Three Waters Reform Proposal

1. Introduction

What are the 3 Waters Reforms about? We've put together a series of videos and information about the Government's proposed changes to New Zealand's water services, and what these changes might mean for Waitaki.

2. Background

After the Havelock North water contamination event where 4 people died, the Government is implementing new standards for drinking and wastewater in NZ and are proposing changes to the way the country’s 3 waters (drinking water, wastewater and stormwater) services are delivered to the community. These proposed changes will affect councils and private water suppliers across the country.

Currently the 67 councils in NZ look after drinking water, wastewater and stormwater in their areas. Waitaki has 15 water supplies connected to 12,000 properties and 8 wastewater areas servicing over 8000 properties. Government is proposing that control is removed from individual councils and transferred to 4 main entities. Water services in Waitaki would be controlled by Entity D which covers most of the South Island, servicing the needs of around 900,000 people. The 3 Waters proposal is based on the belief that having a larger entity deliver these services will result in more efficiency and resilience and enable the delivery of better standards at relatively little increased cost. We’ll discuss the financial implications of this reform further on.

Proposed new entities and government projected household costs by 2051.PNG

3. Drinking Water

Across New Zealand there are various levels in the quality of drinking water and that is also the case in Waitaki.

Our largest water treatment plant here in Oamaru is of a very high quality and that serves communities to the west and south as far as Moeraki. It’s not quite the same everywhere in our district. Although all schemes have some form of treatment, there are still some supplies on either occasional or permanent boil water notices. Upgrades for those schemes are planned over the next 4 - 5 years.

How is Waitaki’s drinking water delivered?

All Council supplied water is either on-demand or restricted, with some consumers (especially larger commercial ones, on meters. In addition to the Oamaru Water Treatment plant, we have 14 other schemes. The Waihemo Water supply feeds the Palmerston township, Goodwood and Dunback areas. And then most other areas have separate water supplies, throughout the Corriedale and Ahuriri Wards.

There are a few drinking water supplies that we do not look after – private supplies, and these too will be affected by the proposed reforms. For any supplies delivering water to more than one household, they will have to meet the same standards for treatment and risk management as Council schemes.

What changes are already here?

The new drinking water regulator, Taumata Arowai is here. The Water Services Bill is soon to become an Act of Parliament. These changes have already happened. When the Bill becomes an Act there will be tougher drinking water standards to comply with that will reach farther into the community and affect every council in New Zealand.

What else is coming?

Stricter environmental standards, economic regulation, and possibly a change in the way water services are delivered, all of which means more cost and in Waitaki’s case, that likely cost will be significant. 


4. Wastewater

Most of us don’t think too long or hard about wastewater; you flush your toilet and the problem goes away! 

Here’s some background on how the system works in Waitaki.

There are a total of 200km of sewer pipes with 29 sewer pumping stations transporting the sewage away from all of the connected properties. From your place, it goes to one of eight treatment plants throughout the district. In total, they treat the effluent from approximately 7500 properties. The bulk of these plants treat the effluent by using oxidation ponds and discharge to land by either soakage trenches or irrigation.

New regulations are coming

Under current regulations we’re in good shape, but this is about to change as new, higher standards are coming which will alter how and where waste water is discharged. These changes may not be that far away, so we need to start thinking about them now.

Oamaru’s wastewater treatment plant treats about 85% of the district’s wastewater, with the treated effluent discharging to land, before going into a stream and from there into the sea just 50m away. At the moment that meets the current resource consent standards but it’s not going to be acceptable in the future. We are going to have to make major changes to our plant to increase the treatment of water, and then it will be clean enough to be discharged to soak into the land.

The reality is that the new standards will require all plants to have the discharged waste water treated to a higher level than it is now. And that’s going to be expensive. However, in Waitaki we have updated a number of our treatment plants recently to discharge to land, so we are in a relatively good spot right now compared to many Councils.

What may be an even greater cost is the potential reduction in the number of septic tanks in more remote communities, with wastewater instead being piped to existing or new wastewater treatment plants. If this is caused by the higher standards, we won’t have any choice on whether we comply or not – it will be a case of how we make that happen at an affordable cost to our community.

5. Stormwater

In Waitaki not many of our towns have stormwater systems, and for those which do, the systems are very small.

What do we provide?

Ohau, Omarama, Weston, Kurow and Moeraki have small systems and Palmerston has a few manholes and pipes taking stormwater away from some streets. Otematata and Oamaru are the two towns that have more substantial systems. In other places we use mud tanks (where water is able to soak into the surrounding ground) and culverts to get the water away from the towns. These are looked after predominantly by the Council’s roading team rather than our water team, due to them generally being part of the roading system.

So what's the proposal?

Under the 3 Waters reform proposals, not a lot is known yet about the changes to stormwater. Very little stormwater is currently treated in New Zealand before it is released to the environment, so the risk to land, and wildlife including fish is higher than it should be. This is often due to contaminants and heavy metals washing off properties and roads and into waterways.

Added to this there is climate change and the heavier rainfalls this is bringing, meaning more water in catchments, when a good number of our systems are already struggling. These are aspects where we know change is needed. We need to build stormwater systems where we currently don’t have any, we need to increase the capacity of our stormwater systems in a number of places, and we will likely need to treat at least some of that water to remove pollutants before it can be discharged to a water body, be it a creek, stream, river, and even just a gully.

6. Private and small providers and the new regulations

The information we have at the moment is based on the Water Services Bill which is due to go to parliament soon. The details may change slightly as the bill passes and becomes an Act, which is expected to happen sometime towards the end of this year. 

What's the new Water Services bill about? 

Under this Bill, where a water supply feeds more than a single house, these water supplies will need to comply with the same water provisions that councils have to, and those small suppliers will be required to become a ‘registered’ water supplier. If the water is being supplied to a single house only, then that remains under the existing provisions of the Building Act, although the definition of potable (or drinking) water in the Building Act will be changed from ‘safe to drink’ to ‘safe to drink and complies with the drinking water standards’. That has a reasonably significant impact on how water is treated, and on the costs to comply. 

Who will this affect? 

In Waitaki this will affect about 1500 people – those who use their own bores to access drinking water or groups of consumers who work together to supply their water.

So if you are supplying water from a farmhouse to another house or if two homes are receiving water from a dam or bore, or a lot of houses are serviced with water from an irrigation scheme, then the providers of that water will fall under the same compliance regime as councils will.

Where does Council fit?

Where Council comes into the picture, is that if the people who operate those schemes decide that it has all become too hard and that the cost of doing it themselves is prohibitive, or it could even be that the new water regulator, Taumata Arowai decides the suppliers aren’t up to the task, then we can be required to step in and take it over. And that’s going to be a big issue, because it would then be the council’s responsibility to get the scheme up to standard, make it run properly, with full treatment and risk management. 

If these changes come in and it results in Council’s taking over numerous small supplies, the additional work and cost required will be a significant drain on resources and a significant increase in cost.

7. The financial picture

One of the most obvious concerns that stems from all these proposed changes, is our ability to pay.

What's the current cost? 

 Currently, if you are on a Council water scheme, you will be paying anything from $416 - $824 per annum, depending on the scheme. Some of our lowest cost schemes are smaller ones which haven’t had their drinking water upgrades done yet, and that is reflected in their cost. If you are on a Council wastewater scheme, those costs range hugely from $187 through to $1097 per annum – this wide range reflects the size of the scheme and the complexity of treating the wastewater to comply with the current standards. For stormwater it’s a relatively small amount extra, which reflects the lack of complex stormwater schemes that we currently have in our community, and the lack of any treatment of that water.

What is the Government estimating? 

The Government, in looking at the new standards, has provided all Councils with a set of numbers which they are using to prove their case that change is needed, and that change is to aggregate water supplies into four large entities covering the country.

The government commissioned the Water infrastructure Commission of Scotland (otherwise known as WICS) to come up with estimates for each Council on what the cost will be to carry out the necessary upgrades, firstly looking at the Councils carrying out the work themselves, and secondly, if there were four large entities set up to carry out the work. The WICS estimate for Councils across New Zealand to do this work, it would cost between $120-185 billion. In our case here in Waitaki, they are saying we need to spend 1.5 billion dollars over the next 30 years to meet the required standards - which equates to 50 million dollars, per year, needing to be spent on water services. Incidentally, that is very close to what our Council currently spends for all of the services we provide each year. 

What does that mean for households?

Breaking that down to a household level, WICS have said that if Councils continue managing water services into the future, this will mean a major increase in rates for water, going from the average household cost of around $700-$800 for water and wastewater each year, to an average of over $13,000 in thirty years, (and that is in today’s dollars). Obviously that is unaffordable for our district. 

The Government says that if most of the Councils in the South Island put their assets into the new entity, that cost in thirty years would instead be around $1640 per household due to the efficiencies gained through amalgamation.

But are the assumptions correct?

Frankly, the WICS costs are based on a number of assumptions, and we don’t agree with a large number of those assumptions. Our review of the numbers indicates the actual cost of leaving water services with the Council is much lower than the $13,000 predicted. Working on improving standards to a level that’s more practical for the New Zealand context, that number is less than a quarter of what’s predicted. However, that would still be a significant increase - so something does need to change, but the question remains, is the new entity system the best solution for communities like Waitaki? 

So what would work best for Waitaki? 

What are the levels of service that we need in New Zealand to ensure our communities have access to good, clean drinking water, and that wastewater and stormwater are treated properly so they don’t harm the environment? 

We are giving the government feedback that the assumed increase in services are good in a general sense, but are unnecessarily high and costly for our New Zealand context.

Should the new standards really require the removal of septic tanks, and instead connecting a lot of our rural community to waste water treatment plants? We definitely have communities where this would be ideal such as in Hampden and Duntroon, but does that need to extend to almost all farms across Waitaki? 

8. Governance structure

Let’s look at what the new water entity will look like, and how it would operate.

Waitaki will be one of twenty territorial authorities in the entity, and one of questions that we will have to consider is exactly how that will work for our district. This very complicated diagram shows the governance structure that is proposed for the four entities that will potentially control the country’s three waters.

3 Waters Governance diagram

The important bit is the green part, showing who’s directly responsibility for running the entity – the board of directors and the entity management. The board will be made up of professional directors with specialised knowledge and skills. 

You might say that Mayors and Councillors have a better understanding of the wants and needs of the communities they represent, but they are not in the proposed model. 

Who will own the assets?

It is proposed that Councils will still own the assets – the ownership does not go to the government, to the entity, or to Māori. However, the control will not sit with Councils.

What would be the role of Councils? 

They will work together to choose half of the 10 to 12 members of the Regional Representation Group. The other half will be chosen by mana whenua, which in our case, is Ngai Tahu. 

What's the role of the Regional Representation Group?

That Regional Representation Group will be responsible for ensuring that the entity is carrying out its obligations on behalf of all of the Councils and communities involved.

One of their important roles is to appoint the independent selection panel, and that selection panel will appoint the board directors. 

Another important role of the Regional Representation Group will be to set the goals of the board, its Key Performance Indicators.

Why the need for such a complicated structure?

The reason for such a complicated structure is to provide enough separation between the operation of the entity and the Councils, to achieve one of the goals for reform which is to get any water asset debts away from Councils. 

That is needed for most Councils, but for Waitaki that is less necessary, as our water asset debt is reasonably low. 

Just how our local concerns and wishes will be heard within this model isn’t clear right now, and this is one of the things that we want to know more about before we make any decision. 

We do know there will be an economic regulator to help ensure the board makes good financial decisions, and there will probably be a Consumer Group to help ensure that the entity works for its communities, but the model is still being fine-tuned to ensure that each district can still get the services it needs, both now and into the future.

What's the role of iwi?

With Entity D defined by the Ngai Tahu takiwa boundary, what role does the iwi play if these reforms go ahead?

Some people are worried, because they’ve heard that iwi will be given 50% ownership of the assets or half of the control of them under the proposals. This is incorrect.

Iwi will help appoint members of the Regional Representation Group. Iwi will not own the water or the assets. Also, iwi will not have any veto rights.


There is one decision which will require 75% of the whole Regional Representation Group to vote for it to happen, and that is a decision
to sell the entity.

Even if that threshold is reached, the decision then has to go to the public and will require a public referendum to reach a 75% vote in favour for the sale to happen. Because a government cannot bind a future government, requiring a 75% vote in favour of any decision to sell means that it will be more difficult to privatise it in the future.

What do we want to know?

Just how Waitaki's local concerns and wishes will be heard within this model isn’t clear right now, and this is one of the things that we want to know more about before we make any decision. 

We do know there will be an economic regulator to help ensure the board makes good financial decisions, and there will probably be a Consumer Group to help ensure that the entity works for its communities, but the model is still being fine-tuned to ensure that each district can still get the services it needs, both now and into the future.

9. Timeline

Let’s start with the new water body, Taumata Arowai, which will set the drinking water standards (and rules) required for the three waters in the future.

  • The Water Services Bill is due for its second reading. It has been already through its first reading, then consultation, and then select committee, and is due to become an Act at the end of this year.
  • Once that happens, Rules and Standards will get released for a consultation period of 10 weeks. It needs to be noted that we are still waiting for further detail to come on transition, and most other things to do with Drinking Water Regulation. 
  • Once the Act is passed, this will bring with it the requirement for all water suppliers to be registered with Taumata Arowhai. That applies to all Council and many private supplies - a water supplier is defined as anyone controlling a water supply which feeds more than one house from a single source. These suppliers will need to be registered within a year of the act coming into being.
  • After that, there will be increased regulation. An economic regulator is likely to be established within 3 years, to ensure that water services are being delivered in a financially responsible and effective way. There will also be an increased emphasis on Regional Councils, something which is happening now, and they will be required to increase their monitoring of water takes and water discharges.

The next step is a change in Water Service Delivery

At the moment, Council is giving feedback to government on the proposals – with no decision being made in the interim. 

  • Next - Government receives feedback and decides on next steps. Which are: Mandate or Not
  • If not, consultation and decision time frames will be made, along with Local Government Act changes to allow it to happen. 
  • If mandated, there will be a Transition, the Water Entities Bill gets released. As we've said, we don’t have any information about these transition details which are still to come from Government and we need this information to make decision about where Waitaki stands in relation to the proposed reforms.
  • The first of July 2024 is the date the Government is working towards. This is the date when there will be a changeover from Council controlled to Entity controlled. This means that the proposed Entity D will then control water services for Waitaki.

So, you can see there’s a lot of water to go under the bridge before any changes can start happening! 

10. Questions and feedback

Council has given feedback to government about our thoughts on the 3 waters proposal. Essentially, we don’t have enough information to make an informed decision and more importantly, we don’t have enough information to have a full discussion with you, our community. 

We're asking the Government for more details

So, we have asked for more details around the financial impact of the proposal and of the new standards that we are expecting to apply to water. And we need to know more about how the new proposed entity will look after our Waitaki community, from the urban schemes serving our towns, through to rural schemes serving our villages and farms. It would also be very helpful for us to know exactly how long we have to consult properly. 

We will be asking for your feedback

We want your feedback and are preparing the consultation material to allow as many people as possible to let us know their thoughts on what is proposed. That will be released as soon as possible, and your feedback will assist us in making the decision as to whether we are in or out. 

However, it is very possible that the government will make the proposals a reality by legislating that it will happen. If that occurs, the decision will be taken out of our hands. That would be a major call for any government to make, but the reality of the political situation is that there has been much time and effort put into this proposal, and the government is convinced that the case for this change has been made so well. 

As we have said all along in Waitaki – there is a case for change, but we are far from convinced that this proposal is the best option for our people to achieve the necessary change. What do you think? Please take part in our upcoming consultation when it opens and give us your thoughts.