Multibillion-dollar Three Waters reforms proposed to stop average household bills reaching $9000 by 2051

The Government is proposing to establish four publicly-owned entities to take responsibility for drinking water, wastewater and stormwater infrastructure to stop average household bills reaching $9000 by 2051.

A report by the Water Industry Commission for Scotland estimates that New Zealand will need to invest between $120 billion to $185 billion on water infrastructure over the next 30 years to meet standards and provide for future population growth. 

Local Government Minister Nanaia Mahuta says the proposed reforms are not only necessary, but will also grow GDP by $14 billion to $23 billion over the next 30 years and generate 5850 to 9260 full-time equivalent jobs.

"Without this change, communities are going to either face very large bills for water services; or infrastructure will continue to degrade with ongoing health and environmental consequences. Both of these outcomes are unacceptable," Mahuta said on Wednesday. 

"We have seen the effects of a system in crisis: fatalities from bacteria in drinking water, broken sewer pipes, poorly treated wastewater running into streams and rivers, no-swim notices at the beaches, regular boil-water notices, and lead contamination.

"As we undertake our economic recovery, these four entities will ensure the upgrade of infrastructure for our most precious natural resource, which will not only help reign in increasing costs for households but provide local jobs while contributing to regional economies."

Department of Internal Affairs modelling shows that even at the more conservative end of estimates, the average household bill for water services could be as high as $1900 to $9000 by 2051, which Mahuta says is unaffordable. 

"Under our proposal for four providers those figures range from $800 to $1640, saving households thousands of dollars."

Under the current set up, 67 councils provide most of the country's three water services, a system Mahuta says is in too many cases ineffective, inefficient, and not fit for purpose.

The Government's reform programme changes the management and operation of three waters services, bringing them under proposed boundaries of four water providers. 

Multibillion-dollar Three Waters reforms proposed to stop average household bills reaching $9000 by 2051
Photo credit: Supplied

National leader Judith Collins raised concerns about the ownership structure after she was leaked a Department of Internal Affairs proposal to transfer 50 percent of publicly-owned water assets in the South Island to Ngāi Tahu ownership.

But Ngāi Tahu said it was "not proposing ownership" of water assets, and that the diagram Collins was leaked showed one option proposed by independent consultants that was not pursued by the iwi. 

The Government has confirmed the four entities will remain in public ownership. 

But perhaps the biggest hurdle the Government will face is that Auckland Mayor Phil Goff is not convinced by the Three Waters proposal. 

"Aucklanders have invested heavily in building up Watercare's more than $10 billion worth of assets, with a further $11 billion invested in water infrastructure in our current 10-year Budget," he says.

"Control over those assets, and our ability to ensure that Aucklanders' needs are put first, is undermined by the reform, which proposes that we could have less than 40 per cent of the council representation in the governance of the new entity. 

"This is despite the fact that 92 percent of the assets of the new entity would come from Auckland, and Auckland would have approximately 90 percent of the population served by the new entity."

Goff also says the projected costs of an unreformed sector by 2051 - 30 years out - simply cannot be relied upon, saying: "It ignores the measures Watercare is currently taking to improve efficiency, which will lower costs."

Similar concerns have been raised by the Whangārei District Council, which has voted to withdraw from the plan. The council has invested in water infrastructure and wants to protect its assets. 

"We've got supply, we've got storage, we've got a treatment plant, a brand new state-of-the-art treatment plan," Whangārei Mayor Sheryl Mai told Newshub. 

"We've got 1.5 million people in Auckland and 200,000 in the region, so how does our voice be heard?"