Perspectives

A glimpse of the future: Councils consult on how to deliver water services

2025

April 26, 2025

Local authorities across the country are making progress on their water services delivery plans, with most councils now consulting their communities on their preferred service-delivery models. MartinJenkins Partner Nick Davis surveys progress and considers what it tells us about how local water services will be delivered in the years ahead.

This article was updated on 16 May 2025.

With most councils consulting their communities on their proposed arrangements for delivering water services, a picture is emerging about the future structure of the water industry.

The diverse approaches councils are taking across the country reflect the unique needs and priorities of each region, as well as differences in the perspectives and preferences across councils.

At the time of writing, only one council – Queenstown Lakes – is yet to reveal its hand. Across the 64 North and South Island territorial authorities that have so begun consulting their communities on future service-delivery arrangements, 44 (69%) have indicated a preference to establish a multi-council owned water services organisation (WSO) and 2 (3%) have opted to set up a stand-alone WSO, with the remaining 18 (29%) indicating they’d prefer to keep water services in-house.

Based on the public information, it looks likely we’ll see significant amalgamations of water services delivery in the Waikato, Bay of Plenty, Hawke’s Bay, Manawatu/Whanganui, Wellington and Otago regions, with the potential for smaller groupings of councils in North and South Canterbury. While some are moving swiftly towards jointly forming CCOs, others are taking a more cautious approach, favouring establishing a water services organisation in stages (Rotorua, for example) or setting up in-house business units.

So let’s look at some examples of the different approaches that councils are indicating as their preferred option, and the drivers and pressures at work on different councils.

And at the end of this article you’ll find an appendix that does a quick sweep through of all of New Zealand’s regions, from Cape Reinga to Bluff, for what councils are proposing.

Getting together to set up jointly owned water services CCOs

Councils in the Waikato region appear to be all agreed in principle that joint water services organisations should be the way ahead, but in the shorter term they’ve split into two sub-regional combinations. The dividing line has been shaped by which areas are facing the greatest growth challenges.

Seven Waikato councils signed a Heads of Agreement in late 2024 and have been working towards establishing a two-waters CCO under the banner “Waikato Water Done Well”. Six of those seven signatories – Ōtorohanga, South Waikato, Waitomo, Waipā, Hauraki, and Matamata-Piako, with Taupō the exception – are currently consulting on this as their preferred option or have indicated that they will do so.

Hamilton City and Waikato District haven’t signed up to Waikato Water Done Well. Hamilton confirmed in September last year that “its preferred long-term solution would be a multi-council regional asset-owning waters company which provides stormwater services to its shareholders,” but the Council had agreed that:

“… the regional proposal, ‘Waikato Water Done Well’ does not meet the city’s needs for an option which rapidly improves Hamilton’s ability to fund for growth.”

Instead, Hamilton and Waikato District proposed that the two would combine to form a two-waters CCO, with stormwater services provided to each council under a services contract.

This would solve Hamilton’s balance-sheet challenge while providing an enduring solution for Waikato District, which currently contracts Watercare to manage its services. Watercare recently indicated it wants to terminate that arrangement, creating a headache for Waikato District. The two councils have indicated the door remains open to others joining.

Nick Davis, a Partner at MartinJenkins, has significant experience in the reform of water services delivery, including advising councils on progressing individual and joint arrangements.

Similar growth drivers for establishing a water services organisation exist for Tauranga City and Western Bay and Selwyn districts, while the need for more resilient infrastructure and improved affordability in the face of long-term challenges are driving water services amalgamation proposals in the rural-provincial regions (Hawke’s Bay, Taranaki, Tararua/Wairarapa, North and South Canterbury, and Central Otago).

The Wellington region is something of a special case, having had a jointly owned water CCO (Wellington Water) managing but not owning assets since 2014. Under the current model – which is widely accepted as involving challenges – individual councils make decisions on funding and investment based on the advice provided by Wellington Water, with investment priorities determined city by city. Under the proposal for a new water services organisation, the board of the new organisation would own the assets and have primary responsibility for decisions on investment, borrowing, and charging.

Going it alone and keeping water services in-house

Different councils are subject to different drivers. As a somewhat remote unitary authority, Gisborne does not have any obvious options to progress a joint arrangement. Instead, it’s consulting on two options, its preferred model being an in-house business unit, and the other option being a wholly owned water services organisation.

By contrast, Whangārei District Council would seem to have more freedom of choice. It has also put forward an in-house business unit as its preferred option for consultation. Whangarei District Council’s consultation document cites the Council’s very low debt and the fact that its boundaries include Northland’s largest urban area:

“As the only city in the region, Whangārei District has the largest population (and number of ratepayers) in Northland. This means we are spared some of the challenges of our Northland neighbours who are grappling with lower populations, smaller amounts of commercial activity and larger geographic areas to maintain and provide for. These factors place unique pressures on Far North and Kaipara Districts’ ability to fund infrastructure and prepare for growth.

“This contributes to the current situation, which sees the other Northland councils with debt on existing water infrastructure assets and greater future borrowing needs than our Council. In comparison, Whangārei District has funds in reserve for water and wastewater infrastructure.”

The in-house option would mean that:

“we retain local ownership and control of our assets, we wouldn’t need to fork out for any CCO set-up costs, nor would we need to cross-subsidise other parts of Northland’s water costs.”

Going it alone but with a new wholly owned water services CCO

Not many councils have so far put this forward as their preferred option for consultation. Those that have don’t appear to see it as their ideal model, and instead would prefer combining with other councils to form jointly owned CCOs.

Selwyn District Council has to deal with the challenges that arise from being one of the fastest-growing districts in the country following the Canterbury earthquakes. In its consultation document it said that: “Maintaining current in-house delivery for delivering water services is not an option due to new legislation and increased compliance.” To help fund the infrastructure costs associated with rapid growth, Selwyn was keen to establish a joint CCO with Christchurch and other councils, but wasn’t successful.

So Selwyn put forward, as its preferred option for consultation, a Selwyn-owned water services CCO – or “WSCCO” – for drinking water and wastewater, with stormwater services staying in-house. With the consultation phase complete, the council has since voted to adopt the proposal.

In its consultation document, Selwyn held out the possibility of joining up with potential partner councils in the future:

“Council has decided to consult on a Selwyn District Council only owned WSCCO, as at this time, there is no viable option to join with other Councils for a Joint WSCCO. If the establishment of a Selwyn WSCCO proceeds and other Councils express an interest in integrating at a later time, this would be considered and worked through.”

Selwyn isn't the only council that has taken this option of not ruling out a future suitor – while this is a more costly transition, it is also an option that is available particularly where councils are looking for solutions to longer-term challenges.

Central Otago is also proposing a wholly owned water services organisation as part of its Long-Term Plan consultation. Separately, Central Otago has been in discussion with Clutha, Waitaki, and Gore District Councils about the four councils potentially forming a new jointly owned organisation under the banner “Southern Water Done Well”.

Council proposals portend significant change for the water sector

In summary, New Zealand's councils are taking diverse approaches to water services delivery under the "Local Water Done Well" framework, reflecting their unique regional challenges and priorities. So far only Queenstown Lakes District Council is yet to begin consultation on its preferred service-delivery arrangements, but it is expected to do so in early June.

A key focus for us at MartinJenkins over the coming weeks will be watching communities’ sentiments as expressed through submissions processes, to see whether there is community support for councils’ preferred options. We’ll also be keeping an eye on council decision-making over June and July as elected members hear from their communities and make decisions in their communities’ long-term interests.

It's clear that the future will see tailored approaches rather than a one-size-fits-all model. It’s also clear that the future trajectory of the water sector will be one of significant change in delivery models, with significant implications for the workforce, labour market, supply chain, regulators, and customers.

APPENDIX:
Aotearoa from top to bottom – the options councils are consulting on

Northland

Northland councils are consulting on their current proposals, with two councils, Far North and Whangārei, indicating their preference to retain services in-house, while Kaipara favours a combined Northland water services organisation.

Whangārei has indicated that under their preferred approach, they expect increased collaboration with other Northland councils. All three councils identified a regional water services organisation as an option for feedback, with Kaipara also consulting on a shared-services contract model with Whangārei.

Waikato (updated 16 May 2025)

All nine Waikato councils are currently consulting their communities. There are two main sub-groups in the region where councils are working together:

• Hamilton City and Waikato District are proposing a jointly owned two-waters CCO, with stormwater services provided to each council under a services contract. This would solve Hamilton City’s balance sheet challenge while providing an enduring solution for Waikato District, which currently contracts Watercare to manage its services. Watercare recently indicated it wishes to terminate that arrangement, creating a headache for Waikato District. Both councils have indicated the door remains open to others joining.

• Seven councils signed a Heads of Agreement in late 2024 and have been working towards the establishment of a two-waters CCO under the banner “Waikato Water Done Well”. Six out of the seven councils are currently consulting on this as their preferred option, with Taupō proposing to keep water services in-house.

• Thames Coromandel District Council is unique among Waikato councils in keeping its options open at this stage. It’s consulting on a proposal to join a water services organisation with other councils, but is actively exploring several options including the two Waikato sub-regional options above, as well as an option of combining with Tauranga and Western Bay of Plenty.

Bay of Plenty

All six local authorities in the Bay of Plenty region are currently or have finished consulting their communities on their preferred options:

• In the west of the region, Tauranga City and Western Bay of Plenty District are both consulting on a proposal to establish a jointly owned water services organisation, with the door remaining open to other councils.

• Elsewhere in the region, Rotorua has indicated it will keep water services in-house until 2028, and then transition services to a water services organisation (either wholly owned by Rotorua Lakes Council or jointly with others). This provides more time to explore potential partnership arrangements, which is likely to be of particular interest to Whakatāne, Ōpōtiki, and Kawerau.

• Similarly, Whakatāne District is consulting on a preferred option of joining a new water services organisation with other councils but is yet to express a preference between a western and an eastern subgrouping. Given the preference stated by Rotorua, the latter option would probably see Whakatāne continuing to deliver services in-house while also continuing to explore opportunities with neighbouring councils.

• Kawerau District and Ōpōtiki District are both consulting on their preferred options of keeping water services in-house for the time being.

Gisborne

As a somewhat remote unitary authority, Gisborne does not have any obvious options to progress a joint arrangement. Instead, it is consulting on two options: its preferred option is an in-house business unit, and the other option it’s presenting is a wholly owned water services organisation.

Taranaki (updated 2 May 2025)

All three Taranaki councils – New Plymouth, Stratford, and South Taranaki – are consulting with their communities on their preferred option of a proposed regional CCO.

Hawke’s Bay (updated 16 May 2025)

The four Hawke's Bay councils – Wairoa, Napier, Hastings, and Central Hawke’s Bay – are consulting their communities on a proposal to establish a jointly owned regional water services organisation. Hawke’s Bay councils were strong advocates for regional-scale water services delivery under the previous government’s reforms.

Manawatū-Whanganui

All seven councils are working through or have already concluded their consultation processes, with a multiplicity of arrangements proposed.

• Three councils – Ruapehu, Whanganui, and Rangitīkei – are proposing a jointly owned water services organisation as their preferred option.

• Palmerston North is also proposing a multi-council water services organisation, with potential partners including Horowhenua, Manawatū, and Kāpiti Coast district councils. However, recognising there is likely to be division in the preferences among this group of councils, Palmerston North has also said that it’s willing to work with one or more councils within the Horizons Regional Council boundary.

• Manawatū (and Kāpiti Coast District in the Wellington region) have both indicated their preference to keep water services in-house, with Horowhenua left a bit isolated in preferring a multi-council water organisation but only Palmerston North seemingly aligned with this preference.

Wellington

Wellington region started out with grand plans, with 10 councils agreeing to investigate a combined water services model. However, this arrangement eventually splintered, with the councils now largely coalescing around two sub-groups plus Kāpiti, who prefers to go it alone.

• In the urban area, five councils – Wellington, Porirua, Lower Hutt, Upper Hutt, and Greater Wellington Regional Council – are proposing a new multi-council water organisation to take over the operations of Wellington Water.

• In the Wairarapa, Masterton, Carterton, and South Wairarapa have come together with Tararua District to propose a jointly owned water services organisation, under the moniker “Wai + T”.

Marlborough, Nelson, and Tasman (updated 2 May 2025)

All three unitary councils in the top of the South Island have either begun or have now concluded their consultation:

• Nelson City Council was the first in the country out of the gate with consultation. Its proposal, subsequently confirmed by the council, is to keep service delivery in-house.

• Tasman is also consulting on continuing with in-house delivery.

• Marlborough is consulting on a proposal to establish a single-council water CCO.

West Coast (updated 16 May 2025)

All three district councils on the West Coast – Buller, Grey, and Westland – are consulting on a proposal to establish a jointly owned regional water services organisation.

Canterbury (updated 16 May 2025)

There are 10 councils in New Zealand’s largest region, including Waitaki, which straddles South Canterbury and North Otago.

• In the north of the region, Kaikōura and Hurunui districts are proposing a jointly owned water services organisation.

• Christchurch City and the Waimakariri and Ashburton districts plan to do their own thing, proposing to keep services in-house.

• Selwyn District has proposed to establish a two-waters CCO (with in-house stormwater management). It noted in its consultation document that: “Maintaining current in-house delivery for delivering water services is not an option due to new legislation and increased compliance”. Selwyn cited council debt limits as a key constraint on its ability to make the required investment in its water infrastructure.

• Tīmaru and Mackenzie districts are both consulting on a proposal to work with neighbouring councils – also including Waimate and Waitaki – to establish a joint water services organisation. However, Mackenzie District council is consulting on its preferred option of keeping services in-house.

Otago and Southland

• Four lower South Island councils – Waitaki, Central Otago, Clutha, and Gore – are consulting on a proposal to establish a multi-council CCO under the banner “Southern Water Done Well”.

• At the bottom of the South, Dunedin, Invercargill, and Southland District Councils are proposing to keep their services in-house.

• Queenstown Lakes District Council is yet to begin consultation but is expected to do so in early June.

Notes on other local authorities

• Auckland Council isn’t required to consult under Local Water Done Well, having reached its own agreement with the Government to pass special legislation to financially separate Watercare from Auckland Council.

• Chatham Islands Council is reported to be working with Auckland Council and Watercare on Local Water Done Well, although details of the proposed arrangements are not yet clear.

• Greater Wellington Regional Council isn’t listed above but is involved in the proposal to establish a water services organisation within the Wellington region that would take over responsibility for the region’s bulk water services.

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