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Water Services Reform Programme
Water Services Reform Programme
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Official logo of the Water Services Reform Programme.

The Water Services Reform Programme (formerly known as Three Waters) was a public infrastructure restructuring programme launched by the Sixth Labour Government to centralise the management of water supply and sanitation in New Zealand.[1][2] It originally proposed shifting control of stormwater, drinking water and wastewater management from the country's 67 local councils to several new publicly-owned regional entities by July 2024.[3][4] Details of the proposed reforms were announced in October 2021. The Three Waters reforms were criticised by several mayors and the opposition National and ACT parties.[5][6][7]

From November 2021, a working group of mayors and Māori representatives reviewed issues of representation, governance and accountability, and reported back in March 2022 with 47 recommendations.[8][9] In April 2022, the government accepted 44 of the recommendations. Key changes to the original proposals included providing non-financial shareholdings for councils in the four new water entities, and increased legislative protection against future privatisation of the water assets. Regional representative groups would be established as part of the governance structure, with equal representation of council and tangata whenua. These representative groups would appoint the members of the boards of the four water entities, based on skill and competence.[10]

In April 2023, the Government announced a major overhaul of the Three Waters programme, renaming it the Water Services Reform Programme.[1][11] The proposed four water services entities were expanded into ten entities. These entities will still retain the split governance structure consisting of both local council and mana whenua representatives.[1][2][11]

In late 2023, the newly-formed National-led coalition Government confirmed that it would repeal the Three Waters legislative framework in favour of a new regime that would favour local council control and ownership of water assets and infrastructure.[12][13] On 14 February 2024, the National-led government passed urgent legislation repealing the previous Labour Government's Three Waters legislation.[14]

History

[edit]

Three Waters Review

[edit]

In mid 2017, the Fifth National Government launched a review of the regulation and supply arrangements of drinking water, wastewater and stormwater (three waters). This review ran in parallel with the later stages of the Inquiry into the Havelock North drinking water contamination of 2016. The Three Waters Review was published in January 2019.[15]

In 2019, the Sixth Labour Government announced plans for regulatory changes in response to the Three Waters Review, including:

  • establish a new, dedicated drinking water regulator
  • extend regulatory coverage to all drinking water suppliers, except individual household self-suppliers
  • provide a multi-barrier approach to drinking water treatment and safety
  • strengthen government oversight and stewardship of wastewater and stormwater services
  • provide transitional arrangements of up to five years to allow water suppliers to adjust to the regulations.[16][17][18][19]

Water services legislation

[edit]

The Taumata Arowai – the Water Services Regulator Bill was introduced to Parliament on 12 December 2019.[20] The Government indicated a separate Water Services bill would be proposed at a later date to give effect to decisions to implement system-wide reforms to the regulation of drinking water and source water, and targeted reforms to improve the regulation and performance of wastewater and stormwater networks.[21]

Mahuta's reform proposals

[edit]

On 28 January 2020, Nanaia Mahuta, the Minister of Local Government, released Cabinet papers and minutes setting out intentions for reform of service delivery and funding arrangements for the three waters services nationwide.[22]

The Cabinet paper referred to two key challenges facing New Zealand's three waters service delivery: affordability and capability. The paper referred to the cumulative effect of increasing capital and operating costs to meet infrastructure challenges, and constrained sector capability to address key public health and environmental challenges. It noted that these challenges are particularly acute for smaller council and non-council drinking water suppliers, with smaller ratepayer and consumer funding bases.[22]

The paper described the current situation (in most regions), where individual councils supply and manage water systems and services alongside their other duties. There was specific reference to Wellington Water (which manages the water assets of six councils) as an example of one approach to service delivery that had successfully built capability through the scale of operations. However, the paper also noted that Wellington Water currently has no ability to make trade-offs between operating and capital expenditure, nor can it cross-subsidise between owners or ratepayers in different districts.[22]

A transition is envisaged to a next stage where water services are fully 'ring-fenced' from other council services, with charges for ratepayers specifically identifying the water services in their rates. At this stage, councils may share service provision with other councils. The final stage envisaged in the paper is the full transfer of ownership of the water assets to a new entity governed by an independent board of directors, and with specialist employees who would focus on water services.[22]

The Government indicated that it would work in partnership with local government to explore options for transitioning councils to new service delivery arrangements, seeking safer, more affordable and reliable three waters services. The first step was to support the investigation of opportunities within regions for collaborative approaches to water service delivery.[23]

Initial plans for implementation

[edit]

Hawke's Bay investigation

[edit]

As an initial step towards implementing the proposed reforms, on 27 January 2020 the Government announced funding of $1.55m for an investigation of opportunities for greater coordination in three waters service delivery across the Hawke's Bay region, involving five councils: Napier City Council, Hastings District Council, Central Hawke's Bay District Council, Wairoa District Council and Hawke's Bay Regional Council.[24]

Otago and Southland investigation

[edit]

In May 2020, ten councils in the Otago and Southland regions commenced the development of a business case for a collaborative approach to managing the three waters assets. The business case was expected to take about eight months and would be followed by public consultation. The Government agreed to cover half of the cost, with a deadline for councils to consider changes to service delivery models by the end of 2021. The ten councils involved in the investigation were Dunedin City Council, Central Otago District Council, Clutha District Council, Queenstown Lakes District Council, Waitaki District Council, Otago Regional Council, Gore District Council, Invercargill City Council, Southland District Council and Environment Southland.[25]

Advertising campaign

[edit]

In late June 2021, the New Zealand Government launched a NZ$3.5 million multimedia advertising campaign called "Better Water is Better for Everyone" to promote its Three Waters reform programme. The advertising campaign was criticised by several mayors and local body councillors and officials including Mayor of Waimate Craig Rowley, Mayor of Waitaki Gary Kircher, Tasman District Council engineering services manager Richard Kirby, Councillors Kit Maling, David Ogilvie for alleged sensationalism, inaccuracies, and for portraying local councils' management of water resources in a negative light. In response, the Department of Internal Affairs reaffirmed the Government's commitment to working with local councils on the Three Waters reform programme.[26][27] In addition, $500,000 was set aside by the Government for the development, maintenance, and hosting of the Three Waters reform programme's website.[28]

By October 2021, the Advertising Standards Authority had received a total of 48 complaints about the Three Waters reform programme. The watchdog ruled that the advertisements were neither misleading or offensive in the context of advocacy advertising.[28]

Launch

[edit]
Three Waters reform programme's logo

On 27 October 2021, Mahuta unveiled the Government's Three Waters reform programme. The plan involves the mandatory transfer of the management of stormwater, drinking water and wastewater from the country's 67 local councils and territorial bodies to four new water entities, with the goal of improving the quality and lowering the cost of water utilities. The Government planned to start creating these four new entities in late 2021, and they would assume control of water utilities in July 2024.[3][4][29] Though the Government had initially stated that the Three Waters programme would be optional for local government bodies, they subsequently decided to mandate in July 2021.[30]

During the announcement, Mahuta also created a working group to advise the Government on how the four water entities' governance would work. According to Mahuta, the group's findings would be placed into a supplementary order paper (SOP) to amend legislation creating the new entities that would manage the three waters systems. Despite its unpopularity with local councils and the public, the Government persisted with the Three Waters reform programme.[31]

On 9 December 2021, the Government postponed until 2022, the introduction of legislation creating the new entities that would manage the Three Waters systems. The Government confirmed that it would wait until the working group had finished their findings, before introducing the new legislation.[31] In mid-December, Mahuta argued that the Three Waters reform should proceed, despite opposition from several local governments, due to the under-investment in the country's water infrastructure. Mahuta also urged party leaders to prevent the privatisation of New Zealand's water assets, entrenching a safeguard requiring a supermajority of 75% of MP's support before a water asset could be sold.[30]

Review by working group

[edit]

A working group of mayors and Māori representatives was formed in November 2021, to review the planned reform programme, focussing on improvements in the three most contentious aspects of the original proposal: representation, governance and accountability.[8] The working group reported back in March 2022, with 47 recommendations.[9] On 29 April 2022, Mahuta announced that the Government had accepted 44 of the recommendations, with three that needed some further work. One of the key changes was that councils would be given non-financial shareholdings in the new water entities, with one share per 50,000 of population, and that there would be additional legislative protection against future privatisation. Co-governance will be established in regional representative groups, where there will be an equal number of seats for mana whenua and councils. These regional oversight groups will appoint the members of the boards of the four water entities, based on skill and competence. The regional representative groups will have a role in setting strategic direction, but will not be involved in operational matters.[10]

Legislative entrenchment

[edit]

On 2 June 2022, Mahuta introduced the Water Services Entities Bill as the first of several new bills to entrench the three water reforms in law. The Water Services Entities Bill would establish the four regional water services entities which would take over management of water infrastructure from the 67 local councils. Under the proposed law, councils would retain ownership of their water assets through a "community share" arrangement but effective control would pass to the four new water services entities, which would have both community and Māori iwi/tribal representation. Mahuta also claimed that there would be safeguards against privatisation. Mahuta also confirmed that further legislation would be introduced to facilitate the transfer of assets and liabilities from local authorities to the Water Services Entities, integrate entities into other regulatory systems, and to cover economic regulation of the water services entities and ensure consumer protection. A National Transition Unit would oversee the establishment of the new water services entities over the next two years.[32][33][34]

On 23 November 2022, the Labour Government decided to push the Water Services Entities Bill under urgency to compensate for the loss of a week's worth of parliamentary sitting time caused by Queen Elizabeth II's death on 9 September 2022.[35] The Bill passed its third and final reading on 7 December. Labour was able to pass the Bill without the support of other parties due to its majority status in the House, an unprecedented occurrence in New Zealand since MMP came into force. While National and ACT parties opposed the Bill due to their opposition to co-governance and centralisation, the Green and Māori parties opposed the Bill on the grounds that it lacked sufficient anti-privatisation safeguards and failed to promote co-governance.[36][37]

Following the passage of the Water Services Entities Act 2022, Mahuta introduced two bills to further entrench the Three Waters reform programme: the Water Services Economic Efficiency and Consumer Protection Bill and the Water Services Legislation Bill, which passed their first readings on 13 December 2022.[38][39] The Water Services Legislation Bill included 130 pages of amendments to the Water Services Entities Act. The new legislation includes provisions for charging for water services, institutes a system of fines for breaching water restrictions and disconnecting from stormwater systems, facilitate information-sharing between the water entities and councils, facilitates cooperation between the water services entities and mana whenua, clarifies the ownership of stormwater systems beneath roads, and outlines what rights the water services entities when working on different kinds of land including roads, railways, and marae.[40]

On 16 August 2023, the Water Services Entities Amendment Act 2023 passed its third reading. The bill increased the number of water services entities from four to ten, and delayed the start of the entities from 2024 to 2026. While the Labour and Green parties supported the bill, it was opposed by the National, ACT and Māori parties. National and ACT have vowed to repeal the entire Three Waters reforms while retaining the water regulator Taumata Arowai.[41]

On 23 August, the Government passed two final bills entrenching the Water Services Reform Programme: the Water Services Economic Efficiency and Consumer Protection Act 2023 and Water Services Legislation Act 2023. The first bill sets up an economic regulation regime overseen by the Commerce Commission as a watchdog over the water services entities' quality and efficiency, and mandates information disclosures. While the Economic Efficiency and Consumer Protection Act was supported by the Labour and Green parties, it was opposed by the National, ACT, and Māori parties. The second bill outlines the duties, functions, and powers of the new water services entities that would come into effect in 2026. The Water Services Legislation Bill was passed with the sole support of the Labour Party. National and ACT have opposed the water services reform programme and vowed to repeal them if elected into government following the 2023 New Zealand general election.[42]

Funding

[edit]

On 19 July 2022, the Government announced that it would give the 67 local councils a total of NZ$44 million to help them transition to the new Three Waters system. The Government had already allocated NZ$2.5 billion to compensate local councils for the reforms including infrastructure and other "wellbeing" investments. Associate Local Government Minister Kieran McAnulty stated that each local council would receive NZ$350,000 over the next 12 months. The opposition National and ACT parties' local government spokespersons Simon Watts and Simon Court described the funding as a "bribe" and a waster of taxpayer money.[43][44]

2023 revamp

[edit]

On 1 February 2023, Kieran McAnulty succeeded Mahuta as Minister of Local Government, which oversees the Three Waters reform programme. After succeeding Jacinda Ardern as Prime Minister in late January, the incoming Chris Hipkins had announced a cabinet reshuffle on 31 January 2023.[45] Hipkins stated that the change was intended to allow Mahuta to focus on her foreign affairs portfolio but denied that it was motivated by controversy around the Three Waters programme. He also confirmed that the Labour Government would continue implementing the Three Waters reforms.[46]

On 8 February, Hipkins reiterated that the Government would continue with the Three Waters reforms, arguing that disasters such as the 2023 North Island floods demonstrated the limits of infrastructure and the need for reform. However, he stated that the Government would be considering whether some of the Three Waters changes would be fit for purpose. Hipkins confirmed that Cabinet had asked McAnulty to consult with local government, Māori and the public and report back on options for "refocusing the reforms."[47][48]

On 13 April 2023, the Government announced a major overhaul of the programme, renaming it the Water Services Reform Programme.[1] The proposed four water services entities were expanded into ten entities. These entities be owned by local councils on behalf of the public, and their boundaries will be based on existing regional boundaries. Each entity will be run by a professional board, with members being appointed based on competency and skill. These boards will still retain the split governance structure consisting of both local council and mana whenua representatives.[49][1][2] According to Local Government Minister McAnulty also announced that the entities are expected to start operating from 1 July 2026.[49]

Repeal

[edit]

On 27 November 2023, the newly-formed National-led coalition government announced that it would scrap the Three Waters reforms as part of its plans to repeal several of the previous Labour Government's policies. The Government's announcement was welcomed by Mayor of Manawatu and co-chair of the Communities 4 Local Democracy group Helen Worboys and Mayor of Hastings Sandra Hazlehurst, who welcomed the Governments "stop work" order on transition activities and said that the water reforms were unaffordable for local councils respectively.[12]

On 14 December 2023, the Minister of Local Government Simeon Brown confirmed that the Government would introduce new legislation in 2024 to repeal the Three Waters legislation with the goal of restoring council ownership and control of water assets. Brown reaffirmed the National-led coalition government's commitment to addressing New Zealand's water infrastructural challenges and implementing a new regime that he claimed would "recognise the importance of local decision making" and give flexibility to local communities and councils.[13] On 21 December 2023, Newsroom reported that a letter from Brown to councils confirmed that Government planned to finance water and wastewater infrastructure by a new type of financially separate council-owned organisation. Instead of the ten proposed water service entities, local councils would be responsible for complying with water regulation rules and water infrastructural investment.[50]

On 14 February 2024, the National-led government passed the Water Services Acts Repeal Act 2024 under urgency, repealing Labour's various Three Waters laws. The repeal bill was supported by the National, ACT and New Zealand First parties but was opposed by the Labour, Green parties, and Te Pāti Māori. During the third reading, Labour MP Willie Jackson claimed that former Local Government Minister and Three Waters architect Nanaia Mahuta had been subject to intense racist vilification.[14] Similar criticism was echoed by Labour's Local Government spokesperson McAnulty, who claimed that the repeal of Three Waters would lead to a rise in local councils' rates and debt.[51]

Local Government Minister Brown confirmed that the Government would introduce two new laws between 2024 and 2025 to roll out its own "Local Water Done Well" programme, which he claimed would give local communities and councils greater control over their water services and infrastructure.[52] The National-led government also announced that same week that these new laws would allow local councils to voluntarily form their own water services groupings and council-controlled organisations similar to Wellington Water and Auckland's Watercare Services.[14]

Reactions

[edit]

Advocacy groups

[edit]

The farming advocacy group Groundswell NZ has voiced opposition to the Three Waters programme, claiming that it was part of a "tsunami" of unworkable government regulations and alleging that it was the theft of the assets of council ratepayers.[53] In December 2021, the group sponsored a petition calling for the Three Waters programme to be scrapped, which attracted 3,000 signatures by 15 December.[30]

In June 2022, the New Zealand Taxpayers' Union and Groundswell organised a nationwide "roadshow" to rally opposition against the Three Waters reforms. They toured 36 cities and towns including Christchurch, Alexandra, and Invercargill.[54][55][56]

Government departments and public servants

[edit]

The New Zealand Infrastructure Commission published an opinion piece in May 2020 supporting the reform of service delivery in the three waters sector nationwide. The chief executive advocated consolidation of asset management and service delivery functions from multiple councils into much larger entities. The main benefits would be to capture economies of scale and free up councils from the specialist technical requirements of managing utility services.[57]

In late February 2023, Te Whatu Ora (Health New Zealand) chair Rob Campbell criticised National's proposal to scrap Three Waters in a LinkedIn post and accused Luxon of "dog whistling" on the issue of co-governance. Campbell's remarks were criticised by several National and ACT MPs including Simeon Brown and David Seymour, who accused him of breaching the Public Service Commission's policy requiring the directors of Crown entities to remain politically impartial. Campbell defended his remarks, stating that they were made in his capacity as a private citizen and rejected suggestions that he had violated the Commission's political impartiality policy.[58] On 27 February, Prime Minister Chris Hipkins criticised Campbell's Three Waters remarks as "inappropriate." On 28 February, Health Minister Ayesha Verrall used her discretionary powers under section 36 of the Crown Entities Act 2004 to relieve Campbell of his position as head of Te Whatu Ora. Though Campbell had apologised to Luxon and Verrall, the latter had demanded that he resign by 10:30 am on 28 February. Campbell had refused to resign and defended his right to criticise National's Three Waters policy.[59][60] On 2 March, Environment Minister David Parker removed Campbell from his positions as chair and board member of the Environmental Protection Authority (EPA) in response to Campbell's Three Waters remarks.[61]

Local and regional councils

[edit]

2021

[edit]

In April 2021, the mayor of the small Hawke's Bay town of Wairoa expressed concerns that the transfer of the three waters assets from local councils into large regional entities would have serious consequences for local government.[62]

In early September, Invercargill's deputy mayor Nobby Clark submitted a notice of motion that the Invercargill City Council advise the Government that it would not be making any decision on the Three Waters issue until it had consulted the local community. This notice of motion was supported by Mayor of Invercargill Tim Shadbolt. Clark's motion did not pass due to a six-to-six tie.[63]

On 9 September, Mayor of Dunedin Aaron Hawkins published an op-ed column in the Otago Daily Times expressing concerns about the Three Waters programme's financial benefits, local consultation and the lack of safeguards against privatisation. However, Hawkins also objected to some opponents' objections to Māori iwi (tribes) being involved in the decision-making process.[64]

In late October, the Government's decision to centralize water utilities and services was criticised by several local councils and mayors including Mayor of Auckland Phil Goff, Mayor of Christchurch Lianne Dalziel, Mayor of Hastings Sandra Hazlehurst, Mayor of the Far North District John Carter, Mayor of Dunedin Hawkins, and Mayor of Wellington Andy Foster.[5][6][65]

In mid-November, the Whangārei District Council, Timaru District Council and Waimakariri District Council launched legal proceedings in the Wellington High Court seeking a judgement about the meaning of council "ownership" of the three waters assets under the planned reforms.[66] By 16 November, the Wairoa District Council and the Napier City Council passed motions to sign "memorandums of understanding" with "partner councils" to oppose the Three Waters reform model. The New Zealand Herald reported that over 30 councils were prepared to sign the MOUs.[67]

In mid-December, the "Communities 4 Local Democracy He hapori mō te Manapori” group converged on Parliament and met with politicians to express their opposition to the Three Waters programme. The group represented 23 mayors and local councils including Manawatū District Council Mayor Helen Worboys, the Christchurch City Council, and the Waimate District Council. The delegation met with representatives from various political parties, including the governing Labour and National parties.[30][68][69] The "Communities 4 Local Democracy" group had emerged in response to the local government advocacy body Local Government New Zealand not reflecting the views of their membership on the issue. However, the Communities group did not include any councils from Otago and Southland. The Invercargill City Council had voted against joining the group due to the $15,000 contribution fee.[68] Dunedin Mayor Hawkins said incorrectly that the Dunedin City Council (DCC) had declined to join the group since its rules would have required Dunedin residents to fund what he regarded as a futile legal action.[69]

2022

[edit]

On 23 February 2022, the Dunedin City Council voted to join "Communities 4 Local Democracy" by a margin of eight to seven. By that time, the number of local authorities involved in the advocacy group had risen to 28.[70] In response to the DCC's decision to join "Communities 4 Local Democracy," two local Māori runanga (tribal councils) Kati Huirapa ki Puketeraki and Te Runanga o Otakou withdrew from their partnership with the city council; citing a breakdown in their relationship.[71][72] On 29 March, the DCC voted by a margin of seven to six to reverse their earlier decision to join "Communities 4 Local Democracy." Supporters including Mayor Hawkins argued that joining the pressure group adversely affected the Council's relations with local Māori while opponents like Councillor Lee Vandervis criticised the Council's reversal as a rejection of local democracy in favour of "centralised control."[73]

In April, the mayors of the Gore District and the Southland District expressed support for the revised plans announced by government in response to the working group recommendations, including the shareholdings to be allocated to councils.[74] The Mayor of Porirua expressed similar support. The President of Local Government New Zealand supported the need for change and the certainty provided by the government's announcements. However, the mayor of Auckland, although supporting much of the reforms, complained that Auckland was being disadvantaged and losing control of its water assets, because of the failure of other local bodies.[75]

In early July, Waimakariri District Mayor and Communities 4 Local Democracy deputy chair Dan Gordon urged the Invercargill City Council to reconsider its decision not to join the lobby group.[76] On 4 July, the Southland District Council confirmed that it would oppose the Government's Three Water reforms and seek to retain control over its water assets.[77][78] On 6 July, the Wellington City Council voted against joining the anti-Three Waters Communities 4 Local Democracy. However, Mayor Andy Foster used his casting vote to express his disagreement with the Government's Three Water reforms.[79]

Despite its stated opposition to the Three Waters reforms, the Taupō District Council applied for NZ$4.93 million in funding from the Government for an upgrade to Owen Delany Park. These funds come from the Government's Better Off Funding programme, which supports local government transition through the Three Waters reforms. Taupō District Mayor David Trewavas justified the funding application on the grounds that the Park upgrade would benefit the community.[80]

Following the release of 2022 New Zealand local elections results in early October 2022, surveys by online media organisations Newsroom and The Spinoff found that a majority of elected mayors opposed the Three Waters reforms. Newsroom's survey of 220 newly-elected mayors and councillors found that 76% of respondents opposed the Three Water reforms.[81] Similarly, The Spinoff's survey of 66 elected mayors found that 43 mayors were opposed to the Three Waters reforms, 14 were undecided, and that nine supported them.[82]

During the 2022 Auckland mayoral election, mayoral candidate Wayne Brown campaigned on halting the Three Water reforms programme in Auckland. Following his election as Mayor of Auckland, Brown instructed the region's water management company Watercare to stop working on the programme on 17 October, describing it as a "doomed proposal".[83] In addition, other newly-elected mayors including Mayor of Invercargill Nobby Clark and Mayor of Nelson Nick Smith have expressed opposition to Three Waters.[84][85]

On 31 October 2022, Brown along with the Mayor of Christchurch Phil Mauger and the Mayor of Waimakariri Dan Gordon proposed an alternative Three Waters plan which would maintain the national water regulator Taumata Arowai but would maintain local ownership, control and accountability over water resources including stormwater assets, transport and drainage. Other proposed changes have included providing affordable finance to support high standard investments in water infrastructure and encouraging local water services entities to consolidate into regional water entities.[86][87]

2023

[edit]

Mayoral responses to the Government's Three Waters revamp in mid-April 2023 was mixed. Local Government New Zealand President Stuart Crosby stated that "a number of questions remained" but added that the vast majority of local councils agreed that water reform was necessary. Mayor of South Wairarapa Martin Connolly said that the changes would give local councils more say compared to the previous model. Mayor of Wellington Tory Whanau defended the need for water reform but wanted it to go faster. She also welcomed the retention of mana whenua representation on the water services entities. Mayor of New Plymouth Neil Holdom expressed support for the water reforms and urged the Labour and National parties to put aside their political differences.[88] The mayors of the Hawke's Bay region including Mayor of Hastings Sandra Hazlehurst, Mayor of Wairoa Craig Little, Mayor of Central Hawke's Bay Alex Walker, Mayor of Napier Kirsten Wise, Hawke's Bay Regional Council chair Hinewai Ormsby, and Ngāti Kahungu iwi chair Bayden Barber issued a joint statement welcoming the changes to the Three Waters reform as a "win-win" for the Hawke's Bay region.[89]

Several Mayors including Mayor of Ashburton Neal Brown, Mayor of Dunedin Jules Radich, and Mayor of Gore Ben Bell adopted "a wait and see approach."[88][90]

By contrast, critics including Mayor of Manawatū and Communities 4 Local Democracy co-chair Helen Worboys, Mayor of Grey Tania Gibson, Mayor of Clutha Bryan Cadogan, Mayor of Hurunui Marie Black, Mayor of Upper Hutt Wayne Guppy, Mayor of Invercargill Nobby Clark, Mayor of Southland Rob Scott, Mayor of Central Otago Tim Cadogan, and Mayor of Queenstown-Lakes Glyn Lewers argued that the Government's changes failed to address their concerns with Three Waters including property rights, local governance, and regional representation.[88]

2024

[edit]

In early February 2024, the Central Otago District Council voted to renew its Three Waters' maintenance contract with Fulton Hogan despite the Government's plans to scrap the Three Waters programme.[91]

Repeal responses

[edit]

In response to the National-led coalition government's announcement that it would repeal the Labour Government's Three Waters reforms, Mayor of Far North Moko Tepania and Mayor of Buller Jamie Cleine expressed concerns that the repeal would cause council rates to rise.[50] Mayor of Clutha Bryan Cadogan, who had initially supported Labours plans to merge all South Island water assets into one entity, stated that local councils would need to work together to manage their water assets despite the repeal.[92] By contrast, Mayor of Auckland Wayne Brown, Mayor of Whanganui Andrew Tripe and Mayor of Manawatu and Communities 4 Local Democracy chair Helen Worboys, and Local Government New Zealand president Sam Broughton welcomed the return of water assets to local government controls' but urged the Government to work on introducing a replacement system that would address rising water prices.[51][92]

Māori leaders and groups

[edit]

In mid-May 2021, Te Maire Tau, the chair of Te Kura Taka Pini, the Māori tribe Ngāi Tahu's freshwater group, disputed claims by the opposition National Party leader Judith Collins that the Government was planning to transfer 50% of the publicly owned water assets in the South Island to Ngāi Tahu. He said Ngāi Tahu did not want to own water infrastructure, and believed that it should remain in public ownership, but that Ngāi Tahu was seeking a share of governance responsibilities.[93]

In May 2021, some Māori leaders from Ruapehu District, Whanganui, South Taranaki and Rangitikei District, including Fiona Kahukura Chase and former Te Pāti Māori (Māori Party) Member of Parliament Dame Tariana Turia, said that the creation of large entities to manage water infrastructure would make it more difficult for local Māori to be part of policy making.[94]

Following the launch of the Three Waters programme in late October 2021, Te Maire Tau, the co-chair of Te Kura Taka Pini, welcomed the Three Water reforms, claiming they would improve water services and environmental outcomes.[95]

In mid April 2023, Te Pāti Māori vice-president John Tamihere rejected the idea of co-governance in favour of the idea that Māori owned the country's water resources.[96]

Political parties

[edit]

In mid May 2021, National Party leader Judith Collins claimed that the Government was planning to transfer 50% of the publicly-owned water assets in the South Island to the Māori tribe Ngāi Tahu.[93]

In late October 2021, the opposition National and ACT parties vowed to repeal the Three Waters reforms if elected into government.[7][65]

Christopher Luxon, who had replaced Collins as National Party leader, accused the Government of misleading local councils about Three Waters being optional.[30] In response to criticism, Labour Party leader and Prime Minister Jacinda Ardern denied that the Government had misled local councils by pitching the Three Waters programme as optional but later determining that it was mandatory, claiming that the Government had worked with local councils to build a consensus for several months.[97]

In response to the revised reform plans announced by government on 29 April 2022, opposition parties criticised the reforms because of the loss of control by local councils, and the design of the governance structure. They promised to repeal the proposed legislation if elected to government.[75]

In late July 2022, Luxon stated that the Three Waters reforms could become an electoral issue at the 2023 New Zealand general election, claiming that the Government had not listened to local democracy, local government, and local voices when implementing the reforms.[98]

On 25 February 2023, Luxon announced that a future National government would scrap the Three Waters reform programme and return water assets to local government control. In addition, Luxon confirmed that National would establish a Water Infrastructure Regulator within the Commerce Commission to set and enforce standards for long-term water infrastructure investment. Under National's water infrastructure plan, local councils would be required to "ring-fence" funds for water infrastructure and "Regional Council Controlled Organisations" would be established to help local councils borrow funds.[99][100]

Following the launch of the Government's revamped "Affordable Water Reforms" programme in mid April 2023, Luxon claimed that the changes amounted to a name change and vowed to repeal the policy if National is elected into government.[11] On 14 April, National's local government spokesperson Simon Watts disputed Local Government Minister Kieran McAnulty's debt figures around the Water Reforms programme and stated that the Government's rebrand of Three Waters would not fool anyone.[101]

Public opinion

[edit]

On 22 October 2021, a Curia-Taxpayers' Union poll found that 54% of voters opposed the scheme while 19% supported the scheme. Despite its unpopularity with local councils and the public, the Government persisted with the Three Waters reform programme.[102][31]

On 22 November 2021, a Newshub–Reid Research poll found that 48% of people opposed the reforms while 27% supported, with 25% unsure. Of Labour voters, 40% were in support with 30% opposed and 31% unsure.[103]

Protests

[edit]

In mid-September 2021, about 25 protesters opposed to the Three Waters reforms stormed the offices of the Nelson City Council. The protest violated COVID-19 lockdown restrictions in force throughout New Zealand at the time.[104]

In early October 2021, about 70 protesters opposed to the Three Waters reforms picketed the offices of the Tauranga City Council. The protest violated COVID-19 lockdown restrictions in force at the time.[105]

On 21 May 2022, protesters opposed to the Three Waters reforms attempted to march across the Auckland Harbour Bridge. They assaulted police and disrupted traffic. In response, police arrested 11 protesters.[106]

References

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The Water Services Reform Programme was a initiative launched in July 2020 to overhaul the delivery of , , and services by consolidating operations from 67 territorial authorities into fewer regional entities, aiming to address chronic underinvestment estimated at $120–185 billion over 30 years. The programme, initially branded as Three Waters, sought to enhance service safety, environmental outcomes, operational efficiency, and long-term affordability amid pressures from ageing assets, climate risks, population growth, and stricter compliance standards under the Water Services Act 2021. Key elements included the creation of Taumata Arowai as an independent regulator in November 2021—later expanded to oversee all three waters—and proposals for economic regulation to incentivize investment while prohibiting of assets. In April 2023, the government adjusted the model from four to ten entities to bolster local representation following feedback, though this did not quell broader resistance. The reform's defining controversies centered on centralization eroding council control over vital assets, mandatory co-governance provisions granting veto-like influence without electoral accountability, and skepticism over projected per-household savings given persistent delivery inefficiencies in fragmented systems. Opposition from a of councils and ratepayers highlighted causal risks of top-down mandates exacerbating rather than resolving underfunding, as local entities already faced incentives misaligned with capital-intensive upgrades. In February 2024, the incoming National-led repealed the core , restoring asset ownership to councils and pivoting to the Local Water Done Well framework, which prioritizes voluntary regional collaborations, enhanced borrowing powers, and targeted regulation without centralized entities. While the original programme failed to fully materialize, it underscored empirical gaps in decentralized water governance—such as uneven compliance and deferred maintenance—but also demonstrated that scale alone does not guarantee fiscal discipline absent democratic buy-in. Taumata Arowai endures as a legacy achievement, enforcing standards independently of delivery models.

Background and Infrastructure Challenges

Historical Underinvestment in Water Services

New Zealand's water infrastructure, encompassing drinking water, wastewater, and stormwater systems, has experienced decades of underinvestment, leading to widespread asset deterioration and compliance risks. Local councils, responsible for service delivery since the 1989 local government reforms, have consistently prioritized operational costs over long-term renewals, resulting in a fragmented approach ill-suited to scaling investments. This pattern was evident in councils' 2021-31 long-term plans, where many explicitly admitted underinvesting in water-related assets due to ratepayer affordability constraints and short-term fiscal pressures. The physical legacy includes extensive ageing pipe networks, with a substantial portion built in the early under construction standards that fail contemporary health and resilience benchmarks. Maintenance backlogs have accumulated, exacerbating vulnerabilities to leaks, bursts, and contamination events; for instance, the national infrastructure deficit involves thousands of kilometers of substandard pipes owned by territorial authorities. Independent assessments, including those benchmarked against international models like Scotland's Commission, project a $120-185 billion funding gap over 30 years to renew and expand systems adequately, factoring in and regulatory upgrades. Contributing factors include historical reliance on depreciated asset valuations that understated replacement costs and a lack of centralized economic scale, which deterred private or pooled financing. By the , this had manifested in rising noncompliance rates, with over 20% of supplies failing bacteriological standards in some years, underscoring the causal link between deferred maintenance and public health risks. Cross-party acknowledgments, including from the subsequent National-led government in 2025, affirmed that such underinvestment imposed escalating costs on households, estimated at up to $4,000 annually per connection without reform.

Pre-Reform Reviews and Economic Analyses

The Havelock North drinking water contamination event in August 2016, which infected approximately 5,000 residents with campylobacteriosis, triggered a government inquiry revealing critical vulnerabilities in New Zealand's decentralized water supply systems. Stage 1 of the inquiry, published on 11 May 2017, established that the outbreak stemmed from campylobacter bacteria in sheep faeces infiltrating unprotected groundwater bores during heavy rainfall, compounded by inadequate monitoring, slow detection, and insufficient chlorination safeguards by the local supplier, the Hastings District Council. This incident, the largest recorded waterborne disease outbreak in the country's history, exposed broader risks from aging infrastructure and variable local standards across 67 territorial authorities responsible for drinking water services. Stage 2 of , released on 8 2017, extended scrutiny to national-level reforms, recommending the creation of a centralized drinking-water regulator to enforce uniform standards, mandatory zones, and rigorous plans. It critiqued the prevailing model of council-led services for fostering complacency, underinvestment, and inconsistent compliance, with indicating that many supplies relied on unconfined aquifers prone to contamination and that only partial of existing guidelines had occurred. The emphasized causal links between fragmented —where small councils managed disparate populations—and heightened risks, while calling for economic incentives to prioritize long-term renewal over short-term budgeting pressures. Economic evaluations preceding the 2019 initiation of formal reform efforts quantified the strains of this fragmentation. Audits by local authorities and sector bodies, such as Water New Zealand's annual surveys from 2017 onward, documented widespread asset deterioration, with national three waters (, , and ) valued at approximately NZ$40–50 billion but requiring renewal investments estimated at $120–185 billion over 30 years to meet compliance and resilience standards. These figures derived from condition assessments showing significant portions of pipe networks exceeding useful life—e.g., up to 30% in poor condition in some regions—and escalating compliance costs post-Havelock, including seismic upgrades and leak reduction, which small-scale providers struggled to fund without rate hikes averaging 20–50% per household. Analyses of operational efficiencies, informed by historical data from 1990s council amalgamations and international benchmarks, highlighted in the fragmented sector. A 2020 review by Strategic Advisors, building on pre-2019 datasets, calculated that average costs per water connection were 1.5–2 times higher for councils serving under 50,000 people compared to larger entities, attributing this to duplicated administrative overheads (up to 15% of budgets) and limited access to specialized expertise or financing at scale. Such findings, while later contested for overestimating aggregation benefits amid fixed geographical constraints, underscored pre-reform pressures from (projected at 1.5% annually) and vulnerabilities, where capital expenditures had lagged OECD peers by 20–30% since the early due to rating caps and competing priorities like roading. These assessments, primarily from government and industry sources, informed the case for structural change but drew methodological critiques for relying on modeled scenarios rather than audited council financials.

Policy Development

Three Waters Review Initiation

The Three Waters Review was established in mid-2017 by the in response to the 2016 Havelock North drinking water contamination incident, where a outbreak affected approximately 5,500 people and resulted in four deaths. This event exposed systemic vulnerabilities in the country's water supply systems, prompting an official inquiry that highlighted deficiencies in regulatory oversight and service delivery for . The review ran parallel to the latter stages of the Havelock North Inquiry, aiming to evaluate and strengthen the overall framework for three waters services—encompassing , , and management. Key objectives of the review included assessing the effectiveness of the existing regulatory and identifying improvements to enhance service providers' capabilities, , and resilience. Early assessments revealed widespread concerns regarding local authorities' capacity to maintain , comply with standards, and invest adequately amid growing pressures and aging assets. These findings underscored the need for reforms to protect , ensure environmental compliance, and achieve economic efficiencies, setting the stage for broader policy discussions. By April 2019, the review had been elevated to a formal priority, reflecting commitments in the Labour Party's policy agenda to address long-term underinvestment in water infrastructure. This prioritization facilitated subsequent phases, including the launch of the Three Waters Reform Programme in July 2020, though the initial review phase focused primarily on diagnostic work rather than structural overhauls. Independent analyses during this period emphasized evidence-based regulatory enhancements over immediate centralization, prioritizing data on compliance failures and funding gaps.

Legislative Framework and Initial Proposals

The Three Waters Reform Programme, later rebranded as the Water Services Reform Programme, was initiated by the in July 2020 to address longstanding challenges in , , and service delivery, including deficits estimated at $120–$185 billion over 30 years. The initial proposals centered on transferring service delivery responsibilities from the 67 territorial authorities to four large regional entities, designed to achieve , standardize performance, and ensure long-term affordability through centralized investment and operations. These entities were structured to cover specific geographic areas: one for most of the excluding , one for and Northland, and two for the , with ownership shared between local authorities (64% via council-controlled organizations) and (36% via a ), alongside provisions for partnership in strategic oversight. The government's preferred model for this restructuring was confirmed on 27 October 2021, following consultations and economic modeling that projected annual household bill savings of $250–$600 compared to council-led delivery, though these figures were contested by critics citing overly optimistic assumptions about scale efficiencies and debt leverage. Initial proposals also included enhanced economic regulation to promote efficiency, with the Commerce Commission tasked to oversee pricing and investment incentives, and a national transition unit to manage the shift from local to regional control by July 2024. Public and local government feedback during 2020–2021 engagement highlighted concerns over loss of local control, potential ratepayer burdens from debt transfers, and the feasibility of the model in rural areas, prompting some refinements but not fundamental alterations to the centralization approach. The legislative framework began to take shape with Cabinet approvals in late 2021, including an exposure draft of the Water Services Entities Bill released on 8 December 2021 to outline entity establishment processes and a for co-design. The Water Services Entities Bill was formally introduced to on 2 June 2022 as the first of three interconnected bills, providing the core legal structure for creating the entities, defining their functions (such as asset ownership and service delivery), and mandating councils to vest assets by 4 2025, with compensation mechanisms tied to independent valuations. This bill empowered the entities with borrowing limits up to 500–650% of —far exceeding council ceilings—to fund upgrades, while incorporating standards and obligations for Māori interests under the . The subsequent Water Services Legislation Bill, introduced later in 2022, built on this by detailing operational powers, duties, and regulatory enforcement, forming the second pillar of the framework. A third bill on and protections was planned to finalize the regime, emphasizing incentives for cost-effective service provision. These proposals faced select committee scrutiny, where amendments addressed some transition flexibilities but retained the compulsory vesting model, reflecting the government's prioritization of national-scale reform over opt-in alternatives favored by many s.

Advertising and Public Engagement Efforts

The initiated a NZ$3.5 million in late 2021, titled "Better Water is Better for Everyone," to build public support for the Three Waters reforms by highlighting deficits and the purported benefits of centralized service entities. An additional NZ$500,000 was allocated for developing a supporting . The effort stemmed from a December 2020 internal proposal for a multi-phased communications strategy, drafted by an external consultancy and endorsed by Local Government Minister , intended to foster a receptive environment for council consultations and curb opt-out risks. Television advertisements featured cartoon depictions of contaminated water flows, failing pipes, and distressed communities or wildlife, with voiceovers asserting that reforms would deliver safer drinking water, reduced environmental harm, and economies of scale unattainable by local councils alone. The campaign projected a run through the end of 2021 but encountered backlash, including 48 complaints to the Advertising Standards Authority labeling it as scaremongering, unbalanced, and propagandistic for implying the reforms as inevitable and the exclusive remedy without disclosing alternatives or ongoing debates. Critics, such as National Party leader Judith Collins and Local Government New Zealand, argued the ads misused public funds to sway opinion amid incomplete legislation and insufficient prior consultation. While the Advertising Standards Authority ruled the ads compliant with commercial standards in October 2021, the State Services Commission separately found the television components breached Cabinet guidelines on by prioritizing over impartial factual explanation, lacking verifiable , and risking perceptions of bias. In response, the revised the second ad to incorporate neutral elements like entity boundary maps and canceled a third installment, potentially averting further expenditure from the allocated budget. Parallel public engagement initiatives included Department of Internal Affairs portals for updates and feedback, alongside mandatory select committee processes for reform bills; the Water Services Entities Bill alone garnered over 88,000 submissions in 2022, many opposing co-governance provisions yet insufficient to alter them. Independent surveys underscored public appetite for involvement, with one nationwide poll in late 2021 revealing 71% support for direct consultation and 76% emphasis on retaining local democratic oversight. Local councils conducted their own outreach, such as Wellington's multi-council surveys yielding 69-84% backing for shared entities in select regions, though national opposition grew amid perceptions of top-down imposition.

Proposed Structure and Mechanisms

Regional Water Entities Design

The Regional Water Entities were designed as ten multi-regional, publicly owned organizations to consolidate the delivery of , , and services previously managed by 67 territorial authorities across . This structure aimed to achieve , enabling investments estimated at $120–185 billion over 30 years to address ageing infrastructure, compliance failures, and pressures. Each entity was intended to operate independently from local councils in financial and operational terms, allowing specialized focus on service reliability, efficiency, and resilience while retaining public ownership by the relevant territorial authorities on behalf of communities. The entities' boundaries were aligned with broader regional groupings to balance scale with local relevance, following a shift from an initial proposal of four larger entities to ten in April 2023 to enhance representation. These included: Northland and Auckland; ; Bay of Plenty; Taranaki; Manawatū-Whanganui; Tairāwhiti and ; ; Nelson/Marlborough/West Coast; ; and Otago/Southland. This configuration sought to combine assets and operations from multiple councils within each area, facilitating borrowing capacity and expertise not feasible at the district level, though critics argued it risked diluting direct accountability. Key design elements emphasized financial through independent debt-raising powers, protected against via legislative safeguards, and a mandate to prioritize water service outcomes over broader council priorities. Entities were to engage communities more extensively than under the Local Government Act 2002, with operational independence intended to insulate decisions from short-term political influences. The model projected lower long-term costs for households by spreading investments across larger populations, though independent analyses questioned the extent of savings given transition costs and unproven efficiencies.

Governance and Co-Governance Elements

The governance structure proposed for the four water services entities (WSEs) in the adopted a two-tier model, featuring regional representative groups (RRGs) to provide strategic oversight and independent boards for operational management. Under the Water Services Entities Act 2022, each RRG was limited to a maximum of 12 members, appointed equally by territorial authorities and mana whenua ( groups with territorial interests in the region), creating a 50/50 split between elected representatives and unelected iwi appointees. The RRGs were tasked with appointing board members via an appointment committee, approving strategic plans, monitoring entity performance, and ensuring compliance with principles, as required by Section 4(1)(a) of the Act. Boards, in turn, were accountable to the RRG and required expertise in areas including Treaty-related knowledge (Section 65), while entities as a whole were prohibited from privatizing core assets without RRG consent. Co-governance elements were embedded to fulfill obligations under Te Tiriti o Waitangi, mandating mana whenua involvement in RRGs (Section 27) and requiring entities to partner with on issues like and cultural values (Section 13(d)). This included provisions for co-chairpersons in RRGs (Section 42) and advisory panels with shared leadership options (Section 56), alongside annual public meetings to promote transparency (Sections 44 and 62). Proponents, including working groups, argued this structure integrated indigenous knowledge to enhance sustainable management and address historical underinvestment affecting communities. However, the model faced substantial opposition for diluting democratic control, as representatives—selected internally by tribal authorities rather than through public election—held equal power in board appointments and veto-capable decisions over serving millions, potentially prioritizing sectional interests over ratepayer accountability. Critics, including leaders and political analysts, highlighted that this arrangement deviated from standard , where unelected entities rarely wield such influence over democratically owned assets, contributing to widespread public referenda rejections and the programme's eventual repeal in February 2024.

Funding Models and Economic Projections

The proposed funding model for the regional water entities under the Water Services Reform Programme relied primarily on revenue from targeted charges levied on households and properties for , , and services, with significant supplementation through financing. These entities, envisioned as multi-council corporations, would transfer of local assets from s, enabling them to borrow at scale with an estimated of 3.5% to 4%, lower than the 5% to 6% typically faced by smaller individual s due to enhanced credit profiles and economies in and operations. The government committed initial support, including a $3 billion package for transition and stimulus, with up to $1.5 billion allocated via a "better off" fund to mitigate short-term losses from asset transfers. Economic regulation, to be overseen by the Commerce Commission, would enforce efficiency standards, price-quality paths, and consumer protections to prevent excessive charges while ensuring reinvestment. Independent analysis commissioned by the government, including from the Water Industry Commission for Scotland (WICS), projected that aggregation into 10 entities would yield operational expenditure (opex) savings of 15% to 40% through shared services and procurement, alongside capital expenditure (capex) efficiencies from standardized asset management, though such benefits were concentrated in non-network functions rather than core infrastructure delivery. However, a Castalia advisory report highlighted limited evidence for substantial scale economies in New Zealand's geographically dispersed context, attributing potential gains more to governance improvements and outsourcing than amalgamation alone, with risks of transitional costs offsetting short-term benefits. Economic projections underscored a national infrastructure deficit requiring $120 billion to $185 billion in investment over 30 years to achieve compliant, resilient three waters systems, with WICS modeling $52 billion to $57 billion specifically for service improvements to international standards. Government assessments forecasted reform-driven efficiencies would avert household water bills doubling without intervention, projecting average annual charges of $800 to $1,640 per household by 2051 under the aggregated model, versus higher localized costs from fragmented borrowing and underinvestment. Broader impacts included an estimated $14 billion to $23 billion GDP uplift over 30 years from accelerated infrastructure spending and supply chain development, alongside 6,000 to 9,000 job creations in construction and related sectors. These figures, derived from Deloitte and industry studies, assumed effective implementation but faced skepticism in analyses questioning the scalability of benefits amid New Zealand's rural-urban variances.

Implementation Phases

Early Planning and Investigations

The Government Inquiry into the Havelock North Drinking Water contamination, announced on 12 September 2016 following an August outbreak of campylobacteriosis that sickened approximately 8,000 residents and resulted in 58 hospitalizations, served as the primary catalyst for early investigations into systemic water service deficiencies. The inquiry's Stage 1 report, released in June 2017, attributed the incident to groundwater contamination via a and inadequate , while critiquing fragmented , insufficient regulatory oversight, and underinvestment in infrastructure as contributing factors. Stage 2 recommendations emphasized enhanced , better , and coordinated national standards to mitigate risks of similar failures, prompting subsequent government reviews of compliance and service delivery models. Building on these findings, early planning accelerated in 2019 with the introduction of the Water Services Bill in December, which proposed establishing Taumata Arowai as an independent regulator to enforce standards and oversee economic regulation. Formal reform initiation occurred at the May 2020 Central/Local Government Forum, where Cabinet and (LGNZ) agreed to a collaborative approach addressing aging pipes, pressures, and a projected $120-185 billion national investment gap over 30 years for resilience and compliance. A Three Waters Steering Committee, chaired by infrastructure expert Brian Hanna and comprising , , and technical representatives, was formed in May 2020 to guide scoping, options analysis, and stakeholder input. The programme's investigative phase intensified with the July 2020 public launch of the Three Waters Reform, tied to a $523 million stimulus package ($261.5 million upfront and $261.5 million milestone-contingent) allocated to 67 councils for urgent pipe renewals and planning. Nationwide engagement workshops, held July-August 2020 with 14 in-person sessions attracting around 1,000 participants, gathered initial feedback on service delivery challenges, including non-compliance rates exceeding 20% in some regions for overflows and risks. These efforts informed a national evidence base modeling scenarios of fragmentation versus centralized entities, highlighting potential cost savings of 15-30% through but raising concerns over local control loss. Central to early investigations was the October 2020-February 2021 (RFI) from councils, which collected granular data on 70,000 kilometers of , treatment plants, and financial projections via standardized templates, online clinics, and 12 webinars to assess asset conditions and debt burdens averaging $1-2 billion per major council. This dataset enabled quantitative analyses, such as predictive modeling of seismic vulnerabilities and climate impacts, underpinning Cabinet's December 2020 in-principle decision for economic regulation including price-quality paths and consumer protections. The Water Services Bill, reintroduced 28 July 2020 and enacted effective 1 March 2021, formalized Taumata Arowai's role in auditing compliance, setting the regulatory foundation for subsequent entity design. Independent critiques, including from submissions, questioned the evidence's emphasis on amalgamation over alternatives like , citing variable council performance data that did not uniformly support nationalization.

2021-2022 Launch Attempts

In October 2021, the New Zealand government transitioned the Three Waters reform from voluntary council participation to a mandatory framework, confirming its preferred model for centralized water service delivery on 27 October. This shift followed earlier engagement efforts, including council feedback periods in August and September 2021, amid evidence of widespread infrastructure deficits estimated at $120-185 billion over 30 years for upgrades. The Water Services Act 2021, which received Royal Assent on 4 October 2021, laid foundational regulatory elements by establishing Taumata Arowai as the independent water services regulator and setting standards for drinking water quality, effective from 2022. To address governance concerns, the government announced a on Representation, Governance, and Accountability on 10 November 2021, with its first meeting on 26 November; the group was tasked with reporting back by February 2022. In April 2022, a Cabinet paper outlined strengthened governance measures in response to ongoing feedback, accepting 44 recommendations from the working group in May, including non-financial shareholdings for and adjustments to co-governance structures. Legislative launch efforts accelerated in mid-2022 with the introduction of the Water Services Entities Bill on 2 June, the first of three key bills to establish four regional entities responsible for service delivery starting from July 2024 on a staggered basis. The bill passed its first reading on 9 June and was referred to the Finance and Expenditure Select Committee, which processed over 80,000 public submissions by November, many highlighting risks of reduced local accountability and higher costs. Concurrently, the Water Services Legislation Bill advanced, with the select committee reporting it back on 8 June incorporating over 300 amendments, such as provisions for Treaty of Waitangi principles and rural water supply plans. These bills aimed to enable entity formation and transfer assets from 67 territorial authorities, but implementation faced delays due to political opposition and the need for further economic regulation legislation introduced in December 2022. Local councils and National Party critics argued the centralization undermined democratic control without proven efficiency gains, contrasting government claims of averting a "boil water" crisis affecting up to 140,000 people annually.

Entrenchment and Working Group Adjustments

In response to widespread opposition from local government to the initial Three Waters proposals, the New Zealand government established independent working groups in November 2021 to refine aspects of the reform programme, particularly focusing on representation, governance, and accountability. The primary group, chaired by independent expert Doug Martin and comprising representatives from iwi/Māori, local authorities, and central government, released its report on 7 March 2022, recommending 47 changes including direct council shareholdings in the proposed water entities proportional to population, enhanced local accountability mechanisms, and iwi partnership arrangements without veto powers. Complementary groups addressed funding models and integration with resource management reforms, aiming to balance centralisation with local input amid concerns over loss of council control. The government accepted nearly all recommendations on 29 April 2022, leading to adjustments such as vesting ownership of water assets in council-held shares within the four regional entities, rather than full transfer to crown entities, and establishing regional assemblies with elected mayors and representatives for strategic oversight. These changes sought to mitigate criticisms of over-centralisation by preserving council influence, though detractors argued they insufficiently addressed democratic deficits and economic risks, with projected entity debt potentially exceeding $120 billion. planning advanced under this revised framework during 2022, incorporating technical adjustments to align with the Water Services Entities Bill. As legislative passage stalled amid , the Labour-led , in a committee stage on 25 November 2022 under urgency, inserted an entrenchment into the Water Services Entities Bill requiring a 60% in to amend or repeal provisions prohibiting privatisation of water assets. This manner-and-form entrenchment, supported only by Labour and MPs, aimed to safeguard ownership but drew immediate condemnation for undermining , as New Zealand's unwritten relies on simple majority rule without binding future legislatures. Constitutional experts and the New Zealand Law Society highlighted risks of judicial intervention and deviation from convention, reserving entrenchment for core rather than policy measures. Facing backlash, including from within Labour, announced on 4 December 2022 the removal of the clause before third reading, admitting it as an error that bypassed standard processes. The bill passed without entrenchment on 8 December 2022, establishing the entities but deferring full operationalisation. The episode underscored tensions in the reform's implementation, with critics viewing it as an authoritarian overreach to lock in centralised control despite public and local resistance.

2023 Modifications

Revamp Rationale and Changes

In April 2023, the , led by Local Government Minister , announced a refocus of the water services reform programme to address criticisms of the original model, which had been faulted for excessive centralization that diminished local council ownership and decision-making over water assets. The official rationale emphasized enhancing regional delivery to achieve for infrastructure upgrades while strengthening local and voice, amid vulnerabilities exposed by events like the 2023 Auckland floods and , which highlighted aging pipes and underinvestment risks estimated at $120–185 billion over 30 years. Key changes involved expanding the number of water services entities from four large national-scale organizations to ten regionally aligned entities, intended to better reflect local demographics and council groupings for improved representation on oversight boards. The programme was rebranded as the Affordable Water Reforms to underscore goals of cost-effective service delivery, with councils retaining non-voting shares in entities and contributing assets valued at around $85 billion, though transfer remained mandatory to access central support. Co-governance elements persisted, including 50% representation on regional steering committees to fulfill obligations, a provision McAnulty defended as essential for partnership despite ongoing debate. These adjustments aimed to secure broader council buy-in, with the government projecting that ten entities would suffice for $50–120 billion in efficiencies through shared services and bulk procurement, while delaying full implementation to allow further consultation. Critics, including opposition parties and some councils, dismissed the revamp as a superficial rebranding that failed to resolve core issues of forced asset transfer and democratic accountability, predicting continued financial burdens on ratepayers. The changes were formalized in the Water Services Entities Amendment Act 2023, which received royal assent on 16 August 2023 but postponed entity establishment beyond the October general election.

Revised Implementation Plans

In April 2023, the New Zealand government announced revisions to the water services reform, rebranding it as the Affordable Water Reform programme and adjusting the structure from four large entities to ten regionally aligned water services entities (WSEs) to prioritize local decision-making, affordability, and resilience while maintaining public ownership. These entities were delineated across specific service areas, including Northland, Auckland, Waikato, Bay of Plenty-Tairāwhiti, Hawke's Bay-Wairarapa, Horizons (Manawatū-Whanganui), Taranaki-Tūtoariri, Greater Wellington, Tasman-Nelson-Marlborough, and Canterbury-Otago Southland, as specified in Schedule 2 of the amending legislation. The Water Services Entities Amendment Act 2023, receiving on 22 August 2023, formalized the revised timelines with staggered establishment dates set by , commencing from 1 July 2024 for initial entities such as those in Northland and , and extending to 1 July 2026 for others to facilitate orderly transitions. This phasing allowed councils to prepare for asset transfers, with full operational handover targeted post-2026, subject to exceptional circumstances permitting delays or adjustments. Key implementation mechanisms included enhanced board compositions with increased council-appointed representatives for stronger local accountability, alongside provisions for entity mergers not earlier than 1 July 2026 via structured plans and . A new Water Services Entities Funding Agency was established to provide loans and grants, aiming to address deficits estimated at NZ$120-185 billion over 30 years, with economic regulation by the Commerce Commission to ensure cost efficiency. Community priority statements were mandated to integrate local water-related preferences into entity strategic planning, while shared services directions enabled collaboration on non-core functions like IT and procurement. The revised plans emphasized a transition period during which councils retained delivery responsibilities until WSEs assumed control, supported by interim economic regulation under the Water Services Economic Efficiency and Consumer Protection Bill introduced in June 2023. Despite these adjustments, implementation required ongoing regulatory refinements, including updates to standards under Taumata Arowai, with the programme's viability tied to legislative passage before the October 2023 election.

Repeal and Alternative Approach

2024 Repeal Legislation

The Water Services Acts Repeal Act 2024 was introduced to Parliament on 13 February 2024 as part of the incoming National-led coalition government's 100-day action plan following the October 2023 general election. The legislation passed its third reading on 14 February 2024 under urgency, with support from National, ACT, and New Zealand First, repealing the foundational statutes of the Water Services Reform Programme without select committee scrutiny due to the bill's narrow scope and time-sensitive nature. The Act specifically repealed three key pieces of prior legislation: the Water Services Entities Act 2022, which had created four regional water services entities to centralize ownership and delivery; the Water Services Legislation Act 2023, which outlined transitional arrangements and modifications to the reform model; and the Water Services Economic Efficiency and Consumer Protection Act 2023, which established economic regulation and consumer protections for the entities. These repeals dissolved the entities, halted entity formation processes, and returned water assets and responsibilities to local councils, effectively ending the centralized model amid criticisms of projected compliance costs exceeding $1.9 billion and reduced local democratic oversight. The Act received on 16 February 2024 and entered into force immediately on 17 February 2024, with transitional provisions allowing for the winding up of any preparatory work under the repealed laws, such as board appointments or contracts, to minimize disruption. No financial penalties were imposed on councils for prior engagement, and the repeal aligned with the government's policy to shift toward localized water management under the "Local Water Done Well" framework, emphasizing council-led solutions with optional collaboration and access to low-interest financing. The move was justified by Minister as restoring control to communities and avoiding the risks of unproven large-scale entities, though Labour opposed it as hasty and potentially delaying .

Emergence of Local Water Done Well

Following the formation of the National-led coalition government after the October 14, 2023, general election, Local Water Done Well emerged as the designated replacement for the repealed Three Waters reforms, with the policy direction formally announced in December 2023 to prioritize local control over water services delivery. This approach was rooted in the National Party's pre-election commitment to devolve decision-making to councils, rejecting the previous centralized model that had mandated large regional entities and incorporated co-governance elements under the . The policy's emergence addressed longstanding infrastructure deficits—estimated at NZ$120-185 billion over 30 years—by enabling councils to tailor solutions to regional needs without compulsory asset transfers to distant entities. The framework's initial rollout coincided with the Water Services Acts Repeal Act, passed on February 28, 2024, which nullified the prior Labour government's legislation and immediately restored ownership and operational authority to local councils. This repeal, enacted within the government's first 100 days as pledged, created a transitional vacuum that Local Water Done Well filled by emphasizing financial sustainability through ringfenced revenue streams—such as targeted rates or user charges—and national regulatory backstops for , environmental compliance, and . Unlike its predecessor, the policy eschewed mandatory multi-entity structures, instead permitting councils to opt for in-house management, standalone council-controlled organizations, or voluntary inter-council collaborations, with an estimated 20-30% potential cost savings from localized efficiencies cited in early government analyses. Subsequent legislative scaffolding solidified the policy's foundations, beginning with the Local Government (Water Services Preliminary Arrangements) Act 2024, enacted on September 2, 2024, which mandated councils to develop Water Services Delivery Plans by September 3, 2025, outlining entity structures, funding mechanisms, and compliance pathways. These plans, required to demonstrate affordability and resilience against risks like and impacts, marked the policy's operational emergence, with initial submissions projecting average household water bill increases of around NZ$900 annually in some regions due to deferred maintenance catch-up. By mid-2025, the first dedicated water services entity under the framework, Selwyn Water Limited, was established by Selwyn District Council on July 8, 2025, serving as a proof-of-concept for scalable, locally governed models focused on reliable supply and management. This progression underscored the policy's intent to foster innovation at the local level while imposing Taumata Arowai standards for safety and economic oversight via the Commerce Commission to mitigate debt burdens, projected to average NZ$5-10 billion per council grouping without central subsidies.

2025 Council Delivery Plans and Regulations

The Local Government (Water Services) Act 2025, enacted on 26 August 2025, mandates that territorial authorities develop and submit Water Services Delivery Plans by 3 September 2025 to outline long-term strategies for drinking water, wastewater, and stormwater services under the Local Water Done Well framework. These plans must specify the intended delivery model—such as in-house management, establishment of council-controlled organizations (CCOs), or transfers to multi-council entities—and detail required investments to achieve compliance with national standards, including those set by Taumata Arowai for drinking water quality. Failure to submit an approved plan triggers ongoing obligations for providers to revise and resubmit until transfer arrangements are finalized. Plans require public consultation and ministerial approval, emphasizing financial sustainability, infrastructure upgrades, and risk management without mandating centralization. For instance, Hamilton City and District Councils submitted New Zealand's first multi-council delivery plan on 25 July 2025, focusing on shared service efficiencies while retaining local control. Similarly, Mackenzie District Council submitted its plan on 1 September 2025 after opting for in-house delivery, and Kapiti Coast District Council adopted its plan on 29 August 2025, prioritizing targeted investments over amalgamation. Accompanying regulations under the Act introduce economic oversight, with the Ministry of Business, Innovation and Employment (MBIE) tasked with developing pricing and efficiency benchmarks by late 2025, though full implementation is phased to 2026. These provisions aim to address historical underinvestment—estimated at $120-185 billion nationally—through localized debt-raising powers and incentives for amalgamation where viable, without overriding council autonomy. By October 2025, over half of New Zealand's 67 territorial authorities had either submitted or publicly consulted on plans, reflecting varied approaches from standalone operations to regional clusters.

Core Controversies

Centralization vs Local Control Debate

The Water Services Reform Programme, initially proposing the amalgamation of local assets into four large entities covering , , and services, ignited a fundamental debate over whether centralization would deliver superior outcomes compared to decentralized local authority management. Proponents, including the Labour Government, argued that larger entities would harness to fund an estimated $120-185 billion in nationwide upgrades over 30 years, addressing chronic underinvestment that had led to compliance failures in 62% of councils' three waters services as of 2021. This approach was posited to enable specialized expertise, standardized , and risk pooling, potentially reducing per-connection costs by 20-40% through bulk procurement and shared technical capabilities, as outlined in government economic modeling. However, subsequent revisions to ten entities in 2023 were framed as a concession to local input while preserving scale benefits, though critics contended this still eroded direct democratic oversight. Opponents, including the National Party, Local Government New Zealand, and independent analysts, emphasized the primacy of local control for and responsiveness, asserting that transferring assets valued at over $100 billion from ratepayer-elected councils to distant entities would diminish community influence over service priorities and pricing. Empirical assessments, such as those by infrastructure advisory firm , found scant evidence of substantial in New Zealand's water sector, with network operations exhibiting constant and only marginal operational savings (estimated at 5-10%) possible from centralized or procurement, insufficient to justify the trade-offs. These analyses, drawing on international benchmarks and , highlighted risks of diseconomies in oversized bureaucracies, including higher administrative costs and reduced incentives for efficiency, as observed in comparable utility amalgamations elsewhere. Local leaders, such as mayors from smaller districts, argued that tailored, proximate decision-making better aligns services with regional needs, like rural , avoiding a one-size-fits-all model that could exacerbate inequities. The debate underscored tensions between national standardization and subnational autonomy, with centralization advocates citing post-Havelock North (2016) water safety crises—where decentralized systems failed to prevent outbreaks affecting 8,000 people—as evidence of systemic local shortcomings requiring intervention. Yet detractors, supported by regulatory audits showing variability but not uniform failure, countered that enhanced funding mechanisms and targeted capacity-building, rather than asset expropriation, could resolve deficits without compromising electoral accountability; for instance, councils demonstrated that collaborative models like yielded compliance gains without full centralization. This contention contributed to the programme's 2024 repeal under the National-led coalition, shifting toward the Local Water Done Well framework, which empowers councils to pursue voluntary amalgamations or retain control, prioritizing localized amid acknowledged challenges.

Co-Governance and Democratic Accountability

The Water Services Reform Programme embedded co-governance elements in its model for the proposed water services entities, primarily through Regional Representative Groups (RRGs) that included mandatory representation from mana whenua alongside local authority delegates. These groups were tasked with appointing entity boards and overseeing strategic direction, with involvement justified as fulfilling partnership obligations under the , including alignment of entity boundaries with traditional and requirements for boards to incorporate knowledge of Treaty principles and mana whenua perspectives. Entities were further directed to partner with on service delivery and respond to -submitted Te Mana o te Wai statements outlining cultural priorities. Democratic accountability concerns arose from the equal weighting of and voices in RRGs, which critics described as effectively halving the influence of elected representatives and introducing unelected tribal appointees into decision-making over essential infrastructure serving millions. Under the Water Services Entities Act 2022, boards reported to these hybrid RRGs rather than directly to voters via councils, with public meetings mandated but ultimate oversight diluted by shared control structures that lacked electoral mechanisms for iwi components. Opponents, including bodies and opposition parties, argued this shifted power toward corporate entities—often not representative of all —potentially prioritizing customary interests over ratepayer-funded assets and universal service needs, without transparent justification tying such arrangements to infrastructure efficacy. The Labour government's 2023 modifications to the programme, announced on , increased entities from four to ten and adjusted ownership shares but retained the core co-governance framework in RRGs and board appointments, prompting sustained that it failed to address deficits despite public and council backlash. Proponents maintained the model enhanced cultural responsiveness and long-term , yet empirical resistance—evident in select committee submissions and polls showing majority opposition—highlighted a perceived disconnect between centralized mandates and local electoral legitimacy. These tensions underscored broader debates on whether Treaty-derived co-governance could coexist with one-person-one-vote principles in public utilities, ultimately factoring into the programme's repeal via the Water Services Acts Repeal Act 2024, which restored primary authority to democratically elected councils.

Cost Efficiency and Financial Risk Assessments

The original Water Services Reform Programme, encompassing the Three Waters initiative, projected significant cost efficiencies through aggregation into four regional entities, estimating national infrastructure needs at NZ$120-185 billion over 30-40 years, with claimed savings of up to 20-30% on operating expenditures via economies of scale. Independent economic modeling by the Water Industry Commission for Scotland (WICS), commissioned for the reform, identified potential efficiency gains but noted challenges in benchmarking due to New Zealand's dispersed population and geography, estimating aggregate operating cost reductions of NZ$685 million annually if full scale were achieved, though with high uncertainty in realization. Critiques of these efficiency projections highlighted limited evidence for substantial scale benefits in New Zealand's context, where small and remote communities predominate; a Advisors analysis found that while some operational savings (e.g., 10-15% in ) were plausible for larger entities, overall aggregation could increase costs through transitional expenses, regulatory overhead, and unproven structures, potentially offsetting gains and raising per-household bills by NZ$200-500 annually in some models. assessed the reforms as accelerating investment but introducing execution risks, including unreliable cost data and dependency on untested entities, which could elevate borrowing costs without guaranteed efficiencies. Financial risks under the programme centered on financing, with entities empowered to raise up to NZ$120 billion in bonds backed by implicit or explicit guarantees, exposing the national to contingent liabilities if revenues faltered from underperformance or population shifts. analyses warned of fiscal vulnerabilities, including separation failures leading to bailouts, estimated at NZ$5-10 billion in worst-case scenarios, compounded by co-governance arrangements that might introduce decision-making delays and higher compliance costs without corresponding productivity boosts. Following the 2024 repeal, the Local Water Done Well framework shifted to council-led delivery, emphasizing financial through ring-fenced revenues and moderated plans, with initial assessments projecting average annual household bills rising NZ$900 in some regions to fund NZ$130-170 billion in nationwide upgrades, forgoing centralized scale but mitigating entity-specific debt risks via localized accountability. options assessments under the prioritize cost-effective models, such as among proximate authorities, to achieve without aggregation premiums, though risks persist from variable local capacities, potentially leading to uneven investment and rate shocks exceeding 20% in underfunded areas if standards lags. Overall, empirical outcomes favor decentralized approaches for risk containment in New Zealand's fragmented market, where centralized models' efficiency promises remain empirically unproven beyond theoretical aggregation benefits observed in denser jurisdictions like .

Reception Across Stakeholders

Political Party Positions

The Labour Party initiated the Water Services Reform Programme in 2021 as part of its infrastructure agenda, legislating the creation of ten regional water services entities to centralize management of , , and infrastructure, with the stated goal of achieving to address a nationwide funding shortfall estimated at $120-185 billion over 30 years. The party defended the reforms against criticism by emphasizing improved service standards, reduced health risks from contaminated water, and long-term financial sustainability through shared expertise and borrowing capacity unavailable to individual councils. Following the 2023 election loss and the subsequent repeal in February 2024, Labour maintained that the alternative approach risked perpetuating rate increases and underinvestment without centralized coordination. The National Party consistently opposed the programme, characterizing it as an overreach that stripped local councils of asset ownership and decision-making authority while embedding unelected representation in governance structures, potentially undermining democratic accountability. In its 2023 election policy, National committed to repealing the Water Services Entities Act 2022 within 100 days of forming government, which it achieved on 14 February 2024, replacing it with the Local Water Done Well framework to restore council control, enhance debt financing limits, and facilitate voluntary regional collaborations without mandatory centralization. rejected the reforms as an inefficient and ideologically driven centralization that prioritized co-governance quotas—such as 50% representation on entity boards—over practical service delivery, arguing that no evidence supported interest in acquiring water assets and that councils could manage improvements through targeted funding reforms. The party advocated returning full ownership and operations to local authorities, enabling voluntary shared services agreements to achieve efficiencies without coercive entities, a stance aligned with its role in the coalition government's repeal and subsequent Local Water Done Well legislation passed in August 2025. voiced strong opposition to the programme, particularly critiquing its perceived bias toward veto powers and asset transfers that could erode public ownership, positioning the reforms as a departure from equitable local governance. As a coalition partner post-2023, the party supported the repeal and emphasized council-led solutions with national support for infrastructure upgrades, rejecting the original model's scale as unproven for cost savings. The initially backed the need for systemic water reforms to enforce stricter environmental standards and protect public assets from but withdrew support for the Water Services Entities Bill at its third reading on 8 December 2022, citing inadequate entrenchment clauses to prevent future asset sales and insufficient into more entities. The party advocated exploring council borrowing guarantees and regional models as alternatives, viewing the Labour approach as compromised by weak safeguards despite alignment on public ownership principles. Te Pāti Māori opposed the enactment of the reform bills, with co-leader arguing in 2023 that the proposed entities failed to operationalize partnerships through meaningful mana whenua involvement in decision-making, rendering the co-governance provisions symbolic rather than substantive. The party criticized the 2024 repeal and Local Water Done Well as further marginalizing roles in water stewardship, insisting on and consultation as to uphold kaitiaki responsibilities.
PartyKey Position on Original ProgrammePost-Repeal Stance
LabourSupported centralization for funding and standardsOpposed repeal; favors entity model revival
NationalOpposed; anti-centralization, pro-local controlImplemented Local Water Done Well
ACTOpposed; rejected co-governance, favored councilsSupported repeal and council empowerment
NZ FirstOpposed; against iwi-favored elementsBacked repeal and local solutions
GreensConditional support; withdrew over privatizationCritical of both original and replacement
Opposed; inadequate Treaty implementationOpposed repeal; demands iwi inclusion

Local and Regional Government Responses

Local and regional governments in expressed significant reservations about the Water Services Reform Programme, particularly its centralization of water assets into multi-regional entities, which was perceived as eroding democratic control and . Approximately 75% of authority submissions opposed the core model proposed in , highlighting concerns over mandatory asset transfers, loss of influence in service delivery, and insufficient input despite broad support for improved standards and a dedicated economic regulator. Councils emphasized the need for voluntary collaboration rather than compulsion, with entities like advocating for mechanisms such as memoranda of understanding to retain oversight, while smaller districts feared diminished community connection to infrastructure decisions. Local Government New Zealand (LGNZ), the primary representative body for councils, acknowledged the programme's intent to address chronic underinvestment—estimated to require $120-185 billion over 30 years—but critiqued its execution, including the 2021 decision to mandate participation as "disappointing" despite partial alignment with council feedback on and equity. Individual councils diverged from LGNZ at times, with some, like Waimate District Council, voicing dissatisfaction over the association's perceived leniency toward the reforms, and others forming legal challenges against over asset valuation and transition terms. The 2023 policy reset expanding entities to 10 was viewed by LGNZ as responsive to scale concerns but insufficient to resolve accountability deficits. Following the programme's repeal on 14 February 2024, responses shifted positively toward the successor Local Water Done Well framework, which restored council ownership and emphasized voluntary multi-council arrangements. LGNZ endorsed the approach for maintaining local assets and , welcoming the August 2024 policy certainty that enabled financial planning amid infrastructure deficits. By September 2025, all 67 territorial authorities submitted water services delivery plans on schedule, outlining strategies for compliance with new standards by 2027-2030, though some councils initiated public consultations to refine options like amid ongoing affordability pressures. This transition reflected relief from central mandates but underscored persistent challenges in funding upgrades without cross-subsidies from larger entities.

Māori Leadership Views

Māori leadership views on the Water Services Reform Programme centred on the proposed co-governance mechanisms, which aimed to integrate /Māori interests into water service entities as a means of fulfilling obligations related to . Proponents argued that these arrangements would enable greater exercise of rangatiratanga (chiefly authority) over freshwater, stormwater, and , addressing historical grievances from Treaty settlements that affirmed Māori interests in water. Te Pāti Māori, a key Māori political voice, supported the underlying goal of enhanced Māori involvement but opposed the Water Services Entities Act 2022 passed in December 2022, contending it inadequately recognized Māori proprietary and customary rights over water and provided insufficient governance authority to . Co-leader highlighted these shortcomings, stating the legislation did not align with the party's to overturn the Crown's position that "everyone owns water" in favor of affirming Māori rights. Prominent iwi figures expressed endorsement of iwi-led roles within the reforms. In August 2023, Tainui leader Tukoroirangi Momōteā urged bold action with iwi and Māori at the forefront of water decisions, emphasizing that the programme reflected shared national aspirations and posed no undue risks to non-Māori stakeholders. Opposition emerged from some local iwi, particularly regarding the programme's centralization, which they saw as undermining hapū (sub-tribal) and local autonomy in favor of national entities. In July 2022, iwi partners collaborating with Otago District Council formally opposed the second tranche of reforms, citing concerns over eroded local decision-making and diminished community influence on water services. The February 2024 repeal of the programme's core legislation drew criticism from advocacy groups, who viewed it as a setback for embedded protections of / participation. Te Wai Trust, in its April 2025 submission on the replacement Local Government (Water Services) Bill, argued against discarding the prior framework's provisions for interests, warning of reduced pathways for and engagement in service delivery.

Public Opinion and Protest Movements

Public opinion towards the Water Services Reform Programme, commonly known as Three Waters, was predominantly negative, as evidenced by multiple polls. A 1News Kantar Public Poll conducted in January 2022 revealed that only 26% of voters supported the reforms, with a expressing opposition. Opposition intensified later, with a Taxpayers' Union-Curia poll in November 2022 finding 70% of respondents who expressed a view against the programme, citing concerns over and . Protest movements arose primarily from rural communities, farmers, and advocates focused on preserving democratic control over water assets. Groundswell NZ, a farmer-led group, organised public meetings and roadshows, including a June 2022 event in Southland that drew about 400 attendees protesting the reforms' centralisation. Smaller-scale demonstrations occurred locally, such as a June 2022 rally in with around 120 participants opposing the loss of council authority. The Communities 4 Local Democracy group, comprising approximately 30 councils by early 2022, coordinated opposition efforts, submitting critiques to parliamentary select committees and advocating for alternatives that retained local ownership and . These activities highlighted grievances including fears of reduced , potential financial burdens on ratepayers, and the perceived overreach of co-governance models in unelected entities, contributing to the programme's eventual reset and repeal in late 2023.

Empirical Outcomes and Legacy

Achieved Reforms and Shortfalls

The Water Services Reform Programme achieved the establishment of Taumata Arowai as New Zealand's independent water services regulator on 1 March 2021, under the Water Services Act 2021, which took full effect on 15 November 2021. This entity assumed responsibility for setting national standards, monitoring and stormwater discharges, and enforcing compliance, replacing fragmented oversight previously handled by the Ministry of Health and local councils. By 2025, Taumata Arowai had registered over 1,400 supplies and issued guidelines addressing compliance gaps, contributing to measurable improvements in reporting and practices across suppliers. These regulatory advancements persisted post-repeal, providing a foundational framework for ongoing service enhancements independent of the programme's structural elements. The programme also facilitated comprehensive national assessments of three waters infrastructure, revealing a $185 billion funding shortfall over 30 years due to decades of underinvestment by local authorities. This data-driven diagnosis, informed by the 2019 Three Waters Review, underscored chronic issues such as aging pipes, leakage rates exceeding 40% in some regions, and non-compliance with environmental standards, prompting councils to prioritize water assets in long-term planning even after repeal. However, these diagnostic efforts did not translate into direct capital investments, as no centralized funding mechanisms were operationalized before the 2024 repeal. Shortfalls were pronounced in the failure to implement the core amalgamation of services from 67 councils into four regional entities, as outlined in the Water Services Entities Act 2022, which passed in September 2022 but saw no entities formed due to widespread opposition and subsequent repeal on 14 February 2024 via urgency legislation. This structural inertia left water services fragmented, exacerbating affordability pressures; councils now confront debt ceilings under the Local Government Funding Agency, with average household water rates projected to rise 20-90% without scale efficiencies or $1.2 billion in anticipated government equity injections. Empirical critiques highlighted unproven assumptions about , with independent analyses estimating that amalgamation costs could offset benefits for smaller entities, and alternative models like targeted council mergers offering lower-risk paths ignored in the top-down design. The programme's emphasis on mandatory iwi representation in , equating to 50% in some entities, generated legal and democratic contention without demonstrated causal links to improved service delivery, as evidenced by ongoing compliance shortfalls in Māori-impacted areas pre-reform. Repeal delayed national resilience against climate risks, such as stormwater overflows during 2023 floods, where localized systems proved inadequate absent coordinated investment. Overall, while regulatory foundations endured, the absence of executed reforms perpetuated a $120-185 billion investment gap, shifting burdens to ratepayers and stalling progress toward sustainable, resilient water infrastructure as of 2025.

Post-Repeal Water Service Developments

Following the repeal of the Water Services Entities Act 2022 and related legislation on 14 February 2024 through the Water Services Acts Repeal Act 2024, the introduced the Local Water Done Well (LWDW) framework as the primary alternative for addressing water infrastructure challenges. This policy shifted emphasis from centralized multi-entity models to localized delivery, enabling councils to form council-controlled organizations (CCOs) or multi-council collaborations while maintaining national standards for quality and wastewater management enforced by the regulator Taumata Arowai. The LWDW approach aimed to promote financial through targeted borrowing access via the Local Government Funding Agency and economic regulation to incentivize efficiency, without the debt limitations imposed under prior local government financing rules. Legislative implementation proceeded in three stages, with the first repealing prior laws, the second establishing economic oversight mechanisms including a new regulator under the Commerce Commission for pricing and performance monitoring, and the third enacting the Water Services Economic Efficiency and Consumer Protection Act 2025, which received on 26 August 2025. Under this regime, territorial authorities were required to develop and submit water services delivery plans by 3 September 2025, outlining strategies for compliance, infrastructure upgrades, and cost management; over 70 councils met this deadline, proposing models that projected average household water bill increases of around 20-30% over the next decade to fund renewals estimated at NZ$120-185 billion nationally by 2050. These plans anticipated the emergence of approximately 40-50 independent water service providers, including standalone council operations and regional entities such as the proposed Northland Water Services CCO involving three district councils. Early outcomes included varied regional adaptations, with entities like Council opting for in-house delivery under the "Our Water, Our Way" model to retain local control, while others pursued to achieve without mandatory amalgamation. Financial mechanisms under LWDW facilitated initial borrowings exceeding NZ$1 billion for priority projects by mid-2025, though critics from sectors highlighted persistent underinvestment risks, as historical deficits—stemming from decades of deferred maintenance—continued to necessitate ratepayer-funded capital works amid constraints on subsidies. Economic , operational from late 2025, introduced protections such as price-quality paths and disclosure requirements to mitigate monopolistic , with initial assessments indicating potential cost savings of 10-15% through competitive procurement compared to pre-repeal projections. Despite progress in devolving , implementation faced hurdles including coordination delays among smaller councils and heightened scrutiny over compliance with Three Waters standards, which mandate 99.9% compliance for microbial risks by 2026. As of October 2025, transitional funding pools and advisory support from the assisted plan refinements, but ongoing debates centered on balancing local autonomy with national efficiency mandates, with no widespread evidence yet of reversed decay or fully resolved affordability pressures.

Persistent Challenges and Future Prospects

Despite the repeal of the centralized Three Waters model and the introduction of the Local Water Done Well framework in 2024–2025, New Zealand's water services continue to grapple with chronic underinvestment in , estimated to require NZ$120–185 billion over the next 30 years to address aging pipes, leaks, and capacity shortfalls. Many networks suffer from decades of deferred maintenance, leading to high losses—often exceeding 40% in some regions—and heightened risks of contamination events, as evidenced by ongoing compliance struggles under the Taumata Arowai regulator's standards introduced in 2021. Financial pressures on local councils remain acute, with ratepayer-funded models straining affordability amid rising operational costs and stringent national standards for safety, , and management. Regulatory fragmentation exacerbates these issues, as the shift back to council-led delivery under the Water Services Economic Efficiency and Consumer Protection Act 2024 and related imposes new economic oversight without resolving core funding gaps, potentially leading to inconsistent across 67 territorial authorities. Critics, including infrastructure experts, argue that without mechanisms for —such as voluntary multi-council entities—the decentralized approach risks perpetuating inefficiencies, with projected household bills rising to NZ$900 annually in areas like due to necessary capital investments. Looking ahead, the requirement for councils to submit Water Services Delivery Plans by 3 September 2025 offers a pathway to tailored, sustainable models, potentially incorporating public-private partnerships or targeted amalgamations to enhance resilience against climate-driven demands like intensified rainfall and sea-level rise. The establishment of economic regulation by the Commerce Commission, effective from mid-2025, aims to enforce efficiency and consumer protections, though its success hinges on councils achieving financial viability without excessive debt or rate hikes. If plans fall short, government intervention—such as mandated mergers—remains a prospect, balancing local autonomy with national imperatives for reliable supply, as outlined in the Local Water Done Well Acts passed on 19 August 2025. Long-term prospects include leveraging digital monitoring and leak-detection technologies to curb losses, but persistent fiscal constraints and political resistance to centralized funding could delay full compliance with Three Waters-era investment benchmarks.

References

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