Three Waters Reform
Some frequently asked questions
Three waters is a term used to describe the management of storm water, waste water and drinking water infrastructure.
Central government has been embarking on a programme of three waters reform for the last few years. There are two main parts to the reforms:
Regulation
The first is about updating regulations and standards and establishing a regulatory oversight body to monitor and enforce the standards. Taumata Arowai was established from 1st March 2022 and took over responsibility from the Ministry of Health for enforcing drinking water standards and ensuring compliance by all service providers. There is an initial focus on larger public water supplies (namely local authorities), but the intention of Taumata Arowai is that all water schemes, whether public or private, are required to demonstrate compliance with the drinking water standards if there are two or more domestic dwelling connections to the supply.
Service Delivery
The second is about significantly changing the way that water services and infrastructure is delivered across New Zealand. Currently most of these services in New Zealand are delivered by 67 local councils and are paid for by rates. Government is proposing that responsibility for providing these services is removed from local councils and transferred to 4 large multi-regional entities. At the start of the process local authorities were assured that this would be a democratic process and that each local authority would have the right to choose to join the new entity or not.
In August 2021 we sought feedback from our community on the second part of the proposed reforms and had an overwhelming negative response. This helped inform our feedback to central government in September 2021. Our summary report to Council which includes all of the feedback from the community can be found in the 29th September Council Agenda p26
Kaikōura District Council remains opposed to aspects of the proposed three waters service delivery reforms as they currently stand. We have been an active member of the Communities 4 Local Democracy group of 32 councils across the country representing over 1.5 million New Zealanders that have similar views. This group has provided feedback and alternative solutions to the Minister for Local Government and also discussed concerns with all opposition parties. This included the presentation of a ten point plan to the Minister on the 4th April 2022 which provided a potential way forward that could be supported, but it was felt that this fell largely on deaf ears.
KDC has always been supportive of an entity taking a Ngāi Tahu takiwā boundary approach if a super entity is to be implemented and also co-governance arrangements with Māori. For Kaikōura District Council and our community it is really about a loss of local democracy. The Government has not been listening to the people. The current proposal has significantly reduced the ability for small communities to have a say in the future management of assets they own. The future impacts are likely to be significant for us as a small rural council and community. There’s a real danger that we will get ignored in the new multi-regional entity and our community will pay more for a lower level of service.
Despite the Minister continuing to say the national case for change is proven, we believe the local Kaikōura financial case just doesn’t add up. We cannot show that the Kaikōura community will be better off financially under the new entity model than if we continued on our own. It’s easy to make the financial case that ‘everyone’s a winner’ stack up if your base assumptions are wrong and you over estimate the level of future investment required. How can our Kaikōura three waters network worth $60m and that had substantial renewal and repair work after the earthquake require $280million of investment over the next 30years? We have asked this question of Government and to date they have been unable to answer.
In October 2021 the Minister for Local Government announced that the three waters service delivery reform process would become mandatory for all Councils effectively removing the local democracy voice.
In April 2022 the Minister for Local Government announced that the Water Entities Bill would proceed having made some minor amendments to the governance arrangements of the four multi-regional entities (based on recommendations from a working group).
This legislation will in effect force Councils to hand over control and effective ownership of their Three Waters assets to one of the four new multi-regional entities. This is despite recent tweaks made by the Government to the proposed governance model to try to address some concerns raised by councils across New Zealand (including Kaikōura District Council).
The Water Entities Bill will need to go through the parliamentary process and is anticipated to get Royal Assent in early 2023. There will be opportunities to provide submissions through that process, but ultimately the Bill cannot legally be stopped and Councils will not have a choice as to whether to join the multi-regional entities or not.
The current intention by Central Government is to have a full transition of all Three Waters responsibilities from the 67 Councils across the country by 1st July 2024.
When the idea of three waters service delivery reform was first introduced there was an initial stimulus funding package made available to all Councils across the country to assist with Three Waters network improvements. This funding was provided on a good faith basis with no commitment required from any Council to join the 3 waters reforms process at a later date. The MOU can be found in the section below.
When the idea of three waters service delivery reform was first introduced there was an initial stimulus funding package made available to all Councils across the country to assist with Three Waters network improvements. This funding was provided on a good faith basis with no commitment required from any Council to join the 3 waters reforms process at a later date. The MOU can be found in the section below.
- Seismic upgrading of Kaikōura township water supply treatment
- Water supply treatment upgrading Kincaid, East Coast, Suburban and Fernleigh
- Inflow control and infiltration of wastewater network
- Spare pumps for main and local wastewater pump stations
- Standby generator for Kaikōura township water supply treatment and site fencing
- Standby generators for mobile wastewater network
- Odour control of wastewater network
Yes, Kaikōura District Council received a total of $1.88m on a no commitment basis back in August 2020. At the point the stimulus funding was offered to us the reforms were still voluntary and all Councils across the country were assured there would be locally led democratic process to determine whether to join the proposed Three Waters multi-regional entities or not.
We have used the funding to undertake a comprehensive programme of improvement works over the last 18mths. The programme of work is due to be completed at the end of June 2022.
No, we need more information before we take that step.
In July 2021 Central Government announced a further $2.5 billion of funding for councils which did not necessarily have to be spent on Three Waters related infrastructure. In total Kaikōura District Council would be eligible for $6.2m of that funding.
On 1st April 2022 Central Government announced that the first $500million of that funding package was being made available for local councils from 1st July 2022. Kaikōura District Council would be eligible for $1.55m of that first tranche of funding.
However, the reforms landscape has significantly changed since that funding was first announced and there are significant conditions and caveats now attached to the proposed funding agreement. This currently includes that all councils cannot actively oppose the reforms and must cooperate and collaborate with the transition teams. Councils have until 30th September 2022 to submit funding proposals.
As outlined and discussed at the April Council meeting, Kaikōura District Council is currently internally identifying projects that could be put forward but is also continuing to work with the C4LD group to explore opportunities for revision of the conditions of the funding agreement that would not prevent Councils continuing to honestly express their views regarding the reforms. Ultimately a decision will need to be made before 30th September as to whether Kaikōura District Council wishes to take up the funding or not and if so, under what circumstances it might be acceptable. No decision has been made at this point.
You can keep checking this webpage which has the latest information released from both Central Government and the Communities 4 Local Democracy campaign (C4LD).
Progress updates are also provided in the Council monthly meeting papers typically in the Chief Executive’s monthly report (under matters for information) and the Council’s monthly ‘Work & Services Committee’ agenda . The agendas can be found at the following link: Monthly Council Meeting Agendas & Minutes
It appears that Central Government is committed to its current course despite significant opposition from Councils and their communities across the country. Kaikōura District Council will continue to work through the C4LD group and advocate for changes to the proposed legislation and there are some political decisions required in the not too distant future with regard to whether we access the additional funding or not. Community members that feel strongly about the reforms should continue to voice their concerns to both Kaikōura District Council (see the link on our website to also keep informed) and our local MP.
Some helpful information
- Currently most of these services in New Zealand are delivered by 67 local councils and are paid for by rates. Government is proposing that responsibility for providing these services is removed from local councils and transferred to 4 large multi-regional entities.
- Under this proposal Three Waters services in the Kaikoura District would be delivered by a new entity that covers most of the South Island (covering the Ngāi Tahu takiwā), serving around 900,000 people.
- Central government considers that such a change is required because some communities currently face very substantial challenges to renew their infrastructure, provide and maintain Three Waters services to the higher health and environmental standards that government believes people want.
- The Three Waters Reform proposal is based on a belief that having much larger organisations deliver these services will substantially improve efficiency and resilience, enabling higher standards to be consistently provided for relatively little additional cost.
- The Government’s proposed model is highly complex, novel and untested; the water companies will have potentially competing socio-economic objectives; water company management will be centralised while the operations will be dispersed; there are unproven cost efficiencies from administrative merger
- Economic regulation can improve water services and consumer welfare given the right ownership and governance structure – which is not evident in this model
- The regulatory model will not achieve its objectives due to problems with the design and accountability of the water companies – there will be challenges improving the availability of information; incentivising management and governance to optimise costs and quality of services; addressing socio-cultural outcomes; and the costs of regulation are likely to exceed the benefits
- Public ownership and governance model must be improved to enable effective economic regulation – other models could deliver direct accountability, information disclosure and benchmarking, incentive-based regulation and reduce the costs of regulation.
Update: 07 June 2022
Water Services Entity Bill Enters Parliament
On 7 June 2022 the Government introduced the Water Services Entities Bill into Parliament. This is the first of two Bills giving effect to the Government’s water services proposals. It establishes the four multi-regional entities, their purpose and objectives, and their representation and governance arrangements. The Bill also covers the accountability arrangements for the entities and other levers communities have to influence the direction of the entities. Some formative transition provisions are also included. The Bill can be downloaded here.
The second Bill is expected in September/October and will cover economic regulation, rural supplies, links to planning, the more detailed powers and the flow-on effects for other obligations (such as LTP’24).
To accompany the introduction of the Bill into Parliament, The Department of Public Affairs has also published a Three Waters Regulatory Impact Assessment and a disclosure Statement for the Bill. The disclosure statement aims to bring together in one place information to support Parliamentary and public scrutiny of the Bill.
It identifies:
- the general policy intent of the Bill and other background policy material
- some of the key quality assurance products and processes used to develop and test the content of the Bill
- the presence of certain significant powers or features in the Bill that might be of particular Parliamentary or public interest and warrant an explanation
Update: 31 May 2022
Rural Supplies Technical Working Group Final Report Published
The Rural Supplies Technical Working Group was established by the Department of Internal Affairs following an eight week engagement period with councils in 2021, where many councils asked questions about how rural supplies would interact with the new Water Service Entities. The Group was established to provide advice to the Department and Taumata Arowai on policy development related to rural drinking water supplies. Their full report is available here, FAQ's about the working party provided by the Department for Internal Affairs here, and summary presentation slides here.
Update: 02 May 2022
Kaikōura District Council Mayor Craig Mackle is disappointed with the Government’s latest 3 Waters changes, announced last week.
Last week the Government announced changes to the governance arrangements for the proposed four entity model based on a recent working group report. C4LD have described these changes as “tinkering around the edges”. Mayor Mackle agrees that the proposals are “mere tinkering and the Government has continued to force this reform through without the support of its stakeholders or their communities.” “We’re disappointed in this initial version of the legislation, but we’re committed to working to get a better model in place that works for everyone.”
Update: 19 April 2022
Communities for Local Democracy (C4LD) meetings in Wellington
On Monday 4th April Mayor Craig Mackle and CEO Will Doughty attended meetings in Wellington as part of the C4LD group that is opposed to the three waters reforms as they currently stand. Meetings were held with Minister Mahuta and separately with the co-leaders of the Green Party. Over 20 Mayors were at the meeting from around the Country. The C4LD group consists of over 30 Councils across the country representing over 1.4 million New Zealanders. As a group we outlined some of our concerns to the reforms and most importantly outlined a 10 point plan that we could see a compromise solution for the Government with the reforms going forward. Unfortunately, the Group did not feel that the Minister was open to considering alternate ways and solutions that the group proposed. Copies of the letter back from the Minister and follow up information from the C4LD group ( including the presentation to the Minister) are below. A similar presentation was provided to the Green Party Co-leaders with good engagement and awareness raising for them around a number of our concerns.
Castalia Report to C4LD-Alternative Options for Water Reform Jan 2022
Presentation to Minister of Local Government 4 April 2022
Letter to Helen Worboys 8 April 2022
Previous updates and more information
04/04/2022 Letter from Government on 'Better off' funding package, Kaikōura District Council will consider the implications before making any decisions
09/03/2022 Media Release Communities 4 Local Democracy, Predictably disappointing feedback from hamstrung working group
07/03/2022 Letter from Department of Internal Affairs, Responding to Kaikōura District Council feedback and questions
10/02/2022 Media Release Communities 4 Local Democracy, Group Offers Better Alternative for Three Waters Delivery
14/01/2022 Media Release Communities 4 Local Democracy, New Zealanders will pay more and receive less under Three Waters
22/12/2021 Memorandum of Understanding C4LD, MOU Between Partner Councils in relation to their Three Waters Campaign
16/12/2021 Media Release Kaikōura District Council, C4LD - the voice of more than a million New Zealanders
03/12/2021 Web Update Kaikōura District Council, Government announced Three Waters Reform would be mandatory for all councils
27/10/2021 Summary of Local Council Feedback on Three Waters Reform proposals
27/10/2021 Web Update Kaikōura District Council, Kaikōura District Council's response to Government media release
You can sign up to the Kaikōura District Council Newsletter to keep up to date on the Three Waters Reforms by following this link
For more information on the Communities 4 Local Democracy Campaign (C4LD) He hapori mō te Manapori and its models for better water services, visit www.communities4localdemocracy.co.nz or their Media Contact: Stephen Doran - 027 202 7784
You can also find more information on the Department of Internal Affairs and the Local Government NZ websites