3 Waters Reform — Local Water Done Well

In 2021 when Three Waters Reform was first proposed, the government aimed to centralise the management and ownership of stormwater, drinking water, and wastewater into four regional co-governed entities, moving these responsibilities away from councils.

Our Council had a range of concerns and fundamentally opposed the forced removal of public-owned assets.

We consulted the community, and 95% of respondents told us that they opposed the reform and valued local ownership and control over water services.

Waimakariri District Council led the formation of Communities 4 Local Democracy (C4LD), a coalition of around 30 councils advocating against Three Waters.

C4LD lobbied for local say, and community assets remaining in community ownership. We put forward an alternative reform model that emphasised local say and ownership, while being agile enough to meet higher regulatory and financial sustainability standards.

This policy formed the basis of Local Water Done Well — the reform proposal adopted by the new Government in early 2024.

The policy allows for local solutions and arrangements to be made to address water infrastructure needs while maintaining local ownership and representation.

As a Council, Waimakariri has heavily invested over many years in our water infrastructure and security on behalf of our community and with our environment in mind, and we aren’t facing the same up-coming infrastructure costs as some other communities.

Over the last 20 years we’ve invested over $100m in our water infrastructure to ensure it is of the highest quality and standard and we are planning to ensure it stays this way. We also have a 150 year infrastructure strategy to fund these assets for our community.

Our water-related assets together have a value of $1,103m, and we have a further $112.7m allocated in the Long Term Plan to support drinking water safety upgrades, improve our wastewater treatment infrastructure and address flood risks in our District.

Legislation passed in August last year requires councils to create a Water Services Delivery Plan for the provision of drinking water, wastewater and stormwater services. This plan details how councils will meet higher standards, investment, and regulations and needs to be sent to the Government by September.

In anticipation of this deadline, Hurunui, Kaikōura, and Waimakariri District councils announced that they had been exploring potential efficiencies that could be achieved through collaboration.

We had utility and infrastructure advisers Castalia, undertake modelling for us looking at drinking water and wastewater services. Stormwater was not included as the close link between stormwater infrastructure with roads and reserves means delivery of these services cannot readily be separated from Council ownership.

Several models were considered and modelled for the delivery of drinking water and wastewater services:

Internal business unit within the council — this is essentially the existing approach to service delivery
2 + 1 model — Hurunui and Kaikoura contract WDC to provide management, operational, and maintenance of water services
Management-Operation-Maintenance (MOM) model — All councils maintain their own assets but form a co-owned MOM entity that manages operations
Joint Council Controlled Organisation (CCO) — The three councils set up a company that would own the water assets and deliver water services
Solely owned CCO — Each council sets up its own company that would own the water assets and deliver water services.

Options	Advantages	Disadvantages	Conclusion
Internal Business Unit	• Ownership, governance and operational control remain with council • Retains current efficient and high-quality service and supports integrated land use and infrastructure planning • Lowest cost option over the next 10 years • Council has made significant investment in water infrastructure over the last 20 years and has a future programme to ensure infrastructure remains at the highest level.	• Does not bring possible benefits of a single purpose entity with an independent board.	Preferred option
2+1 model	• Retains current efficient and high-quality service and supports integrated land use and infrastructure planning • Supports North Canterbury.	• Does not bring possible benefits of a single purpose entity with an independent board • May bring some complexity (WDC acting as a contract service provider).	Viable option
MOM	• May provide some efficiencies • Single purpose entity may improve performance over time • Supports North Canterbury.	• Additional cost and uncertain efficiencies • Increases complexity and muddies accountability for services • Loss of integrated land use and infrastructure planning.	Not preferred
Joint CCO	• May provide some efficiencies • Single purpose entity may improve performance over time • Supports North Canterbury.	• Additional cost and uncertain efficiencies • Loss of integrated land use and infrastructure planning • Need to resolve ownership structure.	Not preferred
Sole CCO	• Single purpose entity may improve performance over time	• Additional cost and uncertain efficiencies • Loss of integrated land use and infrastructure planning	Not preferred

Modelling of future costs, based on various scenarios, has shown that in the first 10 years the preferred model for Waimakariri is an internal business unit.

This is essentially the same as we have now but meets the new Government legislative requirements.

Through a business unit we retain effective control and influence which is what we heard was important when we engaged with the community.

Across the longer term (ten years or more) there are possible efficiencies in other structures. However, these would likely be offset by the costs of setting up a new organisation. There would also be a duplication of overheads across other Council operations.

Any decision to change the way water services are provided in Waimakariri also needs to consider more than just financial matters.

Provision of water services is integral to other Council activities such as land use and infrastructure planning. Taking these factors into account, the Council considered the advantages and disadvantages of the options available during a meeting earlier in the year.

Council considers that the most cost-effective way to provide water services for ratepayers, is through an internal business unit and offer to share/provide management and technical services with Hurunui and Kaikoura councils or their organisations.

There is merit in looking at activities our councils jointly undertake through shared services that provides efficiencies and savings while retaining localism. We will continue to explore these discussions going forward.

An internal business unit is the best model for Waimakariri District being a growth council, but also allows our council through shared position to provide water services to one or both councils through shared services arrangements.

As the proposed approach is to continue with our existing service delivery model there is no impact on levels of borrowing, levels of services or future rates compared with existing arrangements.

Any possible shared service arrangement with Hurunui and Kaikōura would similarly not impact on levels of service or rates compared with existing arrangements as the cost of providing services would be fully recovered from the other councils.

And as described above it is unlikely that the other arrangements that involve Waimakariri being part of a CCO would bring significant financial benefits and that is why we recommend an internal business unit as our preferred option.

It also aligns with feedback we received from the community in 2021 when Three Waters Reform was

first proposed. At the time thousands of Waimakariri residents provided feedback to the council to opt out, with 95 per cent who responded to a survey on the issue saying they wanted water to be managed locally with strong local say.

Further information including technical reports on options as well as previously received community feedback is available in documents tab of this project page.