The Department of Internal Affairs

Te Tari Taiwhenua | Department of Internal Affairs

Building a safe, prosperous and respected nation



 

National Evidence Base

This page is a historic record.

It contains links to old and/or superseded documents for reference purposes only.

For current information go to: Water Services Policy and Legislation (Updated February 2024)

On this page

Summary
Briefing document summarising important findings
Water Industry Commission of Scotland (WICS) Reports (Updated 26 June 2023)
Commentary on the Castalia Report
Farrierswier report
Beca report
Deloitte reports
AON reports (Updated 23 June 2023)
Standard & Poor’s: Ratings Evaluation Service

Summary

This analysis and modelling advances the evidence base informing the case for change for the Water Services Reform Programme.

The reports include analysis of the economic benefits of reform by the Water Industry Commission of Scotland (WICS), independent reviews of WICS’ methodology by Farrierswier and Beca, and an analysis of the effects of the proposed reform on the economy and affected industries by Deloitte.

The reports highlight the huge investment required over the next 30 years to ensure that New Zealanders have access to safe drinking water and our wastewater and stormwater networks achieve good environmental outcomes.

The reports point to the opportunities that reform will provide in reducing the costs of water services compared to the status quo. They also indicate the substantial economic benefits the reforms would deliver.

Briefing document summarising important findings

The high-level findings from these reports are summarised in this briefing, including important findings from a suite of reports that comprise the second stage of the evidence base to support the Water Services Reform Programme.

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Water Industry Commission of Scotland (WICS) Reports

(Updated 26 June 2023)

Early modelling

In 2020/21, the Department commissioned WICS to undertake analysis of the economic benefits of aggregating water services delivery in New Zealand.

The WICS phase 2 report uses detailed and up-to-date information collected from councils to investigate the estimated potential investment requirements for New Zealand and the scope for efficiency gains from transformation of the waters services delivery system.

WICS has run a sensitivity test of its modelled results using updated revenue and borrowing figures for Christchurch City Council to test the impact this might have on the overall results. The results show that for Christchurch on a stand-alone basis, there was a significant increase to the current (2021) average cost per household but there was no material impact on the estimated average cost per household in 2051. As a result, the updated figures do not change the general conclusions of the WICS report.

Updated modelling

As part of the work to refocus the reforms in 2023, WICS was asked to model alternative scenarios that reflected the Government’s proposed 10-entity model.

A slidepack detailing WICS’ methodology and also individual entity models for the 10 entities are available on this page: Individual entity models page

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Commentary on Castalia Report

In recent reports for councils, Castalia makes several broad-ranging and critical statements of the evidence base, focusing mostly on the Water Industry Commission for Scotland’s modelling and analysis.

The Department has been requested to provide commentary on the Castalia Reports, most notably that prepared for Whangārei District Council. The Department considers the Castalia report misrepresents the evidence base and analysis supporting the reform proposals, and reaches conclusions that are not well supported by the available empirical evidence from similar reforms undertaken in other jurisdictions.

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Farrierswier report

Farrierswier reviewed the methodology and underpinning assumptions applied by WICS and the extent to which this is reasonable to inform policy advice.

Beca report

Beca reviewed the standards and practices in the United Kingdom three waters industry and the relevance to New Zealand given WICS has used United Kingdom data and benchmarks as part of its analysis.

Deloitte report

Deloitte has undertaken a comprehensive study of the economic impacts of reform and the potential opportunities and challenges for affected industries.

AON reports

(Updated 23 June 2023)

In April 2023 Aon provided an updated insurance feasibility report for water services reform.

In April 2020, the Department engaged AON to understand whether insurance consideration should influence potential water services entity boundary decisions.

The analysis undertaken by AON showed that insurance considerations should not influence entity boundary decisions as insurance options would be available to the water services entities.

Standard & Poor’s: Ratings Evaluation Service

The Department engaged with Standard & Poor’s (S&P) to test six hypothetical entity design scenarios through a process known as a ‘Ratings Evaluation Service’ (RES). The assessment by S&P of potential credit rating implications associated with the Reform Programme was made across different scenarios to ensure officials were fully informed about a number of potential structural, system and entity design choices. These documents outline the scenarios and outcomes of the RES.

Contact us

If you have any queries, please email: waterservicesreform@dia.govt.nz

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