NZ to Repeal ‘Three Waters’ Scheme, Future Direction Remains Unclear

New Zealand’s aging water infrastructure is in desperate need of upgrades.

A glass of water is filled at a kitchen tap. Cate Gillon/Getty Images

The cost of maintaining, repairing, and renewing New Zealand’s failing water infrastructure will remain with local authorities, Minister for Local Government Simeon Brown has announced.

Cabinet has agreed to introduce and pass legislation early next year that will repeal “Three Waters” legislation, which would have transferred ownership of—and responsibility for—drinking and wastewater assets to four newly constituted “water entities,” each covering around a quarter of the country.

Councils would have had shares in the new entity, which could not be sold or transferred, protecting the assets from being privatised.

Crucially, it relieved councils of the expense of fixing water infrastructure that had not been replaced for very long periods—in some cases over 100 years. Underground pipes have a life expectancy of around 60 to 80 years.

34,000 People a Year Sick From Bad Water

However, the former Labour government, which introduced the concept, used it as one of the first schemes to be subject to its philosophy of “co-governance.”

The term refers to a shared governance arrangement, with representatives of Māori iwi (tribes) sharing equal voting rights with representatives of central and/or local government.

This proved highly contentious, and all three of the parties of the new national coalition government—National, ACT, and NZ First—went to the election pledging to repeal the legislation.

That leaves local authorities with a significant problem, however.

In 2020-2021, 40,000 people had to boil their tap water, while New Zealand’s wastewater systems overflowed or blocked more than 3,000 times.

Every year, 34,000 people fall ill from water that does not meet national standards.

The previous government estimated that between $120 billion and $185 billion (US$115 billion) worth of investment would be needed in “three waters” (drinking water, wastewater, and stormwater) infrastructure over the next 30 years.

For councils to fund this expenditure would mean large increases in rates, coupled with extensive borrowing. Most, therefore, supported the cancelled reforms.

Estimates by the Department of Internal Affairs put the average rate increase at between $800 and $7,360 per year by 2051.

Consultation on Replacement Scheme

Mr. Brown explained the coalition government would instead “implement a new regime which recognises the importance of local decision-making and flexibility for communities and councils to determine how their water services will be delivered in future.”

“We will do this while ensuring a strong emphasis on meeting rules for water quality and long-term investment in infrastructure.

“Specific provisions in the Bill will address the immediate challenges faced by councils who are currently preparing their 2024-2034 long-term plans under the previous government’s settings, by providing flexibility in setting plans.”

There is, as yet, no detail from the new government as to whether it will make any contribution to the cost of water infrastructure renewal, or if councils are expected to entirely shoulder the burden.

While some communities still have no firm figure for what fixing their problems will cost, local authorities in the Wellington region have been told by the council-owned entity—that looks after their water—that they'll need to raise $1 billion a year to deal with the crisis of leaking and blocked pipes.

Wellington Water already struggles to deal with thousands of water leaks across its territory.

Local Government New Zealand [LGNZ], the peak body for local authorities, says “While councils have a range of views on the best model, there is near universal agreement that the status quo can’t remain. Broad system failure has created longstanding issues that will worsen as climate change and extreme weather events put ageing infrastructure under more pressure.

“Wherever the model for reform ends up, it must connect councils with communities. LGNZ will continue to work hard to ensure that councils and communities have meaningful input into this process.”