Three Waters Reform

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 1^st 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 4^th 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 1^st 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 1^st April 2022 Central Government announced that the first $500million of that funding package was being made available for local councils from 1^st 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 30^th 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 30^th 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.

• 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.

Click here for map of proposed boundaries and information on proposed multi-regional entities