Proposed Government Three Waters Reform

Do you have any questions about the governments Water Reform Programme? Use the Questions tool at the bottom of the page and we'll get back to you with an answer.



In July 2020, the Government launched the Three Waters Reform programme – a three-year programme to reform local government three waters service delivery arrangements.

The programme is a major change to how New Zealand’s three waters (our drinking water, wastewater and stormwater) infrastructure and services are planned, maintained and delivered. The reforms are based around three pillars:

  1. Taumata Arowai – New Zealand’s drinking water regulator (expected to be established in late 2021).
  2. Expanding and strengthening New Zealand’s water regulatory system.
  3. Proposed transition from council-owned public water services to four multi-regional entities.

The process, which began in 2017 and was sparked by the campylobacteriosis outbreak in Havelock North in 2016, and has already delivered new legislation and the creation of Taumata Arowai, a new Water Services Regulator, to oversee and enforce a new drinking water regulatory framework, with additional oversight of wastewater and stormwater networks.

While addressing the regulatory issues, both central and local government have identified under-investment in three waters infrastructure in parts of the country and persistent affordability issues for ratepayers. There is also a need for increased investment to meet improvements in freshwater standards and increase resilience to climate change and natural hazards. The government believes that this will offer cost savings to water users, while allowing for increased investment in the infrastructure required to ensure safe, resilient and sustainable water into the future.

Regional Water Authorities

The proposal from central government is to establish four water authorities, who would manage and operate New Zealand’s water services instead of local councils.

Currently the 67 local councils across the country own and operate the majority of New Zealand’s three waters services. In the Mackenzie District, these services are the responsibility of Mackenzie District Council (MDC) and are one of the core services we provide for our community.

One entity (currently named Entity D) is proposed to cover the Ngāi Tahu takiwa (all of the South Island excluding Nelson, Marlborough and Tasman). The Mackenzie District would fall under the proposed boundaries of Entity D.

The Department of Internal Affairs (DIA) has released a map (below) showing the proposed boundaries of the three entities. We would be included in entity D and our Council is in the process of giving the Government feedback on the map. It's important to note that we haven't firmed up a position on the overall proposal and boundaries yet.

You can find this map and more information here.


Proposed Regional Water Entities


Water standards

Regardless of what happens with the proposed multi-regional entities, compliance with water standards is going to be more rigorously enforced by the new government water regulator, Taumata Arowai.

Under Taumata Arowai, drinking water standards must be complied with, and there will be potential criminal implications for water operators who don’t meet the standards required. This will apply to council owned water supplies as well as smaller private schemes, including rural water networks

The standards for wastewater and stormwater are also expected to increase to meet public health and environmental bottom lines.

Regardless of who runs the three waters networks in Mackenzie, public and private water services will have to meet public health and environmental legislation. The costs of compliance and being able to demonstrate compliance is going to go up and will need to be paid for by users.

Government Package

At the Local Government NZ (LGNZ) Conference in mid-July the Government announced a $2.5 billion package for councils as part of its three waters reform.

The package has three financial components:

  1. Support for local government to invest in communities’ wellbeing. This part of the investment totals $2 billion, with $500 million being available from 1 July 2022. It will be allocated between councils according to a nationally consistent formula, reflecting population (75 per cent), deprivation (20 per cent) and land area (5 per cent).
  2. Targeted support to ensure no councils are financially worse off as a result of transferring their three waters assets. This is designed to protect councils from any negative financial consequences of the asset transfer.
  3. Cover of reasonable transition costs. This is intended to make sure council service delivery (including of water services) during the transition isn’t compromised by the work needed to make the transition happen.
What does this mean for MDC?

We fully support the government’s intention to ensure that all New Zealanders have access to safe, clean water and that our environment is protected and regenerated as a priority. But it’s also vital we have a clear understanding of whether the proposed approach is the right thing for our district.

The move to large water entities could potentially significantly change the way water infrastructure and services are delivered in our District and how MDC is funded, as three waters would no longer fall under MDC’s authority.

It is unclear whether Government will give councils the choice to opt in or out of the proposed water entities, or if it will mandate that all councils opt into the reform process.

Regardless of who runs the three waters network in Mackenzie, any water scheme will have to meet drinking water safety and environmental requirements. The costs of compliance and being able to demonstrate compliance are going to go up and need to be paid for users. This applies to Council provided networks and private water schemes.

As this involves a significant community owned asset (our entire water network), if we are given the opportunity to make a decision, we will be sure to consult with our community.

To read a summary Q&A document click here

Our bottom lines

We have provided the government with a range of bottom lines that we believe any reform must meet. These include:

  • Local representation: any water entity developed through the process must enable local representation and MDC must not lose its ability to promote its community’s needs and wishes.
  • There must be adequate controls on water pricing structures and pricing must ensure equity across the entire region of any future entity.
  • The transfer of assets and debt must not negatively impact on MDC’s ability to be a viable organisation.
  • Cost and management of any stranded assets must be considered.
  • That full compliance with drinking water standards, environmental consents and cultural values are non-negotiable and should be progressed with urgency no matter which organisational arrangement is adopted, including the status quo.

Questions MDC is looking to have answered

We have a number of issues that we are seeking clarity on so we can make an informed decision around water reform.

Mayor Graham Smith has sent a letter to the Department of Internal Affairs (DIA) and Local Government New Zealand (LGNZ) outlining MDC's bottom lines and a list of questions we need answered to ensure we can form an educated view on water reform. This letter can be viewed at the link below.

Mayoral Letter to DIA - MDC Questions for DIA on Water reform

Appendix 1: MDC Review of WICS data

What are the potential costs?

DIA have undertaken modelling that looks to understand the cost to households with or without reform. This was based in a Request For Information that every Council in New Zealand had to complete, detailing their water network. The information was then modelled at a national level and the estimate costs outlined for each Council, which is available on an online dashboard.

The Government modelling estimates that by 2051 the provision of three waters in Mackenzie will cost upward of $8,690 per household without reform, or $1,640 with reform. Mackenzie District is working to understand the modelling undertaken and the assumptions used to ensure are an accurate representation of the true potential impacts on our community.


DIA three waters dashboard


What are the next steps?

Government has given all councils until 1 October, to better understand the proposal and how it affects them and their communities. This period is also an opportunity to identify issues of local concern and suggest possible ways to address those.

After the eight-week period, the Government will consider next steps, including the process and revised timing for decision-making. No decisions on this have been made, or will be made, until after this engagement period.

Useful Links

We’ve pulled together some useful links for anyone keen to delve into the detail of what is being proposed:

So, what do other councils think?

You can find out what other councils around New Zealand think of this reform here.


Do you have any questions about the governments Water Reform Programme? Use the Questions tool at the bottom of the page and we'll get back to you with an answer.



In July 2020, the Government launched the Three Waters Reform programme – a three-year programme to reform local government three waters service delivery arrangements.

The programme is a major change to how New Zealand’s three waters (our drinking water, wastewater and stormwater) infrastructure and services are planned, maintained and delivered. The reforms are based around three pillars:

  1. Taumata Arowai – New Zealand’s drinking water regulator (expected to be established in late 2021).
  2. Expanding and strengthening New Zealand’s water regulatory system.
  3. Proposed transition from council-owned public water services to four multi-regional entities.

The process, which began in 2017 and was sparked by the campylobacteriosis outbreak in Havelock North in 2016, and has already delivered new legislation and the creation of Taumata Arowai, a new Water Services Regulator, to oversee and enforce a new drinking water regulatory framework, with additional oversight of wastewater and stormwater networks.

While addressing the regulatory issues, both central and local government have identified under-investment in three waters infrastructure in parts of the country and persistent affordability issues for ratepayers. There is also a need for increased investment to meet improvements in freshwater standards and increase resilience to climate change and natural hazards. The government believes that this will offer cost savings to water users, while allowing for increased investment in the infrastructure required to ensure safe, resilient and sustainable water into the future.

Regional Water Authorities

The proposal from central government is to establish four water authorities, who would manage and operate New Zealand’s water services instead of local councils.

Currently the 67 local councils across the country own and operate the majority of New Zealand’s three waters services. In the Mackenzie District, these services are the responsibility of Mackenzie District Council (MDC) and are one of the core services we provide for our community.

One entity (currently named Entity D) is proposed to cover the Ngāi Tahu takiwa (all of the South Island excluding Nelson, Marlborough and Tasman). The Mackenzie District would fall under the proposed boundaries of Entity D.

The Department of Internal Affairs (DIA) has released a map (below) showing the proposed boundaries of the three entities. We would be included in entity D and our Council is in the process of giving the Government feedback on the map. It's important to note that we haven't firmed up a position on the overall proposal and boundaries yet.

You can find this map and more information here.


Proposed Regional Water Entities


Water standards

Regardless of what happens with the proposed multi-regional entities, compliance with water standards is going to be more rigorously enforced by the new government water regulator, Taumata Arowai.

Under Taumata Arowai, drinking water standards must be complied with, and there will be potential criminal implications for water operators who don’t meet the standards required. This will apply to council owned water supplies as well as smaller private schemes, including rural water networks

The standards for wastewater and stormwater are also expected to increase to meet public health and environmental bottom lines.

Regardless of who runs the three waters networks in Mackenzie, public and private water services will have to meet public health and environmental legislation. The costs of compliance and being able to demonstrate compliance is going to go up and will need to be paid for by users.

Government Package

At the Local Government NZ (LGNZ) Conference in mid-July the Government announced a $2.5 billion package for councils as part of its three waters reform.

The package has three financial components:

  1. Support for local government to invest in communities’ wellbeing. This part of the investment totals $2 billion, with $500 million being available from 1 July 2022. It will be allocated between councils according to a nationally consistent formula, reflecting population (75 per cent), deprivation (20 per cent) and land area (5 per cent).
  2. Targeted support to ensure no councils are financially worse off as a result of transferring their three waters assets. This is designed to protect councils from any negative financial consequences of the asset transfer.
  3. Cover of reasonable transition costs. This is intended to make sure council service delivery (including of water services) during the transition isn’t compromised by the work needed to make the transition happen.
What does this mean for MDC?

We fully support the government’s intention to ensure that all New Zealanders have access to safe, clean water and that our environment is protected and regenerated as a priority. But it’s also vital we have a clear understanding of whether the proposed approach is the right thing for our district.

The move to large water entities could potentially significantly change the way water infrastructure and services are delivered in our District and how MDC is funded, as three waters would no longer fall under MDC’s authority.

It is unclear whether Government will give councils the choice to opt in or out of the proposed water entities, or if it will mandate that all councils opt into the reform process.

Regardless of who runs the three waters network in Mackenzie, any water scheme will have to meet drinking water safety and environmental requirements. The costs of compliance and being able to demonstrate compliance are going to go up and need to be paid for users. This applies to Council provided networks and private water schemes.

As this involves a significant community owned asset (our entire water network), if we are given the opportunity to make a decision, we will be sure to consult with our community.

To read a summary Q&A document click here

Our bottom lines

We have provided the government with a range of bottom lines that we believe any reform must meet. These include:

  • Local representation: any water entity developed through the process must enable local representation and MDC must not lose its ability to promote its community’s needs and wishes.
  • There must be adequate controls on water pricing structures and pricing must ensure equity across the entire region of any future entity.
  • The transfer of assets and debt must not negatively impact on MDC’s ability to be a viable organisation.
  • Cost and management of any stranded assets must be considered.
  • That full compliance with drinking water standards, environmental consents and cultural values are non-negotiable and should be progressed with urgency no matter which organisational arrangement is adopted, including the status quo.

Questions MDC is looking to have answered

We have a number of issues that we are seeking clarity on so we can make an informed decision around water reform.

Mayor Graham Smith has sent a letter to the Department of Internal Affairs (DIA) and Local Government New Zealand (LGNZ) outlining MDC's bottom lines and a list of questions we need answered to ensure we can form an educated view on water reform. This letter can be viewed at the link below.

Mayoral Letter to DIA - MDC Questions for DIA on Water reform

Appendix 1: MDC Review of WICS data

What are the potential costs?

DIA have undertaken modelling that looks to understand the cost to households with or without reform. This was based in a Request For Information that every Council in New Zealand had to complete, detailing their water network. The information was then modelled at a national level and the estimate costs outlined for each Council, which is available on an online dashboard.

The Government modelling estimates that by 2051 the provision of three waters in Mackenzie will cost upward of $8,690 per household without reform, or $1,640 with reform. Mackenzie District is working to understand the modelling undertaken and the assumptions used to ensure are an accurate representation of the true potential impacts on our community.


DIA three waters dashboard


What are the next steps?

Government has given all councils until 1 October, to better understand the proposal and how it affects them and their communities. This period is also an opportunity to identify issues of local concern and suggest possible ways to address those.

After the eight-week period, the Government will consider next steps, including the process and revised timing for decision-making. No decisions on this have been made, or will be made, until after this engagement period.

Useful Links

We’ve pulled together some useful links for anyone keen to delve into the detail of what is being proposed:

So, what do other councils think?

You can find out what other councils around New Zealand think of this reform here.


  • Mackenzie District mayor backs slow down on three waters reform

    As published in the Timaru Herald, 31 August 2021

    https://www.stuff.co.nz/timaru-herald/news/126188412/mackenzie-district-mayor-backs-slow-down-on-three-waters-reform

    Mackenzie mayor Graham Smith has four bottom lines when it comes to the Government’s proposed water reforms.

    Smith has stated he is not opposed to the reforms, though he has concerns about some of the figures used in the Three Waters report and about the speed of the process.

    His main concerns are ensuring community consultation and measuring the reforms against those baselines.

    “MDC (Mackenzie District Council) set some important baselines around mechanisms for local representation and voice, the impact on the viability of smaller councils, pricing equity and the implications of any transfer of ownership of assets,” he told The Timaru Herald.

    He “agreed with Government that the present system is not working”, but warned, “the issue is the provision of good resilient infrastructure to deliver safe drinking water while keeping costs affordable and debt manageable is difficult, especially for small councils”.

    “You can’t argue that we don’t want better water quality, and a Rolls Royce water scheme for New Zealand is a great thing to aspire to.”

    But Smith notes Mackenzie’s situation is different from some councils who may be carrying heavy debt or require large investment to upgrade ageing water systems.

    “In Mackenzie, there is no debt to take over.”

    On August 23, the Canterbury Mayoral Forum – 10 mayors (including Smith) and the chair of Environment Canterbury – asked local Government Minister Nanaia Mahuta to pause the Three Waters reform process.

    The region’s mayors said they have “serious concerns” about the timeframe of the reforms, which would see control of drinking water, wastewater and stormwater infrastructure shift from 67 councils nationwide to four new independent entities.

    Almost all South Island local government areas (except for Marlborough and Tasman) would be merged into one, known as entity D.

    Mahuta , has accused the group of playing political games.

    “Small rural councils ... stand to benefit the most from these reforms and it’s been disappointing to see mayors who have been asked to engage in the process playing political games with their communities’ futures,’’ Mahuta said.

    But Smith said he feels the whole process is “travelling too fast”.

    “We don't have a good enough understanding of it. Our communities don’t have a good enough understanding of it. We are not confident we are going to be in a position to make a call by the end of September.

    “As far as I’m concerned, the infrastructure belongs to the community, so we have to consult with our communities.

    “There’s no need for this time pressure, no need to race the whole reform through without fully understanding it.”

    Smith is also concerned at the number of staff and potential revenue some councils stand to lose.

    “A lot of staff in smaller councils do more than one job, for example some of our engineers do both roading and water.

    “The council has done a bit of modelling since the first announcement, and we’re not sure about some of the assumptions [in the Three Waters report], and that’s what it’s all based on.”

    Under the proposed reforms, control of drinking water, wastewater and stormwater infrastructure would be centralised, in part to create efficiencies of scale.

    But, said Smith, “on the bigger picture, bigger isn’t always better, and government handling of public entities in generals has been dismal in the past, just look at the railways and post office and things.

    Smith said the whole proposition “relies on scale. I don't believe councils can be half in and half out.”

    Until the Minister “can assure us that it's for the betterment of our community, we’re not prepared to sign up”.

    Smith said this may leave the Government forced to mandate participation, which he warns would “use a lot of political capital”

  • Canterbury mayors request pause on three waters reforms - 23 August 2021

    The Canterbury Mayoral Forum has today written to the Minister of Local Government to formally request a pause to the current three waters reform process.

    The reform process proposes to transfer delivery of three waters services from local authorities to four public entities across New Zealand.

    The Forum has taken this step as we have serious concerns about the current decision-making timeframe. The three waters reform proposals are a once-in-a-generation decision for councils and communities, and it is crucial that communities are provided with enough time to engage meaningfully and genuinely with the process and better understand the implications of the proposals. Without this pause, we consider there is a very real risk that Councils and their communities will not be able to make informed decisions about the impact of the proposed reform outcomes.

    “The Mayoral Forum urges the pause to come into effect now and remain in place until the new water service regulator Taumata Arowai is properly established, there is clarity about the proposed Economic Regulator, and the standards and approach from each is clearly understood. We believe this is essential in order to properly and authentically engage with our communities on this incredibly important decision”, says Chair of the Canterbury Mayoral Forum, Mayor Sam Broughton.

    The Forum also acknowledges that the reform process is being undertaken at the same time as other significant reform processes, including a review into the future for local government. A pause in the three waters reform process would allow more time to consider the kind of three waters model that might best support the future for local government.

    The Mayoral Forum looks forward to further engaging with the Minister on our request.

    For further information, contact Maree McNeilly, Mayoral Forum Secretariat, on 027 381 8924.

  • Statement on Three Waters Reform, Mayor Graham Smith - 16 August 2021

    Three Waters is now on many minds now that the National Campaign has been rolled out from Central Government and as a result I am constantly being asked for our position. Firstly, it’s important to note that 3 waters covers drinking water, sewers and storm water.

    There has been a number of discussions around entities as we work through the concerns and how it will affect Mackenzie District Council (MDC).

    From the outset, MDC laid down some important baselines which we needed resolved and while it’s difficult to deny improvement in New Zealand’s standard of drinking water across the country, we don’t have all of our questions answered satisfactorily. Our baselines are as follows:

    1. Any entity developed must enable local representation and Council must not lose its ability to influence and represent our community.
    2. Control over the price of water and pricing structures must ensure equity across the entire region.
    3. The transfer of assets and debt must not negatively impact on Council’s ability to be a viable organization. This cannot be a reform by stealth.
    4. Costs and management of our stranded assets must be considered and catered for.

    Many councils have failing infrastructure and have maxed out their debt. I agree with Central Government that the present system is not working, and the issue is funding. The Government has set up a new water regulatory authority with legislation to mandate full compliance to a national standards and it’s case for change is to significantly improve safety, quality, resilience, accessibility and the performance of the 3 water services.

    MDC was allocated $5 million and signed up to an MoU to share our data. All 70 councils signed into this with the money having to be spent on infrastructure. Ours is mainly pipe replacement in Twizel and sewer de-sludging.

    All councils have had a dashboard prepared by DIA of their position however, it feels as though there are far too many assumptions being made which makes me nervous. MDC has invested maintained and improved infrastructure to date without debt. We have put our assets into the ground and now we have stranded community assets .

    When told status quo is not an option we looked at a South Canterbury model with our neighbours, but this was rejected by DIA as there was not enough scale. Canterbury Mayors did its own study but again this was rejected. We have now been presented with a model that shows four entities for New Zealand and MDC is part of the one that covers most of the South Island.

    We have been consistently told no Council will be worse off and we have the option of opting in or out. In Mackenzie we need to understand what the risks and rewards are of owning our infrastructure and ensuring the need to be consulted on. Are we prepared to invest as we meet the new regulatory standards? Can we achieve better community outcomes without reform? If it’s about price, what are the unintended consequences?

    We will be having some local engagement sessions shortly and will keep you fully informed. I do have some concerns around the future of local government, and indeed democracy.

  • Water Industry Reforms, MDC Media Advisory

    Central Government is reviewing how to improve the regulation and supply of drinking water, wastewater and stormwater (the three waters) in New Zealand.

    This is to give New Zealanders confidence that drinking water is safe to use, sources of drinking water are adequately protected, and wastewater and stormwater are managed in environmentally sustainable ways.

    The review, which began in 2017, has already delivered new legislation and the creation of Taumata Arowai, a new Water Services Regulator, to oversee and enforce a new drinking water regulatory framework, with additional oversight of wastewater and stormwater networks.

    Most three waters assets and services are owned and delivered by local councils.

    While addressing the regulatory issues, both central and local government have identified under-investment in three waters infrastructure in parts of the country and persistent affordability issues for ratepayers, as well as the need for additional investment to meet improvements in freshwater outcomes and increase resilience to climate change and natural hazards.

    In July 2020, Government announced a funding package to local authorities to maintain and improve three waters infrastructure, and to support reform of local government water services delivery arrangements. The Government indicated that its starting intention is public multi-regional models for water service delivery to realise the benefits of scale for communities and reflect neighbouring catchments and communities of interest. There is a preference that entities will be in shared ownership of local authorities.

    To be eligible for this funding, councils must take part in the initial stage of the Reforms programme. This does not commit councils to participating in further phases of the programme, or to establishing new entities or transferring assets. It is a commitment to work together with Government and regional partners to explore the local impacts of a proposal to amalgamate water assets and services, and what those changes would mean for ratepayers.

    Read more at dia.govt.nz

    How we manage the three waters

    In the Mackenzie District, Council is responsible for:

    • public drinking water supplies
    • wastewater collection, treatment and disposal in urban areas
    • managing our stormwater network.

    This is no small task!

    We're responsible for supplying safe water to over 3,000 properties through 373 kilometres of pipe in our district. We operate four urban schemes (Twizel, Tekapo, Fairlie and Burkes Pass), the Allandale rural scheme and the Pukaki Airport supply. We have 533 hydrants for firefighting water supply. We also test and treat hundreds of thousands of litres of water a day to make sure it's safe to drink.

    We provide wastewater collection, treatment and disposal for the residents and businesses of communities in Twizel, Tekapo and Fairlie. We own and maintain more than 2,700 connections and more than 90 kilometres of sewers and 6 pump stations.

    Our stormwater pipe network is more than 22 kilometres long, and has over 342 maintenance access points. We provide a stormwater system to manage water run-off from our district's urban catchments (22,851m in area) while protecting the receiving environment, ensuring water quality and reducing risks to human life, health and property from flooding. We carry out a range of activities on a daily basis to keep our network in good condition.

    What amalgamation would mean for the Mackenzie District

    The Three Waters reform programme has the potential to significantly change the way critical water infrastructure and services are delivered in our district.

    In the Mackenzie District, we have invested heavily in our water management, security and infrastructure on behalf of, and for the benefit of, our community and the environment.

    Our water-related assets together have a value of $51 million, which is 34 per cent of Council's total assets (excluding land under roads).

    A further $11.3 million is allocated in this year's annual plan to support drinking water safety upgrades, improve our wastewater treatment infrastructure and address flood risks in our district.

    Because of this investment, we are well positioned for the future. A recently released Auditor-General's report, Managing the supply of and demand for drinking water, shows that the Mackenzie District Council is setting a good example in our future-focused approach to supplying drinking water.

    Amalgamation could remove our responsibility for maintaining critical waters infrastructure and services. For example, Council would no longer be responsible for delivering drinking water supplies to households. It may also mean changes to how much our ratepayers pay for water and wastewater services, and who they pay for these services, in the future.

    What happens next

    Councillors agreed that Mackenzie District Council will participate in the initial stage of the programme. This agreement gives us a seat at the table, together with Government and regional partners, to explore the local impacts of the Three Water Services proposal.

    In exchange for our participation, we have been granted $5.12 million to further strengthen water, wastewater and stormwater infrastructure and services across the district. This needs to be spent by March 2022.

    Any decision to participate further in the Three Waters Services Reform programme will be subject to a Council decision. Working with our community is very important to us, and we will not make any significant decisions about our water, wastewater and stormwater assets and the provision of these services without talking to our community first.

    $5.12m Initial Funding

    Please note the following:

    • The MOU (which allowed Council to access the funds) is non-binding, and simply allows Council to participate in discussions with government about the proposed reforms
    • Government can push the reform process forward regardless of the views of Mackenzie District Council
    • The funding cannot be put towards projects which have already been signaled and budgeted for as part of Council's Long Term Plan (10 year plan)
    • There will be further tranches of funding available in the next year or two - we don't know what the criteria will be to access these funds at this point in time
    • Mackenzie District Council will continue to lobby government for a way forward that provide the best outcomes for residents and ratepayers in the Mackenzie District

    Click below to download a document detailing how Mackenzie District Council plans to invest the initial tranch of funding received from central government.

    Further Information

Page last updated: 01 October 2021, 08:29