The Department of Internal Affairs

Te Tari Taiwhenua | Department of Internal Affairs

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Future water services delivery system

8 August 2024

In August 2024 the Government set out the key details of New Zealand’s future water services delivery system under Local Water Done Well.

Read the Minister’s press release on the Beehive website

This page provides an overview of key Local Water Done Well policy decisions, including those that will be reflected in the proposed Local Government Water Services Bill.

It is based on Local Water Done Well Cabinet decisions announced by the Minister of Local Government in August 2024.

View the overview in pdf format: Local Water Done Well Overview (PDF, 264KB)

Read detailed information on key Local Water Done Well policy decisions:

Implementation roadmap for Local Water Done Well

View an overview of key activities and milestones for the implementation of Local Water Done Well (PDF, 154KB)

Status of August 2024 policy decisions

Further information

What are the proposed changes?

The proposed Local Government Water Services Bill will establish the enduring settings for the new water services system. Changes are proposed to the water services delivery system and to the water services regulatory system. It is the third piece of legislation in the Government’s three-stage process for implementing Local Water Done Well.

A new delivery system for water services

New delivery models for water services

The Bill will provide an expanded range of water services delivery models for councils to choose from. This includes new water organisations that can be owned by councils and/or consumer trusts. They are intended to have the flexibility to be financially independent from their council owners from a credit rating perspective.

Councils may design their own alternative arrangements, as long as the arrangements meet minimum requirements (below).

Find out more:

Clear minimum requirements for water service providers

Regardless of the model chosen, all local government water service providers 1 will have to meet clear minimum requirements set out in legislation. This includes meeting regulatory standards, financial sustainability requirements such as ringfencing of water services,2 and restrictions against privatisation. There will be additional requirements for water organisations to ensure they are operated and governed effectively.

Planning and accountability for local government water services

The Government is proposing a new planning and accountability framework for water services, which is fit for purpose for the new water services delivery system. The framework will help to improve transparency and accountability, and support an enhanced focus on water services.

Find out more: 

New financing options for councils

The New Zealand Local Government Funding Agency (LGFA) Limited has confirmed that it will provide financing to support water council-controlled organisations (CCOs) established under Local Water Done Well and look to assist high growth councils with additional financing.

LGFA will extend its existing lending to CCOs to new water organisations that are CCOs and are financially supported by their parent council or councils. LGFA will support leverage for water CCOs up to a level equivalent to 500 percent of operating revenues (around twice that of existing councils), subject to water CCOs meeting prudent credit criteria.

LGFA will treat borrowing by water CCOs as separate from borrowing by their supporting parent council or councils. Councils will also retain the ability to borrow through LGFA should they choose to keep water services ‘in house’ rather than establish a water organisation.

LGFA is also reviewing whether it can prudently provide additional flexibility to councils to meet the future challenges faced by the sector.

Find out more: 

A new approach for managing urban stormwater

Councils will retain legal responsibility and control of stormwater services but will have flexibility to choose the arrangements that best suit their circumstances.

Changes are proposed to improve the management of overland flow paths and watercourses in urban areas (an urban area's natural drainage system). This includes clarifying council and private landowner roles and responsibilities, enabling new planning and regulatory tools, and enabling ‘service agreements’ to support the integrated management of stormwater networks.

Find out more: 

New mechanisms for the Minister of Local Government to address problems facing local government water service providers

There will be new mechanisms for the Minister of Local Government to address issues with local government water service providers. These will enhance the powers the Minister already has under the Local Government Act and Local Government (Water Services Preliminary Arrangements) Bill.

The Minister will be able to appoint a Crown facilitator – water services, and/or Water Services Commissioners, if problems (or potential problems) arise in councils or water organisations. These Ministerial bodies could be appointed to identify and implement solutions to a range of issues.

The legislation will also enable the Minister of Local Government’s powers to be used to help address significant or persistent non-compliance with the economic regulation regime. This would be a last-resort option, in situations where the regulatory tools available to the Commerce Commission are insufficient or high cost, and alternative options are required. The Minister of Local Government would consult with the Minister of Commerce and Consumer Affairs if these situations arise.

A new regulatory regime for water services

New economic regulation regime

There will be a new economic regulation regime for local government water service providers, implemented by the Commerce Commission. The Commerce Commission will have a range of regulatory tools, including mandatory information disclosure, to promote efficient practices and protections for consumers.

The regime will ensure that revenue collected by local government water service providers through rates or water charges is being spent on the level of water infrastructure needed.

Find out more: 

Read further information about the new economic regulation regime on the Ministry of Business, Innovation and Employment’s website.

Changing how Taumata Arowai operates

The Government is proposing changes to how Taumata Arowai regulates drinking water suppliers. The changes will remove barriers to Taumata Arowai taking a proportionate, cost effective and efficient approach in its functions and duties. In turn, this will reduce the financial burden on both councils and consumers.

The Water Services Authority – Taumata Arowai

In line with the Government’s intention that government agencies have an English name first, the Government is also proposing to amend the legislation to refer to the ‘Water Services Authority – Taumata Arowai’.

Reducing the regulatory burden for drinking water suppliers

The Government is proposing several changes to the drinking water quality regulatory regime to reduce the burden and costs of complying with regulation for drinking water suppliers. In particular, the changes aim to reduce the burden for small, low-risk suppliers.

Change in approach to Te Mana o te Wai

The Government is proposing to repeal the requirements in water services legislation to give effect to Te Mana o te Wai. It is also proposing to require Taumata Arowai to take account of the National Policy Statement for Freshwater Management, and any regional plans prepared under the Resource Management Act that relate to freshwater, as part of the exercise of its functions, duties and powers.

This will provide regulatory certainty to Taumata Arowai and suppliers, and will remove barriers to Taumata Arowai taking a proportionate, cost effective and efficient approach.

Find out more: 

A new approach to wastewater standards

The Government is proposing changes relating to the wastewater environmental performance standards that are being developed by Taumata Arowai under the Water Services Act. The legislation will be amended so there will be a single standard, rather than a minimum or maximum.

These amendments would be designed to ensure regional councils implement a single standard approach in resource consents, and cannot exceed the standard in consenting conditions apart from on an ‘exceptions’ basis. This does not mean that the environmental requirements for discharges to freshwater or coastal water will be lower – but it will enable a consistent approach for consenting the discharge of wastewater from treatment plants.

Find out more: 

Status of these decisions

The proposed changes outlined above will be included in a Local Government Water Services Bill, which is expected to be introduced in December 2024 and enacted in mid-2025.

There will be an opportunity to provide feedback on the proposed changes at select committee.

The Department of Internal Affairs will be providing guidance material to support implementation of Local Water Done Well, following the enactment of legislation.

Further information

More detailed information can be found in the associated Cabinet papers that have been proactively released on the DIA proactive releases page.

1 ‘Water service provider’ means all forms of local government provider – including councils that continue with direct (in-house) delivery, and water organisations.

2 Ringfencing ensures that water revenue is spent on water services.