Like all Councils we are working on the next stage of water reform, as we have been asked to do by the Coalition Government.

This page is where we will be sharing important information and ultimately asking for your views.

Local Water Done Well

Government mandated water reform means big changes are coming to the way our water is delivered and paid for.

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. This has replaced the previous government’s The Water Services Reform Programme (formerly known as Three Waters).

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

As part of this reform, local councils have to look at alternative ways to deliver water services and develop a Water Service Delivery Plan.

Read more on the Local Water Done Well legislation here.

What is a Water Service Delivery Plan?

Water Services Delivery Plans are a way for councils to demonstrate their commitment to deliver water services that meet regulatory requirements, support growth and urban development, and that are financially sustainable.

Through the development of these plans, councils will provide an assessment of their water infrastructure, how much they need to invest, and how they plan to finance and deliver it through their preferred water service delivery model.

Plans must include an implementation plan that sets out how the council will deliver the new model or arrangements for delivering water services that is proposed in their plan.

Councils are required to prepare Water Service Delivery Plans, either individually or with other councils, by 3 September 2025.

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).

Council’s Three Waters assets have a combined replacement value of $124 M (2022 valuation)

$34,547,112

Download MDC water assets poster (PDF)

Drinking water

We have nine water intakes, six treatment plants, and six pump stations. The total length of reticulated pipes for drinking water is 402.6 km.

Total operating costs (excluding depreciation) are estimated to be $1,067,000 for 2023/34. Projected operating costs are estimated to be approximately 15% higher over the next 10-year period (priced in 2023 dollars).

Replacement value of all water supply assets is $60,802,050 as at the June 2022 asset valuation.

Wastewater

We have 91.9 kilometres of reticulated wastewater pipes, 1,115 manholes, six pump stations and four treatment plants.

Total operating costs (excluding depreciation) are estimated to be $770,000 for 2023/24. Projected operating costs are estimated to be 10-15% higher over the next 10-year period (priced in 2023 dollars).

Replacement value of all wastewater assets is $49,844,359 as at the June 2022 asset valuation.

Stormwater

We have 31.7 kilometres of stormwater reticulation, 409 manholes, 494 sumps and five retention/treatment areas.

Total operating costs (excluding depreciation) are estimated to be $120,000 for 2022/23. Projected operating costs are estimated to be approximately 30% higher over the next 10-year period (priced in 2023 dollars).

Replacement value of all stormwater assets is $13,789,900 as at the June 2022 asset valuation. These values do not include stormwater assets that are located in the roading reserve. This includes open channels, swales, and secondary flow paths.

What does this mean for the for Mackenzie District?

While we are still crunching the numbers, what we do know, is that regardless of the service delivery model, it is highly likely that the rates paid for water will need to increase significantly to meet the requirements set down by Government.

Why are costs expected to rise?

There are a number of reasons why this needs to occur, 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. Ringfencing means future revenue generated (fees and charges, and targeted levies) must cover the costs.

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.

What happens if MDC doesn’t follow the guidance from Government?

This isn’t good – essentially we lose the ability to have a say as a community.

Where a Water Service Delivery Plan is not submitted in accordance with the Act, or a resubmitted Plan does not meet the requirements of the Act, the Minister of Local Government may appoint a Crown Water Services Specialist (at the council’s expense).

The Crown Water Services Specialist has the power to prepare a Plan for the Council, effectively making these decisions for us. We are better off preparing our own Plan locally to set our own direction that best meets our district’s aspirations.

What happens next?

We are currently looking at the numbers on how we can best deliver three waters services across the district into the future. At present we are analysing two options – a standalone internal business unit, or a Council Controlled Organisation (CCO).

As mentioned above, current modelling suggests that no matter the model, rates/ user charges in Mackenzie will need to increase significantly to fund the future capital programme.

Once we have done the analysis on these options, we will consult with the community about the best service delivery model.

When can you have a say?

When we have defined the possible models for the future delivery of three waters across the district, we will undertake a phase of public consultation – this is likely to happen in March or April this year.

At a minimum we are required to present two options for community consideration:

1. Status quo internal business unit (current MDC model).
2. Establishing a Council Controlled Organisation (either individually or with other Councils).

We are currently working through the financial and non-financial implications of these options in the context of the wider reforms, with the first test MDC must demonstrate under any future delivery model is financial sustainability.

MDC staff are currently preparing to present the two delivery model options to Council, and to recommend one of these is endorsed as the proposed option for consultation with the community. Once this has happened, we will launch the public consultation, so stay tuned.