Three Waters Reform Programme

On 2 June, the Department of Internal Affairs (DIA) released a second tranche of evidence-based reports, commissioned to inform the case for change for the Three Waters Reform Programme.

Infrastructure New Zealand welcomes these reforms as they anticipate having significant positive impacts on the economy, including increasing gross domestic product (GDP) by $14.4 billion to $23 billion in present value terms over the next 30 years compared to the likely outcomes without reform. Without service delivery reform and the associated efficiency gains, the real cost increases to communities (households and businesses) of meeting the required investment would be significant and likely unaffordable for many smaller communities and low-income customers.

The reforms expect to create a significant number of jobs spread across all sectors. The WICS Phase 2 analysis shows the affordability challenges that local authorities would likely face without reform.

For some small, rural local authorities, average household costs in 2050 could reach as high as $9,000 per annum in today’s dollars and would be unaffordable for many households. In the larger provincial and metropolitan councils, bills could reach between $1,700 and $3,500 per annum in today’s dollars. 

Auckland would be among the centres gaining the least from efficiency, partly because Watercare has already picked-up much of the potential gain since the merger of local authorities in Auckland in 2010. WICS has advised the government that the biggest efficiency gains in water are made with a population base up to 800,000 people. 

But the risks in Three Waters are big, and the capital cost is high. WICS states New Zealand needs to invest $120–$185b in water services over 30 years if it is to reach the same service standards as the United Kingdom which is between four and six billion of capital, year-on-year, over 30 years.

Cabinet expects to make decisions, including the number and boundaries of new water services entities, in the coming months.

Infrastructure New Zealand will partner with DIA to provide several workshops on the reform programme in the coming months. The complete reports are published here. For the key findings of each report click here.