Local authorities across the country are making progress on their water services delivery plans, with councils having to make decisions on their future service delivery arrangements over June and July. 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 6 June 2025.
With all North and South Island councils having consulted their communities on their proposed arrangements for delivering water services, and more than a dozen having decided their future service delivery model, a clear picture is emerging about the future structure of the water industry.
Councils across the country have been taking diverse approaches as they select their proposed models for water services. This reflects the unique needs and priorities of each region, as well as differences in the perspectives and preferences across councils.
At the time of writing, on 6 June, all North and South Island councils have revealed their proposed models and more than a dozen have made decisions, with the rest to follow in June and July. Only one council – Chatham Islands – is yet to reveal its hand, and that council is a special case, being largely reliant on Crown funding for water infrastructure.
Across the 65 North and South Island territorial authorities that have consulted their communities on future service-delivery arrangements, 44 (67.7%) have indicated a preference to establish a multi-council owned water services organisation (WSO), and three (4.6%) have opted to set up a stand-alone WSO. The remaining 18 (27.7%) have indicated 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, Taranaki, Manawatū-Whanganui, Wellington, Otago, and West Coast regions, with smaller groupings of councils in North and South Canterbury.
While some councils are moving swiftly towards forming jointly owned water CCOs, others are taking a more cautious approach: they’re either favouring establishing a water services organisation in stages (Rotorua, for example) or setting up in-house business units while waiting for evidence of success before considering joining an entity at a later stage.
So let’s look at some examples of the different approaches, 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 or have already decided.
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 – consulted on this as their preferred option.
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. Both councils have since confirmed their decision to set up a joint water services entity, and are moving swiftly to establish a new operational organisation from 1 July 2026.
This is intended to help 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.
Similar growth drivers for establishing a water services organisation exist for Tauranga City and the Western Bay of Plenty and Selwyn districts. The need for more resilient infrastructure and improved affordability in the face of long-term challenges are driving proposals for amalgamating water services in the rural and provincial regions (Hawke’s Bay, Taranaki, Manawatū-Whanganui, Tararua/Wairarapa, North and South Canterbury, and Central Otago) and West Coast.
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 Wellington water services organisation, the board of the new organisation would own the assets and have primary responsibility for decisions on investment, borrowing, and charging.
Some councils are still searching for dance partners
A small number of councils have indicated a preference for joint water services arrangements but don’t have confirmed partners. For example, Kaipara District has decided it would like to establish a Northland region water services organisation, but so far has not found willing partners in the Far North and Whangārei district councils.
Similarly, Thames-Coromandel District Council has been weighing its options, with several options potentially available to it across the Waikato and Bay of Plenty regions, with the Council’s unique geography giving it genuine options on either side of the peninsula.
Whakatāne is in a similar position, with potential groupings to consider both in the West (with Tauranga and Western Bay of Plenty) and the East (with Rotorua, Ōpōtiki, and Kawerau). However, although the prospect of an Eastern Bay WSO seems unlikely at this stage given Rotorua’s stated intention to keep services in-house until 2028.
In two other regions, discussions among potential partners are ongoing, with final groupings yet to emerge:
• In what is perhaps the most dynamic situation in the country, there have been some late changes to proposals in Manawatū-Whanganui, with Horowhenua, Palmerston North, and Rangitīkei proposing to form a joint water services organisation, having originally proposed slightly different groupings. All three councils have left the door open for Ruapehu and Whanganui to join, with decisions expected from these two councils in late June.
• In South Canterbury, three councils – Mackenzie, Tīmaru, and Waimate – consulted on an option to form a joint WSO in their consultation document, but only Mackenzie and Tīmaru indicated that this was their preferred option.
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 consulted 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 also put forward an in-house business unit as its preferred option for consultation. Whangarei District Council’s consultation document cited 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
Only Marlborough, Queenstown Lakes, and Selwyn have proposed this as their preferred option. However, not all of them appear to see it as their ideal model, with Selwyn indicating it would prefer to combine with other councils to form a jointly owned CCO.
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.
Council proposals portend significant change for the water sector
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.
A key focus for us at MartinJenkins over June and July will be watching council decision-making, as elected members hear from their communities and make some of the most consequential decisions in local government since 1989.
So far at least, council decisions on future water services delivery arrangements have been consistent with the preferred options they consulted on.
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 major change in delivery models and the aggregation of services, with significant implications for the workforce, the labour market, supply chains, regulators, and customers.
APPENDIX:
Aotearoa from top to bottom – councils’ proposals and decisions for Local Water Done Well
The information in this breakdown by district is a snapshot as at 6 June 2025.
Northland
Kaipara has decided it wants to establish a combined Northland water services organisation, while Far North and Whangārei district councils have indicated their preference to retain services in-house rather than setting up a WSO with Kaipara.
However, Whangārei has indicated that under its preferred approach, it expects increased collaboration with other Northland councils. In consulting their communities, both Whangarei and Far North also identified a regional water services organisation as an option for feedback.
Waikato
There are two main sub-groups in the region where councils are working together:
• Hamilton City and Waikato District have decided on a jointly owned two-waters CCO, with stormwater services provided to each council under a services contract.
• Seven 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 out of the seven councils – Ōtorohanga, South Waikato, Waitomo, Waipā, Hauraki, and Matamata-Piako – are proposing 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 proposing to join a water services organisation with other councils, but it’s also 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
• In the west of the region, Tauranga City and Western Bay of Plenty District both proposed establishing a jointly owned water services organisation, with the door remaining open to other councils. Western Bay has since confirmed a decision to go with that option.
• 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 has proposed 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 and Ōpōtiki are both proposing to keep 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 proposing to go with an in-house business unit.
Taranaki
All three Taranaki councils – New Plymouth, Stratford, and South Taranaki – have proposed a regional CCO.
Hawke’s Bay
The four Hawke's Bay councils – Wairoa, Napier, Hastings, and Central Hawke’s Bay – have all proposed establishing 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
• Horowhenua, Palmerston North, and Rangitīkei have decided to form a joint water services organisation, having originally proposed slightly different groupings.
• Those three councils have left the door open for Ruapehu and Whanganui to join them. Ruapehu and Whanganui have proposed a jointly owned WSO as their preferred option, and are expected to make decisions in late June.
• Manawatū (and Kāpiti Coast District in the Wellington region) have both confirmed decisions to keep water services in-house.
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, Hutt City (Lower Hutt), Upper Hutt, and Greater Wellington Regional Council – have proposed a new multi-council water organisation to take over the operations of Wellington Water. Wellington City and Porirua have now confirmed their decisions to go with that model.
• In the Wairarapa, Masterton, Carterton, and South Wairarapa came together with Tararua District to propose a jointly owned water services organisation, under the moniker “Wai + T”. Masterton, Carterton, and South Wairarapa have now all confirmed their decisions to go with the Wai + T approach.
Marlborough, Nelson, and Tasman
• Nelson City Council was the first in the country out of the gate with consultation, proposing to keep service delivery in-house. The Council has since confirmed its decision to go with in-house delivery.
• Tasman is also proposing to continue with in-house delivery.
• Marlborough has proposed establishing a single-council water CCO.
West Coast
All three district councils on the West Coast – Buller, Grey, and Westland – have proposed establishing a jointly owned regional water services organisation.
Canterbury
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 have confirmed decisions to go with a jointly owned water services organisation.
• Christchurch City and Ashburton District have decided to do their own thing, keeping services in-house. Waimakariri District is proposing to do the same.
• Selwyn District has decided 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 have both proposed working with neighbouring councils to establish a joint water services organisation. Waimate is proposing to keep services in-house.
Otago and Southland
• Queenstown Lakes District Council began consulting in early June on its proposal to set up a water services organisation solely owned by the Council.
• Four lower South Island councils – Waitaki, Central Otago, Clutha, and Gore – are proposing to establish a multi-council CCO under the banner “Southern Water Done Well”.
• At the bottom of the South, Dunedin and Invercargill have decided to keep their services in-house, and Southland is proposing to do the same.
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.
