Ministerial Letter - Local Water Done Well Reforms
Published on 22 May 2025
Mayor for the Waitaki District, Gary Kircher, received this letter from the Hon. Simon Watts, Minister for Local Government, yesterday - Wednesday May 21 2025.
In the letter, the Minister outlines the importance of financial sustainability of water services in the Water Services Delivery Plan Council has to submit by September 3 2025, as well as the Commerce Commission's future role in regulating both pricing and investment.
He also confirms there will be no extension to the September 3 2025 deadline, and that Crown Facilitators are available to support Councils before that time - and that failure to deliver a Water Services Delivery Plan would see him consider the appointment of a Crown Water Services Specialist to set a plan for water services.
The full letter is available below but excerpts, including highlights of key messages, are here:
Water Service Delivery Plans
"While the Department will be providing further guidance to councils about the Plan assessment process later this month, there are a couple of key areas I wanted to emphasise in relation to financial sustainability at this stage in your Plan development:
• Meeting financial sustainability requirements and working together. The Act defines financial sustainability as ensuring revenues are sufficient to fund long-term investment in water services and meet all regulatory requirements. I have been clear in my expectation that councils should be working together to address financial sustainability challenges, as you are already actively doing.
In particular, I expect councils to be actively considering working with and supporting their neighbouring councils, especially smaller and rural councils, particularly given there is no requirement for price harmonisation under Local Water Done Well.
As you’ll be aware, collaboration enables resource sharing, efficiency gains, better access to financing, and lower costs for ratepayers. Having a pipeline of future work across a region also provides greater investment certainty, and the potential to build a strong future workforce.
• Long-term thinking and solutions. While Plans must cover a 10-year period, they can also include information that covers a further 20 years if the information identifies investment requirements for water services infrastructure or to support future housing growth and urban development. Councils should be planning and making decisions with an enduring focus on financial sustainability, with these outcomes in mind."
Efficiency of water use and demand management through usage-based charging. The Local Government (Water Services) Bill provides a five-year timeframe to transition away from using property values as a factor in setting water charges, to new charging mechanisms such as water metering and volumetric charging.
Water metering and volumetric charging can help reduce water consumption, assist in quick identification of leaks and help manage water losses, which supports the ongoing efficiency and effectiveness of water infrastructure. Councils should be considering these tools (where they are not already in place) as part of their future arrangements. Under the economic regulation regime, over time the Commerce Commission will also be able to consider whether prices are efficient. Including, for example, whether prices reflect the cost of providing services and whether providers are using water resources efficiently.
Economic regulation regime for water services
"As you progress your Plan, it is important to keep in mind that the entities that make core decisions on water supply and wastewater services will be subject to economic regulation under the Commerce Act 1986. These decisions include those relating to the level of charges or revenue recovery and/or capital and operating expenditure.
As a minimum, all regulated suppliers (councils and water organisations) that have responsibility for these core decisions will be subject to information disclosure. This means the Commerce Commission will require regulated suppliers to publish robust information about the planning, investment, and performance of their water supply and wastewater services.
The Commission will also publish a summary and analysis of that information, to promote greater understanding of the performance of individual regulated suppliers, including their relative performance compared with other providers, and changes in performance over time.
The Local Government (Water Services) Bill also gives the Commission other regulatory tools that they will be able to implement as needed. This includes the ability to set minimum and maximum revenue thresholds, providing a clear expectation to regulated suppliers about what level of revenue needs to be collected for investment in, and operation of, water infrastructure. The Commission will also monitor and enforce the requirement that revenue from regulated water services is spent on regulated water services (financial ringfence)."
Next steps
"I want to maintain the momentum as we approach the 3 September deadline for submission of Plans. The Department will be ready to accept early submission of Plans by councils that are able to. Please keep this in mind in your planning.
I do not intend to grant extensions to the deadline for submitting Plans given the progress made so far, and various avenues of support that have been and continue to be available. Where a Plan is not submitted on time, I will be considering using my powers under legislation to intervene, such as by appointing a Crown water services specialist.
If you feel you may need additional support to enable you to resolve challenges and ensure progress with your Plan, Crown facilitators continue to be available. Crown facilitators are a key part of our approach and councils shouldn’t be reluctant about requesting their support. A Crown facilitator can provide tailored guidance, facilitate collaboration among councils, or assist with joint planning efforts."
Council is publishing this letter to ensure the community has a clear understanding of the Local Water Done Well reforms, and the expectations of the Government in delivering a Water Services Delivery Plan by the deadline.
Letter from Hon. Simon Watts, Minister for Local Government, on Water Services Delivery Plans(PDF, 189KB)