Southern Water Done Well model best position for future – Brad Olsen
Published on 03 June 2025
Leading economist Brad Olsen has voiced strong support for Southern Water Done Well’s preferred water services delivery model, saying it offers the best pathway to safe, reliable water services and long-term financial benefits for the southern region.
At a recent meeting of Southern Water Done Well (SWDW) political leaders and senior staff, Olsen underscored the reality that change was unavoidable.
SWDW’s four partner councils – Waitaki, Gore, Central Otago, and Clutha district councils – are presently consulting on three options for the future delivery of water services to meet the Government’s Local Water Done Well legislation.
Their preferred delivery model is a jointly owned council controlled organisation (CCO).
The Infometrics chief executive and principal economist agreed, saying it provided a strategic, carefully considered approach to meeting future water services challenges.
“Status quo is just not going to cut it anymore. And if it does, it’ll become so expensive that the community won’t tolerate it … the Government clearly isn’t tolerating it already.
“So, effectively, things needs to change.”
One of the most compelling advantages of Southern Water Done Well’s preferred model was the leap in bargaining power it delivers. Individually, the four councils each represent just 1% to 2% of the South Island’s population, placing them 13th to 18th out of 23 South Island councils, in terms of scale.
However, by forming a jointly owned council controlled organisation, they collectively moved into the fourth-largest position, representing 6.6% of the South Island’s population.
“That shift in scale is transformative,” said Olsen.
“It gives councils and their communities far greater influence when negotiating with contractors, accessing skilled staff, and securing funding. In a tight infrastructure market, scale gives you options and leverage.”
Even greater efficiencies would be gained if other councils were accepted into a jointly owned CCO at some point in the future.
Olsen noted SWDW's deliberately conservative approach to financial modelling for the jointly owned CCO and emphasised the importance of looking long-term.
While short-term financial gains may be modest, water assets are long-term (20 years+) and by year 20, modelling for other joint water services delivery entities has shown potential savings of up to 20% compared to going it alone, he said.
Just as significantly, the joint approach improves resilience, attracts talent, and helps councils meet more demanding compliance standards without overburdening local ratepayers.
Olsen believed there was potential for even greater gains beyond initial projections.
“We’ve reviewed the assumptions, and they’re conservative. That’s appropriate, given the significant changes that have to happen, but even under these conservative assumptions, the numbers still stack up.”
The conservative modelling still projects 15–16% operating and capital efficiencies being achieved over “roughly a decade, which is a similar timeframe to achieve efficiencies as seen in other spaces”.
Morrison Low’s modelling of the benefits of a jointly owned CCO shows it would save consumers $44 million in its first seven years compared to where costs would otherwise increase to. Savings for consumers increased to $82 million in the jointly owned CCO’s first 10 years.
Olsen also highlighted that the proposed model retains community ownership while delivering greater long-term benefits through scale and coordination.
The jointly owned CCO provided coordinated investment and joint planning, allowing infrastructure projects to be staggered regionally, smoothing costs, and avoiding competition for contractors.
Southern Water Done Well’s preferred delivery model gave councils the scale, flexibility, and financial sustainability they simply can’t get on their own while retaining community ownership and voice, Olsen said.
Southern Water Done Well consultation closes this Friday (6 June) at 5:00pm.