Water Services Reform


Following the serious campylobacter outbreak in 2016 and the Government’s Inquiry into Havelock North drinking water, central and local government have been considering the issues and opportunities facing the system for regulating and managing the three waters (drinking water, wastewater, and stormwater).

The focus has been on how to ensure safe drinking water, improve the environmental performance and transparency of wastewater and stormwater network, and deal with funding and affordability challenges, particularly for communities with small rating bases or high-growth areas that have reached their prudential borrowing limits.

Currently, 67 different councils including Upper Hutt own, maintain, and run most of the country’s water services on behalf of their communities. However, councils face several challenges to deliver these in an affordable way into the future, including ageing infrastructure, growth, and the impacts of climate change.

Everyone agrees that more investment is needed in water infrastructure—it was reflected in our recent Long Term Plan. But ultimately each council will need to decide what service delivery arrangements are most appropriate, based on the interests of their communities and the community’s wellbeing (now and into the future).

View the latest information on the Water Services Reform website.

For more background on the reform visit the Department of Internal Affairs.


What's being proposed?

The water services reform will change the way water services are delivered to meet the challenges ahead caused by ageing infrastructure, historical under-investment, and the impacts of climate change and population growth.

The 10 new Water Services Entities (WSEs) will be owned by local councils on behalf of the public; however, they remain operationally and financially independent from them. The balance sheets of WSEs are required to be sufficiently separate from local government, to allow them to achieve higher levels of financial leverage than local authorities can obtain on their own.

The WSEs will be required to consult with their customers, businesses, and residents on their strategic direction, investment priorities, their prices and charges, and work closely with local authorities to ensure water infrastructure provides for growth and development in spatial plans. The entities will have to report on how consumer and community feedback was incorporated into their decision-making.

Upper Hutt City Council is in the lower North Island entity (called G for the interim) along with the eight other councils of the Wellington region. 

You can view this fact sheet(PDF, 6MB) for more details and a map of the 10 entity areas.

What's happened so far?

August 2023 – Three pieces of legislation giving effect to the Government’s reform of water services delivery were enacted in late August before Parliament rose for the general election.

The Water Services Entities Amendment Act and Water Services Legislation Act will be incorporated into the Water Services Entities Act, the core piece of legislation enacting the reform. The Act provides the framework for establishing 10 water services entities, including their functions, powers, and tools for their work, and arrangements for the transition to the new system.

The Water Services Entities Act will be complemented by a separate Water Services Economic Efficiency and Consumer Protection Act (led by MBIE) that establishes an economic regulation and a consumer protection regime as part of the reform of water services.

The majority of the legislation will come into force from 1 July 2024, except for some provisions that enable preparations to be made for the transition leading up to July 2024.

On 25 August 2023 the Minister for Local Government released a preliminary recommended schedule for the establishment dates for the nine water services entities outside of Auckland/Northland. This stated the current preliminary ‘go live’ date for the Wellington region’s Entity G was 1 October 2024 and the Minister was seeking feedback from councils on this.

July 2023 – On 27 July the Governance and Administration Select Committee reported back on the Water Services Entities Amendment Bill

This bill gives effect to its reset changes announced in April 2023 and contains additional policy decisions and transitional arrangements for local government long-term planning, reporting, and rate setting over this period.

Council submission on this amendment bill is available here(PDF, 112KB). You can find more information about the latest bill and the Select Committee report on the Parliament website.

The Government intends to pass all legislation (three bills) to give effect to the water services reforms before the House rises for the General Election on 31 August 2023.

June 2023 – On 8 June the Finance and Expenditure Select Committee reported back on the Water Services Legislation Bill and the Water Services Economic Regulation and Consumer Protection Bill.

On 16 June the Government introduced a new amendment bill to give effect to its reset changes announced in April 2023. The Water Services Entities Amendment Bill also contains additional policy decisions and transitional arrangements for local government long-term planning, reporting, and rate setting over this period.

You can find more information about the latest bill on the Parliament website including the accelerated public consultation process, open until Wednesday 5 July.

April 2023 – The Government announced changes to the water services reforms. The changes are designed to strengthen the connection between local communities and their water services provider while ensuring affordability of services for households.

For more details about the changes and what is proposed, see this fact sheet(PDF, 6MB) or visit the Water Services Reform website.

The Government intends to introduce and pass legislation to allow for these changes before this year’s election. This will be subject to the Parliamentary timetable and processes, and include the opportunity for public feedback.

Key aspects of the changes announced are:

  • Moving to 10 publicly owned, specialised water service entities, rather than the four entities originally proposed.
  • Under the 10-entity model, every territorial authority owner – and therefore every community – will be represented on their respective entity’s regional representative group.
  • The 10 new entities will ‘go live’ in a staged approach, from early 2025 to 1 July 2026, rather than the original start date of 1 July 2024 for all entities.

February 2023 – Consultation closed on the latest legislation enabling the reform to progress.

View Upper Hutt City Council's submission to the Finance and Expenditure Committee on the Water Services Legislation Bill(PDF, 115KB) and the Water Services Economic Regulation and Consumer Protection Bill(PDF, 124KB).

December 2022 – The Government introduced two new pieces of legislation further enable the reform to be implemented. The Water Services Legislation Bill and the Water Services Economic Regulation and Consumer Protection Bill are open for public submissions until 12 February.

November 2022 – on 11 November the Finance and Expenditure Select Committee issued its report on the Water Services Entities Bill. The Bill establishes four publicly owned dedicated water services entities that will provide safe, reliable, and efficient water services through improved investment and management.

The Committee considered over 80,000 submissions on this legislation. As a result of submissions, approximately 130 amendments have been made to the Bill. Given the Bill has 228 clauses (plus schedules), the number of changes to address feedback is substantial and significant.

You can find more information in this summary of the proposed(PDF, 160KB)  changes or the full Select Committee report on the NZ Parliament website. 

August 2022  - Council considered a report and agreed to allocate the first tranche of $3.9M in better off funding to six initiatives. These are now underway in either planning or early delivery stages.

  • Development of an Integrated Transport Strategy for Upper Hutt $500,000
  • Sustainability Strategy Community Engagement programme $200,000
  • Sustainability Stimulus Grant additional funding $200,000
  • Maidstone Park sand turf floodlights installation $1,000,000
  • City centre upgrade project water main renewal $1,000,000
  • Pinehaven Stream flood protection project additional funding $1,000,000


July 2022 – The Chair of the Government Finance and Expenditure Committee is calling for public submissions on the Water Services Entities Bill. You can make a submission at the New Zealand Parliament Website Water Services Entities Bill.  Closes 22 July. 

View Upper Hutt City Council's submission to the Finance and Expenditure Committee(PDF, 153KB)

June 2022 - on 2 June 2022, the Government announced legislation which will enable the creation of the new Water Services Entities (WSEs). National consultation opened on 10 June 2022.

As well as setting up the new WSEs so they can be ready in two years’ time, the Bill locks in council ownership of the WSEs on behalf of the communities. Councils will have one share per 50,000 people in their area, rounded up – so each council will have at least one share.

The legislation is trying to ensure communities will have a say in the running of the new water organisations through council and iwi oversight, while giving WSEs the financial and operational independence they need to get on with the job. Although the governance and feedback structure is quite complex and convoluted.

Read the Bill online at legislation.govt.nz. You can have your say on the ownership, governance and accountability arrangements of these new entities in the Bill by making a Select Committee submission. Visit parliament.govt.nz to find out more about this process. We are also making a submission.

You will also be able to give your views to the select committee until 22 July 2022.  

March 2022 - in March, Councillors voted to sign up to Communities 4 Local Democracy. We’re one of 31 councils representing around 1.5 million people from Cape Reinga to the Waitaki River and from Haast to Mahia. Communities 4 Local Democracy believe that we can do better than the ‘one size fits none’ proposals from Government, and that we can deliver better services while still being affordable and locally responsive.

Communities 4 Local Democracy supports the higher standards being put into place by the Government’s new water regulator Taumata Arowai. Local Government is ready to work together to deliver these improvements while keeping locally focused and responsive services. To find out more and to read the proposal, go to communities4localdemocracy.co.nz

December 2021 - the Government announced the Three Waters Entities Bill will be delayed to give the working group time to recommend changes to governance and accountability. Draft legislation has been prepared and will be made public, giving the working group until 28 February to report back and recommend any changes. The bill would be introduced to Parliament shortly after.

November 2021 - we launched a residents survey to seek feedback from our community on the Government’s decision to go ahead with the Three Waters Reform, despite concern and opposition raised by councils from across the country.  The survey closed on 28 November and a report on the results went to Council on 15 December. The Government also named the Three Waters working group and released the terms of reference

Initially the Government said there would be a community engagement process, where local communities would be given the opportunity to express their views and provide feedback about the Three Waters Reform.  

In the most recent announcement, the Minister for Local Government indicated there will not be a local community consultation process. Instead, communities/public will have an opportunity to provide feedback through the select committee process. 

October 2021 - the Government announced they would be progressing the Three Waters Reform. You can watch the announcement and read a summary of local Government feedback on the proposal on the DIA website

September 2021 - Council submitted its feedback to Government on the Three Waters Reform(PDF, 297KB)

July 2020 - along with announcing the Three Waters Reform, the Government also announced an initial funding package of $761 million to provide a post COVID-19 stimulus to maintain and improve water three waters infrastructure, support a three-year programme of reform of local government water service delivery arrangements (reform programme), and support the establishment of Taumata Arowai, the new Waters Services Regulator.

The initial stage (Tranche 1 – Memorandum of Understanding (MOU), Funding Agreement, Delivery Plan and Request for Information (RFI) process, was an opt-in, non-binding approach. It did not require councils to commit to future phases of the reform programme.

We completed the RFI process over Christmas and New Year 2020/21 and the Government has used this information, evidence, and modelling to make preliminary decisions on the next stages of reform and has concluded that the case for change has been made. Here is the full report on the case for change.


What could it mean for Upper Hutt City?

Updated modelling: Affordability of water services

The Water Industry Commission for Scotland (WICS) has recently updated its analysis of the benefits of amalgamating local authority water services delivery to reflect the Government’s ten entity proposal. This analysis updates key assumptions that were made as part of WICS’ original economic analysis of water services aggregation in 2021. This includes updating key assumptions such as interest rates and inflation, updating council information to reflect the most current published financial information, and updating the 30-year period of analysis to start in 2024 and finish in 2054.

See more details on this updated modelling work here.

Funding support packages

Councils throughout New Zealand have received funding as part of the transition, including:

  • Three Waters Stimulus funding – $523 million to invest in three waters infrastructure (drinking water, wastewater, and stormwater). Upper Hutt City Council was allocated $4.7 million from this package in 2020/21.
  • Transition Support funding – $44 million to support council activities relates to water services reform, paid in instalments across 12 months up until 30 June 2023. Upper Hutt City Council has been allocated $409,000 for the 2022/23 financial year.
  • "Better Off" funding – $500 million (tranche one*) to invest in local community wellbeing. In 2022, Upper Hutt City Council was allocated $3.9 million from this package to utilise by June 2027.
  • "No Worse Off” funding – $500 million in total will be made available in due course once the reform transition is complete, acknowledging that the transition process gives rise to costs and financial impacts for councils. The funding will ensure no council is left worse off as a result of bearing stranded costs, or because of the net impacts that the combination of losing revenue and debt could have on their credit ratings.

* As part of the changes to water services reforms announced in April 2023, the Government decided not to move ahead with the $1.5 billion second phase/tranche of better off funding for councils to ensure the water services entities are able to operate sustainability.

How can I find out more information?

You can visit the Government’s  Water Services Reform website.

Taumata Arowai became a new Crown entity in March 2021 and is the new water services regulator, dedicated to providing safe and reliable drinking water and improved delivery of waste and storm water.

Local Government New Zealand (LGNZ) has an information section about the reform.

For background on the reform visit the Department of Internal Affairs.