The Minister of Local Government yesterday (Wednesday 27 October) announced Cabinet’s decision to introduce legislation to establish four publicly-owned entities to take over the country’s Three Waters.

Infrastructure New Zealand released a media statement yesterday supporting the Government’s decision to progress the Three Waters Reform Programme given the status quo is not working and cannot continue.

The Government has clearly signalled it has no confidence in local government to deliver, and in our view, the reforms are the best option to deliver the changes required at the least cost to ratepayers and households.

The story so far

The Three Waters reform responds to the increasingly apparent challenges facing service delivery nationally. These include ageing infrastructure, historical under-investment, a bow-wave of wastewater plants to be reconsented, source water contamination, higher consumer expectations, required resilience for impacts of climate change and natural hazards, evolving demographics and huge looming costs.

It follows a four-year discussion with local government, iwi and industry, and an eight-week period for local government to provide feedback on the Government’s reform proposals.

Next steps

The Water Services Entities Bill (the Bill) will be introduced to Parliament this December and will have its first reading followed by the usual select committee process early next year.

Cabinet has agreed to establish three working groups, similar to the Stormwater Technical Working Group. These groups will include expertise from across local government and iwi, to partner to refine outstanding elements.

The key timelines are as follows:

The standalone entities will be owned by local government, with safeguards ensuring that communities will be the ultimate guardians of public ownership with any future proposal for privatisation requiring 75 percent of votes in favour in a public referendum.

The proposed reforms anticipate reducing the burden on households, with the average cost being within a range of between $800 and $1640 depending on location, as compared to being between $1900 and $9000 over the next 30 years without reform.

The devil will be in the Bill’s details, and we will be particularly interested in the entity design, especially the governance and accountability arrangements.

Discussion document on regulatory safeguards

Minister of Commerce and Consumer Affairs David Clark has also just released a discussion document that seeks feedback on the regulatory safeguards required to ensure consumers and communities receive three waters services that meet their needs now and into the future.

The 96-page discussion document focusses on whether economic regulation and consumer protection is needed for three waters and, if so, how this should look. The discussion document seeks feedback on issues including:

  • whether economic regulation should apply to all three waters, or just drinking water and wastewater, and which suppliers it should apply to
  • what form of economic regulation should apply, such as information disclosure and price-quality regulation, and how this should be designed
  • whether additional consumer protections are needed for the three waters sector, e.g. whether there should be minimum service level requirements
  • how to give consumers a strong voice and resolve consumer disputes
  • who the economic regulation and consumer protection regulator(s) should be, and how the regimes should be funded.

Public consultation closes at 5pm on 20 December. The discussion document can be viewed here.