Let's Talk Water Reform

Water reform as part of the Government’s Local Water Done Well legislation means big changes are coming to the way our water is delivered and paid for.

This is one of the most important issues your Council will have to decide on as part of the current term, and it’s one we are taking very seriously.

It is highly likely that the rates and user charges paid by our ratepayers for water will need to increase significantly to meet the requirements set down by Government.

Water Services Delivery Plan submitted (September 2025)

On 1 September 2025, Mackenzie District Council submitted its Water Service Delivery Plan.

This follows a Council decision on 26 August, where Councillors voted to approve the Water Services Delivery Plan for an in-house water services business.

The Plan outlines how water services will be delivered and financed in a manner that is compliant with the Government’s Local Water Done Well reforms. The Government required all councils to submit a Water Services Delivery Plan that complies with the legislation for meeting drinking and wastewater standards, and which is financially sustainable.

The Plan has been be submitted to the Department of Internal Affairs, who will make a decision whether to approve it, seek amendments or reject it.

Click here to read the MDC Water Services Delivery Plan

What is Local Water Done Well?

In December 2023 the Government announced a new direction for water services (drinking water, wastewater and stormwater services) policy and legislation which it has called Local Water Done Well.

The Government’s intention is to ensure people pay cost-reflective prices for water services, that those services are delivered to an acceptable quality, and that water services providers are investing sufficiently in infrastructure.

Key components of Local Water Done Well include:

• Fit-for-purpose service delivery models and financing tools
• Ensuring water services are financially sustainable
• Introducing greater central government oversight, economic and quality regulation

Read more on the Local Water Done Well legislation here. 

What has been the process so far?

Council engaged and consulted with its community on its proposed model for delivering water services under Local Water Done Well from Friday 9 May to Friday 13 June 2025.

Council proposed two models for the future delivery of water services:

Option 1 – Keeping these services in-house and overseen by our Council, but there would be some changes to help us meet new government requirements (This received 56.5% community support).

Option 2 – Working with other councils to set up a new water organisation to manage our water services. This could be across three or four districts, or others, based on what our communities need and want, and on the final council decisions (This received 43.5% community support).

Council decided to adopt an in-house water services delivery model at their meeting on 15 July 2025, following community consultation and extensive deliberations.

Following this decision, MDC staff prepared and submitted a Water Services Delivery Plan that aligns to the requirements set by the DIA.

What happens next?

September – October: DIA Assessment

DIA will be assessing all aspects of our Plan against legislative requirements, with a focus on identifying any risks or issues that may impact their ability to accept the plan.

To assess whether a council’s water services delivery is financially sustainable, three components will be considered:

• Revenue sufficiency – is there sufficient revenue to cover the costs (including servicing debt) of water services delivery?
• Investment sufficiency – is the projected level of investment sufficient to meet regulatory requirements and provide for growth?
• Financing sufficiency – are funding and finance arrangements sufficient to meet investment requirements?

Throughout the assessment process we will be in regular communication with DIA to answer any questions about assumptions used or clarify information.

October – December: DIA review and acceptance

The DIA Plan Review Panel will review recommendations and to make a recommendation to the Secretary for Local Government.

The Plan Review Panel includes senior leads from key government agencies involved in Local Water Done Well – DIA, National Infrastructure Funding and Financing (NIFF), Commerce Commission, Local Government Funding Agency (LGFA), Water Services Authority, and an external observer.

By the end of December 2025, DIA expects to have notified all councils of the decision on their Plans.

When our Plan is accepted, we will publish it on our website, communicate this to our community and advise DIA.

If DIA is not satisfied that our Plan complies with the Act, it can require MDC to amend and resubmit our Plan, or not accept it.

Mackenzie District Water Assets

The provision of Three Waters (drinking water, wastewater and stormwater services) is a core council function that ensures public health, protection of assets, delivers community wellbeing and safeguards the environment.

Three Waters infrastructure comprises treatment facilities, pipes, pump stations and other assets that represent a significant council investment over many years.

The three main town centres of Fairlie, Takapō/Tekapo and Twizel have Three Waters services. Council also has water supply schemes in Burkes Pass and Allandale, and a wastewater scheme in Burkes Pass.

There is also the Albury Water Supply which supplies water to the surrounding rural area. The Albury township supply is connected to the Downland Water Supply (not managed by Council).  

Total replacement value of our three waters network is $101.3 million

Click the below image to view a summary of our district's water assets.

Why are costs expected to rise?

There are a number of reasons why costs are going to rise, including increasing regulatory standards (particularly for wastewater treatment and disposal) which will cost more to meet, historic underfunding of the water network to keep rates low, and the effects of rapid and ongoing population growth. These are issues that are being seen across the country, as councils grapple with Government driven water reforms.

The Mackenzie District, like other popular tourist destinations also has a high number of visitors in relation to our small ratepayer base. This puts additional pressure on our infrastructure, but we are unable to recoup the costs of this additional demand.

A key driver of the need to increase water rates is the fact that over the next 30 years we will need to invest over $200m into our Three Waters network. In particular we have been planning for significant upgrades and renewals to the wastewater treatment plants in Fairlie, Takapō, Burkes Pass and Twizel to ensure they remain compliant and fit for purpose when their current consents expire in late 2030’s to 2040’s.

In addition, the Government now requires that three waters finances are ‘ringfenced’. This means we can only pay for spending on three waters with the income we directly receive from ratepayers and other sources. Historically we have funded three waters through a mix of targeted rates and general rates, but the in future this ‘top up’ from general rates cannot occur. Our water charges must therefore increase to offset this.

Essentially, we need to increase rates now so that we can meet the government’s expectations for an appropriate level of investment that meets all renewal, growth, level of service, and regulatory requirements over the next 30-years.