Three Waters Reform Programme

What is the Three Waters Reform programme?

The Three Waters Reform Programme was launched by the Government in July 2020. The programme’s purpose is to consider how best to regulate and deliver the three water services – drinking water, wastewater and stormwater – across New Zealand.

Currently, 67 different councils, including South Wairarapa, own and operate the majority of the country’s water services. However, councils face a number of challenges to deliver these in an affordable way into the future, including ageing infrastructure, growth and the impacts of climate change.

The Government’s reforms propose putting all water services into four larger public entities. South Wairarapa District Council would be in entity C with 22 other councils from the top of the South Island, the Wellington region and the east coast of the North Island.

Proposed 4 public water entities – South Wairarapa in Entity C

This is a big issue for all Councils, and one this Council is taking very seriously to ensure a good outcome for our district. It is clear things cannot continue as they are, and while the Government has signalled it will press on with the reforms, legislation is not due to be introduced until mid-2022.

The changes themselves would not come into place until 2024. In the meantime, the Council will continue to deliver water services through Wellington Water, the region’s joint Council-controlled organisation. South Wairarapa, Porirua, Wellington, Hutt, Upper Hutt and Greater Wellington Councils are all owners in Wellington Water.

If you would like to share your thoughts on the reform programme – you can complete this feedback form.

If you have other questions or would like to raise specific issues about the reform programme, please email: 3waters@swdc.govt.nz

Relevant information can be found on the Department of Internal Affairs’ websiteand on the Local Government New Zealand website.

Why Three Waters was introduced

Three Waters was triggered by the fact that many parts of the country have inadequate water infrastructure which will come under increased pressure as tougher water quality standards are introduced.

The reforms were triggered by a major campylobacter contamination of Havelock North’s drinking water in 2016. The outbreak made an estimated 5,500 residents ill, hospitalised 45 people and may have been a contributing factor in three deaths. A Government inquiry found the probable cause was sheep faeces from flooded paddocks entering an aquifer near a key water bore.

It’s also estimated that 40,000 people were affected by boil water notices in 2020.

In November 2021, a new drinking water regulator Taumata Arowai came into effect with the Water Services Act 2021. The Ministry of Health remains in change of drinking water policy, but Taumata Arowai will enforce new drinking water standards which will come into effect on 1 July 2022.

These new water standards raise the game for local Council water assets. The Government estimates that without reform, households are expected to face water costs of up to $9000 per year, or, the prospect of services that fail to meet the needs of their communities.

However, some Councils have raised concerns that merging Council water assets into larger bodies will mean the ratepayers who paid for those assets will lose control over them.

Recommendations from a working party on the governance aspect of Three Waters earlier in 2022 were that Councils be given shareholdings in the water entities, in proportion to their population – a recommendation the Government has accepted.

The journey to Three Waters

2016

  • Havelock North campylobacteria outbreak affects thousands of residents

2020

  • South Wairarapa District Council and other councils around the country sign Memorandum of Understanding (MOU) agreeing to work with the Government on water reform.

2021

  • In July, the Government gives Councils data about WICS (Water Industry Commission for Scotland) water reforms along with other information from the Department of Internal Affairs. Councils were asked for their feedback by October 1. No decisions were required.
  • Councils are asked considers the model holistically in terms of service, finance and funding, economic development and growth, workforce, delivery and capability, and social, cultural and environmental wellbeing.
  • South Wairarapa District Council identifies a number issues of local concern, and requests greater clarity from the Government so it can conduct public consultation. This is the SWDC’s initial feedback to the Department of Internal Affairs on the Three Waters proposal.
  • The Council notes that amalgamating water assets would remove Wellington Water’s responsibility for maintaining our district’s critical waters infrastructure and services. Council would no longer be responsible for delivering drinking water supplies to households.
  • Council also notes it could mean changes to how much ratepayers pay for water and wastewater services, and who they paid in the future.
  • After the deadline, Local Government Minister Nanaia Mahuta indicates that the Government will press ahead with 3 Waters without community consultation.
  • Taumata Arowai, a new drinking water regulator, becomes a Crown Entity in March and becomes full operational with the Water Services Act’s enactment in November.

2022

  • In March, three working groups are established to consider Council feedback report back on to the Government. Two of the groups are focused on technical issues (planning and rural services), the third on governance and representation.
  • On 29 April, the Government accepts most of the recommendations, notably to give Councils shares in the four water entities. South Wairarapa would have one share out of 36 in Entity C.
  • Another key recommendation is the need to embed co-governance principles at the Regional Representative Group level. Each of the Water Service entities will have a Regional Representative Group, whose membership will be split 50:50 between local council and iwi group representatives. The representative group will appoint the entity’s board, which will, in turn, appoint executives for the entity’s day to day running.
  • The Government retains co-governance at RRG level, but recommends rather than mandates co-chairs at board level and maintains a merit-based approach to board appointments.
  • The report also recognises Te Mana o te Wai as a “korowai” (principle) that applies across the water services framework;
  • The Government’s response to the governance working group’s recommendations can be found here.
  • At this stage, Three Waters legislation remains on track to be introduced into Parliament in mid-2022.

Key milestones ahead
• Government decisions – April 2022
• Bill process / Select Committee – from May 2022
• Better off funding process – applications open in July 2022
• Local establishment entities and establishment process – mid to late 2022
• 2023 – Significant transition activity
• 1 July 2024 – Three Waters is due to “go live”’

The shape of the proposal

Under the Government’s proposal, South Wairarapa would be part of “Entity C” along with 22 other councils from the top of the South Island, the Wellington region and the east coast of the North Island.

The assets (including pipes, pump stations and the wastewater treatment plant) would be transferred to the new entity who would be the new owner of these assets.

The costs of water services that are currently charged for within rates would be removed and billed separately by the water entity – just as you receive a bill for electricity supply.

It is intended that the entities have the scale, capacity and capability to improve delivery at an affordable cost. The proposals also mention a suite of mechanisms to protect Māori/iwi rights and interests and prevent privatisation, and an economic regulator would be appointed to protect consumer interests and provide strong incentives for performance.

A dashboard outlining the modelling for South Wairarapa District can be found here.

What does South Wairarapa District Council think?

Council remains in a listening mode to the conversation on Three Waters. We remain open to new information from the Government and the Department of Internal Affairs. Our chief executive Harry Wilson has answered a few questions from residents:

Will SWDC not receive a return for its shareholding?

You are correct. The reasons for the shareholding arrangements were part of the proposals made by local government to the Minister via the steering group. The main reasons were to keep ownership of the assets with local government and as a means of preventing possible future privatisation. There is nothing that I have seen that indicates Mana Whenua (the iwi members) will be receiving a return.

How much will the design and costs of Three Waters cost us?

The design and cost inherent in the new structure will not be costs to South Wairarapa District Council, as these costs and charges will be levied by the entities themselves. The whole model is predicated on an economy of scale with the intention of reducing future costs and charges to ratepayers. The economic modelling for this is on the DIA’s website. Our current Annual Plan does not include any extra costs to ratepayers for the proposed reform.

What stance has the Council taken on Three Waters?

South Wairarapa District Council has not taken a view one way or the other, as yet. There are too many unknowns still. You are more than welcome to view the April 2022 Council meeting on YouTube where an update on the reforms was provided to Council.

How would the Three Waters Programme impact me

The Government has released a dashboard on the Three Waters Web page. However this data still needs be verified and compared alongside the Council’s own projections for water service costs, based on its Long Term Plan. What is known is that the status quo is not an option, as rising water quality standards put pressure on current water assets.

From Local Government NZ: If a council “opts out”, it would find itself operating in a very different landscape, with large and growing proportion of expenditure and energy eaten up by three waters investment and compliance. It would be exposed to three new areas of regulatory focus:

  • Taumata Arowai’s more stringent compliance and new drinking water safety standards. Complying with these standards may require infrastructure investment and Councils will not be able to defer crucial upgrades on the grounds of cost.
  • Taumata Arowai’s work alongside Regional Council regulators to provide national oversight on the performance of wastewater and stormwater networks;
  • Economic regulation, to ensure fair, affordable pricing for water consumers as well as appropriate levels of investment across three waters services.

Read more about the changing regulatory environment on the DIA website

What is the current water delivery model in South Wairarapa?

South Wairarapa District Council supplies the three water services to residents of South Wairarapa.

Council’s aim under the Long Term Plan is to provide reliable and sustainable reticulated potable water supplies to the townships of Greytown, Featherston and Martinborough, and to provide stock water-race supply networks from the Tauherenikau and Waiohine Rivers.

Water in our district comes from the Waiohine catchment for Featherston, the Kuratawhiti Street bore for Greytown residents, and the Herricks bore field for users in Martinborough. Treated water is delivered to residential properties through the network reticulation.

SWDC became a joint owner of Wellington Water Limited on 1 October 2019. This means that while council owns all its ‘three waters’ infrastructure, Wellington Water is responsible for managing it and providing three waters services to the Council. This includes providing planning, advice, design, project and operations management, maintenance, and monitoring relating to the assets and services of the water networks. SWDC sets all the policies and performance objectives that are expected to be met by Wellington Water.

Read more about our current water service on our Water page.


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