Three Waters reforms reworked into 10 regionally-led entities in shake-up

The Government has unveiled its refresh of the reforms formerly known as Three Waters, announcing that 10 public water entities will be established instead of the four previously proposed.

There will still be an element of co-governance, with council representatives and iwi/Māori partnering to "provide strategic oversight and direction to the entities", which will have their own boards "appointed on competency and skill".

Minister for Local Government Kieran McAnulty says the "major changes to New Zealand's affordable water reforms" have come as a result of listening to feedback from local government.

But some mayors who have been critical of the Government's reform plan aren't happy with the new proposal either, saying it's "the same plan with a different name".

McAnulty said the Government has "listened closely" and believes the reform programme "must be led at a regional level".

Previously, councils' water infrastructure was planned to be amalgamated into four water entities covering large parts of New Zealand.

For example, under the old plan, one entity would have covered the vast majority of the South Island and another would have covered Nelson, Tasman, Wellington, Wairarapa, Napier and up the East Coast.

There was criticism from some in local government that these entities were too big and risked smaller communities losing their voice. The Government said having four entities created the scale and structural change needed to enable significant investment.

The 10 new entities, which councils will have an ownership stake in, cover smaller parts of the country. For example, Nelson, Tasman and Marlborough will have their own entity instead of being bundled in with parts of the North Island.

"By extending the number of publicly owned water entities to 10, every district council in the country will have a say and representation over their local water services entities through regional representative groups, forming a partnership between council representatives and iwi/Māori that will provide strategic oversight and direction to the entities.

"These groups will continue to sit below the governance board, in which each member will be appointed on merit and qualification, but by increasing the number of entities we will be able to ensure the needs of every community, especially small rural towns, are heard and met."

The Government said that under the 10-entity model, every territorial authority owner will be represented on the entity's regional representative group.

There would continue to be an equal number of mana whenua representatives.

"Under te Tiriti o Waitangi/the Treaty of Waitangi, mana whenua have the right to participate in decisions that relate to water services. Iwi/Māori also have responsibilities as kaitiaki to protect Te Mana o te Wai, the health and mauri of our water," the Government explained in material accompanying a press release on the changes.

"Therefore it is appropriate that the regional representative group remains a partnership between iwi/Māori and representatives of the councils who will own the new entities and represent their wider communities."

Three Waters reforms reworked into 10 regionally-led entities in shake-up

McAnulty said the reforms are "absolutely essential" and if they aren't acted on, Kiwis will be hit with unaffordable rate bills.

The Local Government Minister said he'd been working with local government leaders over the last few months on how the Government could move forward with its water infrastructure reforms.

"The feedback has been overwhelmingly clear that our water infrastructure deficit needs to be addressed now if we're to save households from ballooning bills that will make water unaffordable."

The minister, who is also the local MP for Wairarapa, said the cost of meeting the upgrades is projected to be up to $185 billion over the next 30 years.

"Local councils cannot afford this on their own, and households in some areas could see rates rise up to $9730 per year by 2054 if we do nothing."

Minister McAunlty said the project costs have been peer-reviewed and make for "pretty grim reading".

"Leaving councils to deal with this themselves will lead to unaffordable rate rises. It would be setting councils up to fail and I can't in good conscience do that."

Under the Government's proposal to stand up 10 entities, Minister McAnulty said Kiwis will still make big savings, projected at $2770 to $5400 on average within each region.

The Minister said the water services entities will begin delivering water services from July 1, 2026 "at the latest" and can proceed before that date if they're ready.

"These are once-in-a-generation reforms, and it's important that we get it right, we landed on this by working with councils and will continue to do so to ensure a smooth transition."

'Same plan with a different name'

But Communities 4 Local Democracy, a group of councils which have criticised the Government's specific reforms, are disappointed by the announcement which they said only contains "minor tweaks" and doesn't "answer concerns around community property rights and meaningful local voice".

"We think New Zealanders will see through this, it’s the same plan with a different name," said co-chairs and mayors Helen Worboys and Dan Gordon said.

"Simply adding more entities and changing the name is a desperate attempt to save this plan and attempt to show they've done something with the $100 million they’ve sunk into this process so far."

They said they had been "genuinely excited" about engaging with the minister to "map a great path forward for water reform". But they believed the Government had continued "to shelve local democracy and ignore an overwhelming majority of the community to press on with its plan virtually unaltered".

"Unfortunately, instead of listening to what communities are asking for, the Government once again thinks it knows better and is serving up a reheated version of the same unpalatable, unpopular plan."

Earlier, Central Otago Mayor Tim Cadogan, a supporter for the Government's previous proposal, told RNZ that compromises could undermine the reforms.

"We've got to find the most affordable way to do the work that needs to be done," Cadogan said.

"And we've managed - primarily through a lack of clarity - to have got ourselves in a point where maybe there's going to be compromises made, that are going to have a direct impact on [a ratepayer's] already stretched pocket into the future."

He said co-governance had become a distraction from the "crucial economic and environmental problems".

The policy was previously known as Three Waters, but that isn't found anywhere in the press release announcing the changes. Three Waters referred to drinking, waste and stormwater.

On Monday, Prime Minister Chris Hipkins was asked why he would no longer call the reforms Three Waters.

"Because fundamentally, it's about water infrastructure and it's about making sure that we're dealing with the country's water infrastructure deficit," he replied.

"Let's call it what it is; it's about making sure we have affordable water infrastructure improvements. There is a massive bill coming down the pipeline, if you'll excuse the pun, in terms of upgrading our water infrastructure. That's what these reforms are about."

He said the term had become "somewhat confused".

ACT Party local government spokesperson Simon Court on Thursday said the Government should just get rid of the policy altogether rather than unveiling a "hollow rebrand".

"New Zealanders aren’t stupid. Whatever way Hipkins tries to spin it, whatever he changes the name to, if the policy still expropriates ratepayer assets and divides New Zealanders by ancestry through co-government then Kiwis won’t have a bar of it."

The shake-up on Thursday comes after Chris Hipkins told The Hui that former Minister of Local Government Nanaia Mahuta was left alone by her Cabinet colleagues to defend Three Waters for too long.

"I think if I reflect critically on that period, we probably left Nanaia Mahuta out on her own defending the Three Waters reform program and the co-governance debate by herself for longer than we should have.

"I actually think Nanaia bore the brunt of that [debate]. It was very unfair. It became very personalised to her."

Hipkins said it was one of the reasons he took the Local Government portfolio off Mahuta in his first Cabinet reshuffle.

"I wasn't willing to allow that to continue... I think she deserved better than that."

He added many people who oppose Three Waters don't understand the water infrastructure changes.

Instead, the Prime Minister said they've "just heard the dog whistle racism that's associated with it".

He's previously said the term co-governance has been "misunderstood". The inclusion of elements of co-governance in the Three Waters policy attracted some of the sharpest criticism.