Local Water Done Well

New national regulations require stricter water quality, safety, and environmental standards. Councils must determine how to best manage water services while maintaining financial sustainability.

The government has moved away from large-scale centralisation, recognising that councils and communities should have more say in how their water services are managed. However, all water services must still meet high environmental and safety standards, which means councils need to find ways to structure services efficiently and cost-effectively.

The original Three Waters Reform proposed shifting all water services (drinking, wastewater, and stormwater) to four large entities across New Zealand. The Affordable Waters policy revised this approach by increasing the number of entities but maintaining central control. Local Water Done Well is a locally-led model where councils retain a greater level of control and oversight. Instead of a distant centralised entity, it is designed to reflect the needs of our communities while still meeting national regulations.

If councils choose not to participate in Local Water Done Well or an alternative model, they will still be required to meet national water quality and infrastructure requirements. This could result in significant financial pressure on councils to maintain and upgrade water services independently.

Water services will be funded through direct charges rather than rates. Prices will be standardised over time.

No. The proposed model is more like Auckland’s water services approach, ensuring local accountability and cost management.

While reversing a decision would be complex, councils will retain oversight to ensure services are delivered effectively and affordably.

Local Water Done Well introduces a new regulatory regime for water services delivery. There will be new rules for investment, borrowing and pricing and new options for how we deliver water services. This new environment requires councils to prepare a water services delivery plan by 3 September 2025 to demonstrate how water services delivery (drinking water, wastewater and stormwater services) will meet new water quality and infrastructure standards, support growth and urban development and be financially sustainable by 30 June 2028.

There are many ways that ratepayers and industrial users are currently being charged for water services. For the purposes of this consultation to compare options, we have pulled together the total revenue requirements and divided this by the number of connections for each option to reflect an indicative annual charge for an average consumer (domestic or industrial) receiving access to all water services [drinking water, wastewater and stormwater management] under a consistent set of assumptions.

The Local Government (Water Services) Bill, likely to become legislation by mid-2025, contemplates green water services infrastructure within the context of stormwater service. Green water services infrastructure means a natural, semi-natural or engineered area, feature or process that mimics natural areas, features, or processes that are planned or managed to provide water services. Further work will be done on stormwater services, including water races, within the preparation of the water services delivery plan in September 2025.

The status quo and joint CCO options have been modelled from each council’s Long-Term Plans. The South Wairarapa model is based on a draft unaudited Long-Term Plan. All capital works, including those from years 9 to 20, are based on Council Infrastructure Strategies and underlying asset management plans. Additional capital works have been included for Carterton District Council. Both options assume additional regulatory charges will take effect from 1 July 2025 for the two new regulators being Water Services Agency – Taumata Arowai and the Commerce Commission. These additional regulatory costs will impact future water services charges regardless of which option council decides.

The inflation rate chosen and applied for twenty years will significantly impact the projected average connection charges and is a significant unknown today. It was determined that a better approach was to use uninflated numbers consistently across the modelling to enable a comparison of options. For estimates of indicative charges including assumed inflationary impacts, please contact council.

Public consultation runs from 7 March to 22 April 2025.

Online submissions, public meetings, and written forms available at council offices.

Consultation closes on 22 April. Councils will review feedback, deliberate on the preferred model, and make formal decisions following hearings.

Your council will decide on the future of water services delivery after the consultation process is completed. Once the decision is made, the preferred option will be incorporated into the Water Services Delivery Plan as the proposed delivery model. The WSDP must be submitted to the Secretary for Local Government by 3 September 2025, and if accepted, the new entity will be established. In our modelling, we have assumed a start date for any new entity of 1 July 2026. An Establishment Plan has not yet been developed, as this must come after the consultation process and decision on the preferred option.

Council does not believe we would be required to consult again, as the consulted delivery option will still be a multi-council joint council-controlled organisation. Council could seek legal advice if this risk comes to fruition.

The financial forecasts developed for our proposal and alternative option are made up as follows:

• The forecasts assume the commencement date for a joint CCO is 1 July 2026.
• Both options assume additional regulatory charges will take effect from 1 July 2026 for the two regulators involved: the Water Services Agency – Taumata Arowai and the Commerce Commission.
• Both the Carterton-only and CCO option forecasts have used the 2026/27 financial year as Year 1.
• The Carterton-only forecast uses Carterton District Council’s financial strategy, including policies for depreciation and debt funding, as prescribed in the Local Government Act 2002 (LGA 2002).
• The CCO’s financial model forecasts funding all capital investment from debt.  Debt servicing costs are recovered via revenue charged to water, wastewater and stormwater users. The CCO model anticipates using the greater debt leverage that will be available and managing the funding needs with a utilities infrastructure funding model.
• The forecasts for both options use inputs from our Long-Term Plan operating and capital expenditure, extended to 20 years.  These forecast calculations are based on a ‘steady state’ of operating and capital expenditure beyond year 10, with the exception of:
• Carterton District Council additional capital spend of $20m spread evenly across wastewater and water supply.
• Masterton District Council additional capital spend of $60 million (plus inflation) for a major wastewater treatment plant upgrade from 2034.
• Capital investment in the CCO option has been focused to the early years of the entity’s operation. This reflects both the capacity of debt funding available and the ability of contractors to complete a high tempo work programme without compromising quality or increasing price.
• The CCO option anticipates scale economies and efficiencies in operating and capital investment at 1% of annual expenditure, beginning at year 3. Growth in the number of connections is also anticipated at 1.9% per annum.
• The CCO option includes an estimated $5m for set-up costs, and a further $2.8m for operational costs, over and above existing costs.
• The financial forecasts have been developed using the best information available at the time they were prepared and are based on a set of assumptions, all of which will be subject to variability.

 In addition to the above, the National Infrastructure Funding and Financing (NIFF) and the Local Government Funding Agency (LGFA) have provided input and oversight throughout the development of the financial model.

Download our Water Services Delivery Plan Financial Template – for WairarapaTararua water services CCO document for further information.