What the local government water services bill means for the sector

In a formal setting, Steve Jones, the National Infrastructure Manager at Harrison Grierson, relaxes on a couch wearing a pink shirt.

Harrison Grierson's National Infrastructure Manager, Steve Jones, breaks down the Local Government (Water Services) Bill and looks at what it means for local and regional councils.

We all want to see a more efficient and productive water sector in New Zealand. Goodness knows we need it.

I’m sure local communities would have leapt for joy in December when National’s Local Government (Water Services) Bill was published. The bill focuses on giving communities back control of water infrastructure in a step towards future economic regulation and a more reliable water infrastructure.

The third in a series of new bills introduced to supersede the Labour government’s endeavour to reform the sector, it’s targeted at regulation ensuring a financially sustainable water service meeting regulatory requirements in all regions across the country.

It’s a step forward for the government’s policy of providing services on a user-pays basis as those utility services that are on that footing are sustainable and deliver better, consistent levels of service to the public they serve.

The bill requires both water supply and wastewater services to be delivered in this manner while being open to the inclusion of stormwater services either now or in the future. The snag with stormwater, of course, is that there is no charging mechanism for this in a user pays model outside of a targeted rate.

While the bill proposes that regional councils remain in control of the environmental aspects of water, one of the key changes is the move for Taumata Arowai from water quality regulators to a Water Services Authority with its remit broadened to cover all aspects of three waters. The Commerce Commission will become the water sector’s economic regulator. The approach to three regulators for price, quality and environment is a carbon copy of most other countries where three water services are either privatised or carved out from mainstream local government organisations.

Watercare will also see the appointment of a crown monitor to ensure Aucklanders don’t see unnecessary rate hikes.

My concern is, if you economically regulate and set prices for water services for customers you need to have a level playing field across the country in terms of standards and the levels of service customers receive for the price they pay. People cannot be charged more in an area with a long-term boil notice on their water supplies than an area where the supplied water is safe to drink. Some areas satisfy SNZ PAS4509 firefighting flow and pressure requirements, some do not. Discharge consents for wastewater treatment plants are stricter in some catchments and locations than in others which leads to a higher cost of treatment in some locations than in others, so environmental benefit needs to be recognised in the price of the service.

You get my point.

Therefore, I am pleased to read of the introduction of mandatory standards for both wastewater and stormwater environmental performance and of course, the national engineering design standards (NEDS) which I had the privilege to help the Department of Internal Affairs develop through 2023.  This important work has endured, even though the water reform process itself has since changed. It’s heartening to see that the significance of this work has not been thrown away but has instead been embraced as a key piece in the puzzle to unlock a more efficient and productive water sector in New Zealand. 

In England and Wales, a prescribed level of service was set in the 1990s when the industry was privatised and regulated by the Water Services Regulation Authority (OFWAT).  Similarly in Scotland, the Scottish Water Commission has embraced standardised, national levels of service indicators. In both of these examples, a level playing field was set by which all water service providers could be judged by the regulators and the general public.

Also in the UK, standard design documents such as Sewers for Adoption created a nationally recognised minimum set of requirements that any developer would have to meet in order for their assets to be vested in the local water service provider on completion. This has reduced costs in the longer term and assisted in the development of new products and materials that both improved reliability and reduced cost and carbon.

Back here in New Zealand, councils now have until September 2025 to develop their water service delivery plans which need to outline arrangements and implementation.

Get in touch with Steve and the Three Waters team at Harrison Grierson if you need support to develop aspects of your delivery plans about the proposed mandatory environmental standards, stormwater network risk management plans or want to discuss the NEDS when transitioning to the new environment.