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. 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. 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. 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. 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. In April 2023, the Government announced a major overhaul of the Three Waters programme, renaming it the Water Services Reform Programme. 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. 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. On 14 February 2024, the National-led government passed urgent legislation repealing the previous Labour Government's Three Waters legislation.
History
Three Waters Review 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. 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.
Water services legislation The Taumata Arowai – the Water Services Regulator Bill was introduced to Parliament on 12 December 2019. 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.
Mahuta's reform proposals 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. 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. 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. 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. 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.
Initial plans for implementation
Hawke's Bay investigation 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.
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