water services reform programme water services reform programme the water services reform programme (formerly known as three waters) is a public infrastructure restructuring programme launched by the sixth labour government to centralise the management of water supply and sanitation in new zealand. it originally proposed shifting control of stormwater, drinking water and wastewater management from the country's 67 local councils to several new publicly-owned regional entities by july 2024. details of the proposed reforms were announced in october 2021. the three waters reforms were criticised by several mayors and the opposition national and act parties. from november 2021, a working group of mayors and māori representatives reviewed issues of representation, governance and accountability, and reported back in march 2022 with 47 recommendations. in april 2022, the government accepted 44 of the recommendations. key changes to the original proposals included providing non-financial shareholdings for councils in the four new water entities, and increased legislative protection against future privatisation of the water assets. regional representative groups would be established as part of the governance structure, with equal representation of council and tangata whenua. these representative groups would appoint the members of the boards of the four water entities, based on skill and competence. in april 2023, the government announced a major overhaul of the three waters programme, renaming it the water services reform programme. the proposed four water services entities were expanded into ten entities. these entities will still retain the split governance structure consisting of both local council and mana whenua representatives. history three waters review in mid 2017, the fifth national government launched a review of the regulation and supply arrangements of drinking water, wastewater and stormwater (three waters). this review ran in parallel with the later stages of the inquiry into the havelock north drinking water contamination of 2016. the three waters review was published in january 2019. in 2019, the sixth labour government announced plans for regulatory changes in response to the three waters review, including: establish a new, dedicated drinking water regulator extend regulatory coverage to all drinking water suppliers, except individual household self-suppliers provide a multi-barrier approach to drinking water treatment and safety strengthen government oversight and stewardship of wastewater and stormwater services provide transitional arrangements of up to five years to allow water suppliers to adjust to the regulations. water services legislation the taumata arowai–the water services regulator bill was introduced to parliament on 12 december 2019. the government indicated a separate water services bill would be proposed at a later date to give effect to decisions to implement system-wide reforms to the regulation of drinking water and source water, and targeted reforms to improve the regulation and performance of wastewater and stormwater networks. mahuta's reform proposals on 28 january 2020, nanaia mahuta, the minister of local government, released cabinet papers and minutes setting out intentions for reform of service delivery and funding arrangements for the three waters services nationwide. the cabinet paper referred to two key challenges facing new zealand's three waters service delivery: affordability and capability. the paper referred to the cumulative effect of increasing capital and operating costs to meet infrastructure challenges, and constrained sector capability to address key public health and environmental challenges. it noted that these challenges are particularly acute for smaller council and non-council drinking water suppliers, with smaller ratepayer and consumer funding bases. the paper described the current situation (in most regions), where individual councils supply and manage water systems and services alongside their other duties. there was specific reference to wellington water (which manages the water assets of six councils) as an example of one approach to service delivery that had successfully built capability through the scale of operations. however, the paper also noted that wellington water currently has no ability to make trade-offs between operating and capital expenditure, nor can it cross-subsidise between owners or ratepayers in different districts. a transition is envisaged to a next stage where water services are fully 'ring-fenced' from other council services, with charges for ratepayers specifically identifying the water services in their rates. at this stage, councils may share service provision with other councils. the final stage envisaged in the paper is the full transfer of ownership of the water assets to a new entity governed by an independent board of directors, and with specialist employees who would focus on water services. the government indicated that it would work in partnership with local government to explore options for transitioning councils to new service delivery arrangements, seeking safer, more affordable and reliable three waters services. the first step was to support the investigation of opportunities within regions for collaborative approaches to water service delivery. hawke's bay investigation as an initial step towards implementing the proposed reforms, on 27 january 2020 the government announced funding of $1.55m for an investigation of opportunities for greater coordination in three waters service delivery across the hawke's bay region, involving five councils: napier city council, hastings district council, central hawke's bay district council, wairoa district council and hawke's bay regional council. otago and southland investigation in may 2020, ten councils in the otago and southland regions commenced the development of a business case for a collaborative approach to managing the three waters assets. the business case was expected to take about eight months and would be followed by public consultation. the government agreed to cover half of the cost, with a deadline for councils to consider changes to service delivery models by the end of 2021. the ten councils involved in the investigation were dunedin city council, central otago district council, clutha district council, queenstown lakes district council, waitaki district council, otago regional council, gore district council, invercargill city council, southland district council and environment southland. advertising campaign in late june 2021, the new zealand government launched a nz$3.5 million multimedia advertising campaign called "better water is better for everyone" to promote its three waters reform programme. the advertising campaign was criticised by several mayors and local body councillors and officials including mayor of waimate craig rowley, mayor of waitaki gary kircher, tasman district council engineering services manager richard kirby, councillors kit maling, david ogilvie for alleged sensationalism, inaccuracies, and for portraying local councils' management of water resources in a negative light. in response, the department of internal affairs reaffirmed the government's commitment to working with local councils on the three waters reform programme. in addition, $500,000 was set aside by the government for the development, maintenance, and hosting of the three waters reform programme's website. by october 2021, the advertising standards authority had received a total of 48 complaints about the three waters reform programme. the watchdog ruled that the advertisements were neither misleading or offensive in the context of advocacy advertising. launch of nationwide programme three waters reform programme's logo on 27 october 2021, mahuta unveiled the government's three waters reform programme. the plan involves the mandatory transfer of the management of stormwater, drinking water and wastewater from the country's 67 local councils and territorial bodies to four new water entities, with the goal of improving the quality and lowering the cost of water utilities. the government planned to start creating these four new entities in late 2021, and they would assume control of water utilities in july 2024. though the government had initially stated that the three waters programme would be optional for local government bodies, they subsequently decided to mandate in july 2021. during the announcement, mahuta also created a working group to advise the government on how the four water entities' governance would work. according to mahuta, the group's findings would be placed into a supplementary order paper (sop) to amend legislation creating the new entities that would manage the three waters systems. despite its unpopularity with local councils and the public, the government persisted with the three waters reform programme. on 9 december 2021, the government postponed until 2022, the introduction of legislation creating the new entities that would manage the three waters systems. the government confirmed that it would wait until the working group had finished their findings, before introducing the new legislation. in mid-december, mahuta argued that the three waters reform should proceed, despite opposition from several local governments, due to the under-investment in the country's water infrastructure. mahuta also urged party leaders to prevent the privatisation of new zealand's water assets, entrenching a safeguard requiring a supermajority of 75% of mp's support before a water asset could be sold. review by working group a working group of mayors and māori representatives was formed in november 2021, to review the planned reform programme, focussing on improvements in the three most contentious aspects of the original proposal: representation, governance and accountability. the working group reported back in march 2022, with 47 recommendations. on 29 april 2022, mahuta announced that the government had accepted 44 of the recommendations, with three that needed some further work. one of the key changes was that councils would be given non-financial shareholdings in the new water entities, with one share per 50,000 of population, and that there would be additional legislative protection against future privatisation. co-governance will be established in regional representative groups, where there will be an equal number of seats for mana whenua and councils. these regional oversight groups will appoint the members of the boards of the four water entities, based on skill and competence. the regional representative groups will have a role in setting strategic direction, but will not be involved in operational matters. legislative entrenchment on 2 june 2022, mahuta introduced the water services entities bill as the first of several new bills to entrench the three water reforms in law. the water services entities bill would establish the four regional water services entities which would take over management of water infrastructure from the 67 local councils. under the proposed law, councils would retain ownership of their water assets through a "community share" arrangement but effective control would pass to the four new water services entities, which would have both community and māori iwi/tribal representation. mahuta also claimed that there would be safeguards against privatisation. mahuta also confirmed that further legislation would be introduced to facilitate the transfer of assets and liabilities from local authorities to the water services entities, integrate entities into other regulatory systems, and to cover economic regulation of the water services entities and ensure consumer protection. a national transition unit would oversee the establishment of the new water services entities over the next two years. on 23 november 2022, the labour government decided to push the water services entities bill under urgency to compensate for the loss of a week's worth of parliamentary sitting time caused by queen elizabeth ii's death on 9 september 2022. the bill passed its third and final reading on 7 december. labour was able to pass the bill without the support of other parties due to its majority status in the house, an unprecedented occurrence in new zealand since mmp came into force. while national and act parties opposed the bill due to their opposition to co-governance and centralisation, the green and māori parties opposed the bill on the grounds that it lacked sufficient anti-privatisation safeguards and failed to promote co-governance. following the passage of the water services entities act 2022, mahuta introduced two bills to further entrench the three waters reform programme: the water services economic efficiency and consumer protection bill and the water services legislation bill, which passed their first readings on 13 december 2022. the water services legislation bill included 130 pages of amendments to the water services entities act. the new legislation includes provisions for charging for water services, institutes a system of fines for breaching water restrictions and disconnecting from stormwater systems, facilitate information-sharing between the water entities and councils, facilitates cooperation between the water services entities and mana whenua, clarifies the ownership of stormwater systems beneath roads, and outlines what rights the water services entities when working on different kinds of land including roads, railways, and marae. funding on 19 july 2022, the government announced that it would give the 67 local councils a total of nz$44 million to help them transition to the new three waters system. the government had already allocated nz$2.5 billion to compensate local councils for the reforms including infrastructure and other "wellbeing" investments. associate local government minister