Three Waters Reform
The Government's Three Waters reform will see the delivery of Western Bay's drinking water, wastewater and stormwater transferred from Council to a new central North Island entity (Entity B) covering the greater Waikato, Bay of Plenty, Taranaki and parts of Manawatū-Whanganui.
This change will not come into place until 2024 and Western Bay will to manage its water services until then. As part of the reform Council will receive $21.3 million out of the $2.5 billion Three Waters reform package.
This page is where you can keep up to date with the latest Three Waters reform announcements from both the Government and Council - what's new, what's coming up and what it means for the Western Bay.
What's the latest? Communities 4 Local Democracy
On 14 December 2022 Council agreed in principle to
- join Communities 4 Local Democracy – He Hapori mo te Manapori (C4LD)
- support the Communities 4 Local Democracy draft Mayoral Declaration.
You can watch a recording of Council’s kōrero on our YouTube channel - https://www.youtube.com/watch?v=3CY03Cx17Vw
What is Communities 4 Local Democracy – He Hapori mo te Manapori?
Communities 4 Local Democracy – He Hapori mo te Manapori (C4LD) is a local government action group consisting of 31 Councils, it aims to work with the government to deliver safe drinking water while retaining local voice and meaningful partnership with mana whenua.
A full list of members can be found here https://www.communities4localdemocracy.co.nz/about
What is the draft Mayoral Declaration?
Crafted by the C4LD coalition and the Mayors of Auckland and Christchurch City Councils, the mayors put forward an alternate proposal that kept part of the existing reforms including the new water regulator, Taumata Arowai, while maintaining local ownership, control and accountability.
The plan will replace four large water entities with Regional Water Organisations (RWOs), which would be unable to be sold outside local authority ownership.
Following the statement issued on 31 October 2022 by the Mayors of Auckland and Christchurch City, calling on the Government to work with local government to achieve consensus on the three waters reform programme, C4LD have prepared a draft Mayoral Declaration supporting the collective statement.
What does this mean for the Western Bay?
Given a practicable alternative to the current reform is yet to emerge, Council has agreed in principle to join C4LD (subject to due diligence) and Mayor James Denyer signs the draft Mayoral Declaration.
This decision coincides with the Water Services Bill enacted in December 2022 to establish, under law, the four new entities which will take over water services from councils in July 2024.
At the same time, two further Bills were introduced and had their first reading in Parliament. These were a technical extension of the new Water Services Act (the Water Services Legislation Bill), and the Economic Regulation and Consumer Protection Bill.
Despite these legislation updates, supporting the Declaration signals to those of our community opposed to the reform programme/approach that Council is showing leadership.
It also displays a strength of views across the local government sector.
However, there are still a number of answered questions given the pace and scale of Government’s Three Waters Reform programme is fast. Which is why we are going to be clarifying the conditions of C4LD membership, future financial commitments, future plans and any queries with governance.
Once we have this information, councillors will vote again on whether to confirm the arrangement in 2023.
What's the Water Service Entities Bill?
The Water Services Entities Bill was introduced on 2 June 2022 and enacted by Government in December 2022.
The Bill will establish, under law, the four new entities which will take over water services from councils in July 2024. While the entities will continue to be proportionately owned by councils, they will have more scale to invest in water infrastructure and do things differently to improve management of three waters.
This Bill also covers the accountability arrangements for the entities and other levers communities have to influence the direction of the entities. Some formative transition provisions are also included.
Under the Bill these entities will manage the future delivery of three waters services across the country. The Bill also sets out how these entities will be governed, how they will operate, and how they will be held accountable.
Nationwide public consultation on the Water Services Entities Bill closed on Friday 22 July. You can read Council's submission to the Select Committee here
Water Service Entities Bill #2 and #3
In December 2022, two further Bills were introduced and had their first reading in Parliament.
These were a technical extension of the new Water Services Act (the Water Services Legislation Bill), and the Economic Regulation and Consumer Protection Bill. The bills will cover economic regulation, rural supplies, links to planning, the more detailed powers and the flow-on effects for other obligations.
Like the first Bill, Council will take the time to study these Bills and develop its own submission to ensure better outcomes for our communities and the environment. The community will be able to share their views on the draft legislation and we encourage everyone to provide their feedback direct to Government.
What does the Three Waters Reform mean for Council?
To help understand what the reform would mean for Council's finances, balance sheet and borrowing we've set out the most up-to-date information (2021/22 financial year).
Proportion of Three Waters Revenue
For the year ended 30 June 2021, 30 percent of Council's Total Operating Revenue came from Three Waters. This includes property rates, user fees and volumetric water charges.
| 2021 | |
| Total Revenue | $124,138,000 |
| Total Operating Revenue | $104,902,000 |
| Three Waters Revenue | $31,477,000 |
| 30% |
Proportion of Three Waters Debt
Due to where Council sits on the investment cycle providing assets for the community, most of Council's borrowing has been to deliver Three Waters infrastructure. As at 30 June 2021, 80 percent of Council's borrowing related to Three Waters.
| 2021 | |
| Total Gross Debt | $90,000,000 |
| Total Net Debt | $64,294,000 |
| Three Waters Gross Debt | $72,900,000 |
| Three Waters Net Debt | $52,078,140 |
| 81% |
Proportion of Three Waters Assets
As at 30 June 2021, Council had $389 million of assets related to Three Waters. This represents 26 percent of Council's Property, Plant & Equipment.
| 2021 | |
| Total Property, Plant & Equipment | $ 1,510,097,000 |
| 3 Waters Property, Plant & Equipment | $ 389,000,000 |
| 26% |
Impact of Three Waters Reform on Council Borrowing Capacity
Council's balance sheet capacity is measured using our Debt to Revenue Ratio. Council has a financial strategy that states that our Debt to Revenue Ratio must be no more than 180 percent (i.e. debt no more than 1.8 x our operating revenue).
For the year ended 30 June 2021, Council's Debt to Revenue Ratio was 61 percent. If we were to recalculate this without Three Waters revenue and debt it would be 17 percent.
| 2021 | 2021 | |
| Total | Without 3 Waters | |
| Operating Revenue | $ 104,902,000 | $73,425,000 |
| Net Debt | $ 64,294,000 | $12,215,860 |
| Debt to Revenue Ratio | 61% | 17% |
Feedback to Minister of Local Government
Council's feedback to the Select Committee on the Water Services Entities Bill
Mayor's media statements
Frequently asked questions
What is the Three Waters Reform?
The Three Waters Reform programme sets out to improve the health and wellbeing of all New Zealanders. It will improve the safety, quality, and environmental performance of water, wastewater and storm water services in a way that is considerably more affordable per household than what is projected without reform.
What will the proposed reform mean?
This reform will bring together three waters services, currently delivered by 67 different councils across New Zealand, into four competency-based water services entities. These entities will remain firmly in public ownership (by the communities they serve).
The reform will improve our ability to address contamination of urban streams, lakes and coastal environments through sewer overflows and other unauthorised discharges and storm water run-off.
Reform will also improve transparency about, and accountability for, the delivery and costs of these services and uphold the Crown's Treaty of Waitangi obligations to iwi/Māori.
Why is the Government proposing to move water services from councils to four new entities?
Because councils are facing challenges in the provision of quality water services to meet the growing demands of their communities.
In particular:
- funding the necessary infrastructure, such as water and wastewater treatment plants, pipes, etc
- complying with safety standards and environmental expectations
- building resilience to natural hazards and climate change into three waters networks
- supporting growth – more people, means more demands on infrastructure.
The effective delivery of waters services is essential for our communities and includes:
- safe drinking water, safe disposal of wastewater and effective stormwater drainage
- adequate supply of cost-effective waters services for housing, businesses and community services
- well-managed extraction of drinking water, and careful disposal of treated wastewater and stormwater so that our environment is protected.
Evidence shows that significant national investment is needed to continue to offer effective water service delivery. If the model stays as it is (council-ownership and management), service quality will be variable, and services will become unaffordable for many New Zealanders. Reform will enable communities across New Zealand to benefit from scale and operational efficiencies, making it more cost-effective in the long-run.
What does it mean for the Western Bay?
The reform would mean a significant change for council, and for the way drinking water, wastewater and stormwater services are delivered to our community in the future.
Under the Government’s draft proposal Western Bay of Plenty District Council could be part of a central North Island entity involving 22 councils in the greater Waikato, Bay of Plenty, Taranaki and parts of Manawatū-Whanganui. Boundaries will be confirmed in September 2021, following further discussion with councils and iwi.
If the reform goes ahead, any change would only come into place in 2024, so we would continue to manage water services until then.
Is Western Bay doing a good job to deliver its water services?
Council has done a good job investing in water infrastructure and in turn providing a good service to our residents.
Our infrastructure is in a good state and this reflects the major investments we have made in the past. Our assets are modern and well maintained and we are committed to ensuring this continues now and into the future.
However, expert research and international experience shows a different national structure will allow us to do even better. Like most areas in New Zealand, we also need to invest a lot more, and meet new compliance and environmental levels in the future. The reform programme is designed to significantly reduce future costs to ratepayers.
Where can I get more information?
Department of Internal Affairs
- The latest Government information and releases is uploaded to the Department of Internal Affairs website here.
Mayor's media statements
Other important links
- Local Government New Zealand (LGNZ)
- Give your feedback to the Government here.
