.

The Government announced on 27 October 2021 that they will be mandating changes to the way drinking water, waste water and storm water are delivered in communities across New Zealand.

We have since joined with other like-minded Councils to oppose the current Three Waters reform because we believe there's a better way to achieve the same outcomes. He hapori mo te Manapori / Communities 4 Local Democracy is a new local government action group committed to working with central government to ensure all New Zealanders have access to safe drinking water and that local communities continue to have a say on the use of assets purchased on their behalf using ratepayer funds.