Implementing Local Water Done Well Policy in New Zealand
New Zealand’s water infrastructure landscape will undergo significant changes with the introduction of the “Local Water Done Well” policy, replacing the previous “Three Waters” regime. At the heart of this transition lies an alternative water reform originally proposed by “Communities 4 Local Democracy,” a framework that our team at Castalia had the privilege of advising on. This framework was adopted as an election manifesto policy by the largest party in New Zealand’s recently elected coalition Government.
Global Water Intelligence Magazine published an article in March 2024 on the challenges and opportunities presented by this reform. Some local authorities have praised the Castalia-designed reform model as it maintains the local oversight of water services. Others are concerned that the new reform could increase water tariffs by 20%. This is against the backdrop of the previous Government’s “Three Waters” regime that proposed four, and later 10, regional corporations with large forecast capital expenditure. The new Government’s proposed reform aims to strike a balance between retaining accountability to local communities and ensuring water services are delivered on a financially sustainable basis while achieving managerial, operational, and capital project sequencing efficiencies (where available).
Local Water Done Well proposes to maintain managerial and finance responsibilities under local governments while clarifying the central government’s regulatory role, with improved enforcement to address water quality, financial performance, and environmental outcome issues. It will require councils to develop robust plans for future capital expenditure needs. The new policy also provides local authorities with options to create viable water management configurations rather than imposing a one-fits-all approach.
The first stage of this regime is expected to be signed into law in mid-2024 and allows councils to establish new council-controlled organizations to deliver water services. A second bill will be introduced in December. The bill will create a new range of financing tools and allow the creation of financially independent council-owned water providers. Councils will be able to establish joint-owned utilities or choose to remain independent based on each utility’s managerial and financing needs. As Castalia’s CEO David Ehrhardt said to GWI, the new policy is “all about options that local authorities can choose from, not about forcing solutions on them.”
Our Managing Director, Andreas Heuser was appointed Chair of the Government’s Technical Advisory Group (TAG). The TAG will advise the Government in preparing the policy and legislation to implement Local Water Done Well.
Download GWI’s article here: New Zealand Utility Reform Struggles with Cost of CAPEX.pdf
