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Water service mergers floated as small local councils struggle with funding, provision

Wednesday 30th May 2018

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The government is actively considering whether the water services currently supplied by local government should be merged into a number of larger jointly owned entities to help both fund and ensure the quality of drinking water, wastewater and stormwater services.

Speaking to a national Water Summit, Local Government Minister Nanaia Mahuta said the government was exploring "aggregated, dedicated water providers" as recommended by a government-appointed inquiry into the contamination of drinking water in the Hawkes Bay town of Havelock North.

"This would be one way to lift capability and provide a more sustainable funding model, and it has been something that many overseas countries have adopted with very good results," said Mahuta, who stressed that any solution would ensure water assets remained in public ownership.

While there were "no predetermined solutions", it was clear that small-scale local councils lacked both the expertise and the funding base to go it alone on providing water infrastructure, which is critical to public health and environmental management.

Some examples of aggregated water providers already exist in Auckland's Watercare and Wellington Water. The former governs Auckland's only drinking and wastewater, whereas the latter also governs stormwater.

Also under consideration is the creation of a dedicated water regulator, akin to the regulatory bodies that oversee the electricity and gas sectors. At present, each local government that provides water services does so according to its own systems and regulation, constrained only by national standards for drinking water and wastewater discharges.

"I recognise that many councils will be concerned about what might happen if they have less of a role in water service delivery. We need to start thinking about what they might do instead. Again, I want us to be talking openly about this," Mahuta said. "A critical part of successful change will be determining how local government continues to be involved in the governance of water assets, and what the links are with broader council planning.  We also need to have an open discussion about how local communities continue to be involved in services in their area.   Responsive local service delivery will also be an important part of success."

Mahuta also foreshadowed a national consultation on how to fund water infrastructure, with rates and metered charging for water use being the main current options.

"Our small towns and provincial areas have fallen behind, and the cost of upgrading their drinking water infrastructure will effectively be unaffordable for many of them,"  Mahuta said. "We will also need to consider how our larger urban populations can help the smaller towns and provincial areas, and how to spread resources, expertise, and technology across the country.

"The biggest question is whether we are brave enough to move away from the status quo and be open to doing things differently for the good of the country and all our communities."


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