FAQs

Earlier water reform initiatives took a centralised view of the way water services were managed. Local Water Done Well takes a more localised view with central government oversight.

Local Water Done Well recognises the importance of local decision making and flexibility for councils to decide the best way to deliver water services for communities in the future. There is a strong emphasis on meeting environmental, water quality and economic regulatory requirements.

Councils will be required to align with new and stricter rules for investment, borrowing and pricing, and new options for how water services are delivered.

The next step for councils is by September 2025, they must submit a Water Services Delivery Plan (WSDP) to the Government. This plan must include:

• How councils will meet the new standards.
• How councils will provide water services that are financially sustainable in the long term.
• Which delivery model councils will use in the future.

The plan must show how councils will meet these requirements by June 2028.

Financial sustainability means water services revenue (from rates or user charges) is sufficient to meet the costs of delivering water services. The costs of delivering water services include meeting all regulatory standards, and long-term investment in water services.

Currently, councils are responsible for planning, funding, building and maintaining the infrastructure and processes that deliver drinking water (also known as water supply), wastewater and stormwater services. This includes ensuring they meet community needs, comply with environmental and quality standards, and address challenges such as population growth and climate change.

While councils can continue to deliver services ‘in house’ as they do now, they will still be required to meet national water quality and infrastructure requirements. This would require big changes to the current ‘status quo’ approach to water services delivery. This is likely to result in significant financial pressure on councils to maintain and upgrade these water services independently, and, as a result, unaffordable rate rises for the community.

These new requirements mean big changes to water services delivery, regardless of which model councils decide on. The Government has nominated possible delivery models, and Hawke’s Bay councils have collectively looked at the pros and cons of three options:

• ‘In-house’ Internal business unit (enhanced council delivered services)
• Single council-owned water organisation (Single CCO)
• Multi-council owned water organisation (Regional CCO)

Napier City Council along with Central Hawke’s Bay District Council, Hastings District Council and Wairoa District Council have identified their preferred option for future water services delivery as a joint council-controlled Organisation (a regional CCO).

Under this model, the Regional CCO (including all water assets) would be publicly owned, with all four councils as the only shareholders.

The CCO would be responsible for delivering drinking water, wastewater and stormwater services across council boundaries. It would build, maintain and operate critical waters infrastructure, based on direction from the council shareholders.

The specific pros and cons vary across councils but overall a Regional CCO is expected to offer cost efficiencies, better borrowing power, shared expertise, greater resilience and enhanced service delivery. It provides a regional approach to water services, while individual councils are involved in key decisions as a shareholder.

As part of the Government’s Local Water Done Well programme and new legislation, every council must consult with their communities on how water services are delivered in the future.

This will be one of the most important decisions councils make in the coming decades and they want to know if you support their preferred option of a joint Council-controlled Organisation before they make a final decision on which to base their Water Service Deliver Plans.

A CCO is different to a council. It is governed by an independent Board of Directors, working to meet clear expectations set by shareholding councils and their elected representatives. Each year, CCOs must formally report back to their shareholding councils, to ensure those expectations are met.

Under Local Water Done Well, a CCO is expected to be able to access higher levels of debt funding for water infrastructure investment, and at a lower cost than Council’s borrowing on their own.

While councils have the flexibility to choose how they deliver water services, the Government has a strong preference for councils to collaborate and form multi-council water entities with the financial capacity to invest in water services infrastructure.

No. Under all options, water assets will remain publicly owned. The law prevents councils from selling water assets without extensive legislative and community approval.

Yes, whichever future model is chosen. Regardless of the model, water is going to cost residents more. Councils will be required to meet new rules and regulations, make the necessary infrastructure investments, and respond to population growth and climate change. The key challenge for all councils is finding a way to manage these rising costs in the most effective, affordable and sustainable way.

A CCO would be governed by a group of appropriately skilled, independent directors with an appropriate mix of expertise to make decisions about long-term, critical infrastructure. Shareholding councils would appoint the directors.

The Board of Directors must meet clear expectations set by shareholding councils and their elected representatives. Each year, CCOs must formally report back to their shareholding councils, to ensure those expectations are met.

Council-controlled organisations will be able to access debt from the Local Government Funding Agency (LGFA), if they are financially supported by their parent council or councils. Under the new plan, water CCOs will be able to leverage up to a level equivalent to 500% of operating revenues subject to meeting prudent credit criteria.

The Commerce Commission will provide oversight of all water service providers (either a CCO or an internal business unit within council) to ensure it is well managed financially and meets its legal obligations in terms of water charges.

Taumata Arowai already requires councils to meet water quality standards. It will require the same thing of a council-controlled Organisation (CCO) or ‘In-house’ Internal Business Unit.

Different councils have different relationships with local iwi/hapū, and currently all councils work directly with mana whenua in their own areas. Local Water Done Well reform has been a very fast process under very tight timeframes. While councils have been keeping iwi/hapū informed, discussion and agreement around the roles and relationships under each potential delivery model still needs to be discussed and confirmed.

That could happen. If some Hawke’s Bay councils decided not to join a Regional CCO at this time, then each council would need to consider the other delivery options. This might mean each of the councils submit an individual Water Services Delivery Plan, rather than a joint Plan. It would then be up to central government to review the Plans and assess whether these would meet the new requirements.

Napier City Council, Central Hawke’s Bay District Council, Hastings District Council and Wairoa District Council have all identified a Regional Council-controlled Organisation (CCO) organisation as the preferred option for how water services are delivered in the future.

Government legislation requires each council to consult with their communities on the planned changes to water services delivery and it is important councils explain what these changes look like for their communities, as these differ across the councils. It is also important councils consider the specific views of their respective communities and factor these in to their final decision.

Consultation closes on 15 June. Councils will review feedback, deliberate on the preferred model, and make formal decisions following hearings in July.

The option selected by councils, taking community feedback into account, will be incorporated into the Water Services Delivery Plan as the proposed delivery model. The WSDP must be submitted to the Secretary for Local Government by 3 September 2025, and if accepted, the new entity will be established. In the Hawke’s Bay modelling, a start date for any new entity of mid-June 2026 has been indicated. An Establishment Plan has not yet been developed, as this must come after the consultation process and decision on the preferred option.