Local authorities across the country are making progress on their water services delivery plans, with many councils now consulting their communities on their preferred service-delivery models. MartinJenkins Partner Nick Davis surveys progress so far and considers what it might tell us about how local water will be done in the years ahead.
As many councils go public with their preferences under Local Water Done Well, a picture is beginning to emerge about what the future of water services delivery might look like.
It’s fascinating to see the diverse approaches councils are taking across the country. This diversity highlights the unique needs and priorities of each region, as well as differences in the perspectives and preferences across councils.
At the time of writing, more than 20 councils are yet to reveal their hands. But in councils’ proposals thus far, 29 have indicated a preference to establish a new water services organisation, with 14 indicating they’d prefer to keep services in-house.
Based on the public information, it looks likely we’ll see significant amalgamations of water services delivery in the Waikato, Bay of Plenty, and Wellington regions, with the possibility of combined delivery in Hawke’s Bay and Canterbury. While some are moving swiftly towards jointly forming CCOs, others are taking a more cautious approach, favouring in-house business units.
So let’s look at some examples of the different approaches that councils are indicating as their preferred option, and the drivers and pressures at work on different councils.
And at the end of this article you’ll find an appendix that does a quick sweep through of all of New Zealand’s regions, from Cape Reinga to Bluff, for what councils’ consultation processes so far are indicating about their preferred options.
Getting together to set up jointly owned water services CCOs
Councils in the Waikato region appear to be all agreed in principle that joint water services organisations should be the way ahead, but in the shorter term they’ve split into two sub-regional combinations. The dividing line has been shaped by which areas are facing the greatest growth challenges.
Seven Waikato councils signed a Heads of Agreement in late 2024 and have been working towards establishing a two-waters CCO under the banner “Waikato Water Done Well”. Four out of those seven signatories – Ōtorohanga, South Waikato, Waitomo, and Waipā – are currently consulting on this as their preferred option or have indicated that they will do so.
Hamilton City and Waikato District haven’t signed up to Waikato Water Done Well. Hamilton confirmed in September last year that “its preferred long-term solution would be a multi-council regional asset-owning waters company which provides stormwater services to its shareholders,” but the Council had agreed that:
“… the regional proposal, ‘Waikato Water Done Well’ does not meet the city’s needs for an option which rapidly improves Hamilton’s ability to fund for growth.”
Instead, Hamilton and Waikato District proposed that the two would combine to form a two-waters CCO, with stormwater services provided to each council under a services contract.
This would solve Hamilton’s balance-sheet challenge while providing an enduring solution for Waikato District, which currently contracts Watercare to manage its services. Watercare recently indicated it wants to terminate that arrangement, creating a headache for Waikato District. The two councils have indicated the door remains open to others joining.
Going it alone and keeping water services in-house
Different councils are subject to different drivers. As a somewhat remote unitary authority, Gisborne does not have any obvious options to progress a joint arrangement. Instead, it’s consulting on two options, its preferred model being an in-house business unit, and the other option being a wholly owned water services organisation.
By contrast, Whangārei District Council would seem to have more freedom of choice. It has also put forward an in-house business unit as its preferred option for consultation. Whangarei District Council’s consultation document cites the Council’s very low debt and the fact that its boundaries include Northland’s largest urban area:
“As the only city in the region, Whangārei District has the largest population (and number of ratepayers) in Northland. This means we are spared some of the challenges of our Northland neighbours who are grappling with lower populations, smaller amounts of commercial activity and larger geographic areas to maintain and provide for. These factors place unique pressures on Far North and Kaipara Districts’ ability to fund infrastructure and prepare for growth.
“This contributes to the current situation, which sees the other Northland councils with debt on existing water infrastructure assets and greater future borrowing needs than our Council. In comparison, Whangārei District has funds in reserve for water and wastewater infrastructure.”
The in-house option would mean that:
“we retain local ownership and control of our assets, we wouldn’t need to fork out for any CCO set-up costs, nor would we need to cross-subsidise other parts of Northland’s water costs.”
Going it alone but with a new wholly owned water services CCO
Not many councils have so far put this forward as their preferred option for consultation. Those that have don’t appear to see it as their ideal model, and instead would prefer combining with other councils to form jointly owned CCOs.
Selwyn District Council has to deal with the challenges that arise from being one of the fastest-growing districts in the country following the Canterbury earthquakes. In its consultation document it said that: “Maintaining current in-house delivery for delivering water services is not an option due to new legislation and increased compliance.” To help fund the infrastructure costs associated with rapid growth, Selwyn was keen to establish a joint CCO with Christchurch and other councils, but wasn’t successful.
So Selwyn put forward, as its preferred option for consultation, a Selwyn-owned water services CCO – or “WSCCO” – for drinking water and waste water, with stormwater services staying in-house. With the consultation phase complete, the council has since voted to adopt the proposal.
In its consultation document, Selwyn held out the possibility of joining up with potential partner councils in the future:
“Council has decided to consult on a Selwyn District Council only owned WSCCO, as at this time, there is no viable option to join with other Councils for a Joint WSCCO. If the establishment of a Selwyn WSCCO proceeds and other Councils express an interest in integrating at a later time, this would be considered and worked through.”
Selwyn isn't the only council that has taken this option of not ruling out a future suitor – while this is a more costly transition, it is also an option that is available particularly where councils are looking for solutions to longer-term challenges.
Central Otago is also proposing a wholly owned water services organisation as part of its Long-Term Plan consultation. Separately, Central Otago has been in discussion with Clutha, Waitaki, and Gore District Councils about the four councils potentially forming a new jointly owned organisation under the banner “Southern Water Done Well”.
Many councils are yet to show their hands
In summary, New Zealand's councils are taking diverse approaches to water services delivery under the "Local Water Done Well" framework, reflecting their unique regional challenges and priorities. So far roughly 45 councils have indicated, through their consultation with their communities, their preferred option for water services delivery.
With more than 20 councils still to reveal their preferences and most final decisions expected in June and July, the landscape for local water services in New Zealand will continue to evolve and points to a future characterised by tailored regional solutions rather than a one-size-fits-all model.
APPENDIX:
Aotearoa from top to bottom – the options councils are consulting on
Northland
Northland councils are consulting on their current proposals, with two councils, Far North and Whangārei, indicating their preference to retain services in-house, while Kaipara favours a combined Northland water services organisation.
Whangārei has indicated that under their preferred approach, they expect increased collaboration with other Northland councils. All three councils identified a regional water services organisation as an option for feedback, with Kaipara also consulting on a shared-services contract model with Whangārei.
Waikato
Six of the nine Waikato councils are currently consulting their communities, with Hauraki, Matamata-Piako, Waipā, and Taupō expected to begin consultation within the next few weeks. There are two main sub-groups in the region where councils are working together:
• Hamilton City and Waikato District are proposing a jointly owned two-waters CCO, with stormwater services provided to each council under a services contract. This would solve Hamilton City’s balance sheet challenge while providing an enduring solution for Waikato District, which currently contracts Watercare to manage its services. Watercare recently indicated it wishes to terminate that arrangement, creating a headache for Waikato District. Both councils have indicated the door remains open to others joining.
• Seven councils signed a Heads of Agreement in late 2024 and have been working towards the establishment of a two-waters CCO under the banner “Waikato Water Done Well”. Three of these councils – Ōtorohanga, South Waikato, and Waitomo – are currently consulting on this as their preferred option, with Waipā also confirming it will do the same. The three remaining councils – Hauraki, Matamata-Piako, and Taupō – are yet to publicly confirm their preference.
• Thames Coromandel District Council is unique among Waikato councils in keeping its options open at this stage. It’s consulting on a proposal to join a water services organisation with other councils, but is actively exploring several options including the two Waikato sub-regional options above, as well as an option of combining with Tauranga and Western Bay of Plenty.
Bay of Plenty
Six of the seven local authorities in the Bay of Plenty region are currently consulting their communities, with Ōpōtiki expected to commence consultation shortly.
• In the west of the region, Tauranga City and Western Bay of Plenty District are both consulting on a proposal to establish a jointly owned water services organisation, with the door remaining open to other councils.
• Elsewhere in the region, Rotorua has indicated it will keep water services in-house until 2028, and then transition services to a water services organisation (either wholly owned by Rotorua Lakes Council or jointly with others). This provides more time to explore potential partnership arrangements, which is likely to be of particular interest to Whakatāne, Ōpōtiki, and Kawerau.
• Similarly, Whakatāne District is consulting on a preferred option of joining a new water services organisation with other councils but is yet to express a preference between a western and an eastern subgrouping. Given the preference stated by Rotorua, the latter option would probably see Whakatāne continuing to deliver services in-house while also continuing to explore opportunities with neighbouring councils.
• Kawerau District has indicated it would prefer to keep water services in-house for the time being, while Ōpōtiki is yet to confirm its preferred option.
Gisborne
As a somewhat remote unitary authority, Gisborne does not have any obvious options to progress a joint arrangement. Instead, it is consulting on two options: its preferred option is an in-house business unit, and the other option it’s presenting is a wholly owned water services organisation.
Taranaki and Hawke’s Bay
Councils in the Taranaki and Hawke’s Bay regions are lagging behind their neighbours in the north, with councils yet to publicly consult. However, both regions have been working together to develop combined CCO options for the purposes of consultation. Hawke’s Bay was a strong advocate for regional-scale water services delivery under the previous government’s reforms, with the Mayor of New Plymouth also having previously advocated for a regional approach.
Manawatū-Whanganui
Currently all seven councils are working through or have already concluded their consultation processes, with a multiplicity of arrangements proposed.
• Three councils – Ruapehu, Whanganui, and Rangitīkei – are proposing a jointly owned water services organisation as their preferred option.
• Palmerston North is also proposing a multi-council water services organisation, with potential partners including Horowhenua, Manawatū, and Kāpiti Coast district councils. However, recognising there is likely to be division in the preferences among this group of councils, Palmerston North has also said that it’s willing to work with one or more councils within the Horizons Regional Council boundary.
• Manawatū (and Kāpiti Coast District in the Wellington region) have both indicated their preference to keep water services in-house, with Horowhenua left a bit isolated in preferring a multi-council water organisation but only Palmerston North seemingly aligned with this preference.
Wellington
Wellington region started out with grand plans, with 10 councils agreeing to investigate a combined water services model. However, this arrangement eventually splintered, with the councils now largely coalescing around two sub-groups plus Kāpiti, who prefers to go it alone.
• In the urban area, five councils – Wellington, Porirua, Lower Hutt, Upper Hutt, and Greater Wellington Regional Council – are proposing a new multi-council water organisation to take over the operations of Wellington Water.
• In the Wairarapa, Masterton, Carterton, and South Wairarapa have come together with Tararua District to propose a jointly owned water services organisation, under the moniker “Wai + T”.
Marlborough, Nelson, and Tasman
• Of the three unitary councils in the top of the South Island, only Nelson City Council has consulted its community, being the first in the country out of the gate. Its proposal, subsequently confirmed by the council, is to keep service delivery in-house.
• Marlborough and Tasman are expected to begin consultation in the next few weeks.
Canterbury
There are 10 councils in New Zealand’s largest region, including Waitaki, which straddles South Canterbury and North Otago.
• In the north of the region, Kaikōura and Hurunui districts are proposing a jointly owned water services organisation.
• Christchurch City and the Waimakariri and Ashburton districts plan to do their own thing, proposing to keep services in-house.
• Selwyn District has proposed to establish a two-waters CCO (with in-house stormwater management). It noted in its consultation document that: “Maintaining current in-house delivery for delivering water services is not an option due to new legislation and increased compliance”. Selwyn cited council debt limits as a key constraint on its ability to make the required investment in its water infrastructure.
• The remaining councils in Canterbury – Mackenzie, Tīmaru, Waimate, and Waitaki – are yet to confirm their preferences and begin consultation. But Timaru, Mackenzie, and Waimate are also in discussions about a potential joint water organisation.
Otago and Southland
• Of the four Otago councils (that is, excluding Waitaki, which was covered above), only Dunedin and Central Otago have begun consultation. Dunedin proposes to keep services in-house and Central Otago proposes a wholly owned water services organisation as part of its Long-Term Plan consultation.
• Separately, Central Otago has been in discussion with Clutha, Waitaki, and Gore District Councils about the four councils potentially forming a jointly owned water services organisation under the banner “Southern Water Done Well”. Those other three councils are expected to begin consultation over the next month.
• At the bottom of the South, both Invercargill and Southland District Councils are proposing to keep their services in-house.
