Regulatory pressures and Water Services Reform

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

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Summary
Taumata Arowai and compliance with water standards
Economic regulation

Summary

The status quo for water service providers is changing. This Government is progressing reforms to the regulatory environment to ensure all New Zealanders have access to affordable safe drinking water and stormwater and wastewater services that meet today’s public health and environmental expectations.  

Public health, consumer and environmental protection, the enforcement of standards and the requirement to meet appropriate infrastructure investments are critical parts of the overall Water Services Reform Programme regardless of whether councils continue to participate in the reform programme or not.

These will expose council water suppliers to three main areas of regulatory focus, will significantly raise compliance pressures and likely require substantial additional investments in infrastructure and services. These include:

• Taumata Arowai ensuring stringent compliance with drinking water safety standards;
• Taumata Arowai working alongside Regional Council regulators to provide national oversight on the performance of wastewater and stormwater networks;
• Economic regulation to provide water consumers with assurance of fair and affordable pricing, and ensure transparency, efficiencies and appropriate levels of investment across waters services. 

Taumata Arowai and compliance with water standards

Taumata Arowai became a Crown entity in March 2021 and took over from the Ministry of Health as the dedicated new drinking water regulator when the Water Services Act commenced on 15 November 2021.

Taumata Arowai enforces current drinking water standards and, working alongside the Regional Council regulators, provides national oversight of environmental performance of wastewater and stormwater networks.

The Water Services Act provides Taumata Arowai with a comprehensive set of regulatory tools to ensure that drinking water safety standards are achieved.

The drinking water standards remain unchanged. However, in the new regulatory environment, suppliers are required to meet these standards. At present many do not. In many cases to comply with these standards may require additional infrastructure investment. Councils will not be able to defer crucial upgrades on the grounds of cost.

Taumata Arowai has the power to put in place directions and compliance orders to ensure that unacceptable risks to public health are resolved in a timely way. It can also issue Infringement fees and prosecute where reckless or wilful behaviour creates risk to public health.

These tools will enable the regulation of drinking water to be in proportion to the risk, scale and complexity of a supply. Details will be specified by regulations made under the Water Services Act.

Working alongside the Regional Council regulators, Taumata Arowai will also monitor compliance with environmental regulations at a national level and drive greater focus on the performance of wastewater and stormwater networks.

Economic regulation

Economic regulation plays a critical role in protecting and enhancing the long-term interests of consumers and providing high-quality performance information.  Ministers have agreed that the three waters sector will be subject to economic regulation that will ensure there is good service quality for the consumer, the right level of investment, and drive efficiency gains – including a requirement to meet depreciation, protection against inefficiencies and the removal of opportunities for monopoly/excessive pricing. 

Economic regulation will provide greater transparency about the costs and performance of three waters services and infrastructure and strengthen accountability for performance. It is intended that price quality regulation will be introduced to ensure the new entities are operating efficiently, performing effectively, and charging a fair price to consumers.

Economic regulation falls within the portfolio of the Minister of Commerce and Consumer Affairs. Preparation of advice will be led by the Ministry of Business, Innovation and Employment, in consultation with the Department of Internal Affairs and the Treasury. 

For more information about economic regulation of water services see: Economic regulation and consumer protection regime for water services (MBIE website)

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