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New Zealand’s water reforms grapple with infrastructure and funding challenges

About the blog

Gillian Blythe
Water New Zealand CEO

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  • New Zealand’s water reforms grapple with infrastructure and funding challenges

A major campylobacter outbreak in the small town of Havelock North triggered the most significant reforms in New Zealand's water sector in decades. Eight years on, however, uncertainty and debate persist over how to fund the critical upgrades needed to address the country's ageing and long-neglected infrastructure.

The contamination event, which resulted in four deaths and left over 5,000 people ill, was a wake-up call for both the water sector and the New Zealand population. The subsequent inquiry into its causes revealed a “widespread systemic failure among water suppliers to meet the high standards required for the supply of safe drinking water to the public”.

The inquiry pointed to non-compliance in meeting drinking water standards and a high level of complacency amongst many of the country’s 67 water suppliers along with a failure of regulatory oversight. In other words, it was only luck that had prevented occurrences like this in other regions.

The lack of compliance didn’t stop with drinking water.  Recently it was found that only around a quarter of wastewater treatment plants were compliant with their consents and across the networks, the aged and crumbling pipes are leaking around 20 per cent of water from the network.

It’s been estimated that expenditure will need to at least double and potentially triple or even quadruple to make the necessary improvements

The fallout from Havelock North led to the establishment of a new drinking water regulator, Taumata Arowai, which has recently taken on board wider responsibilities for the environmental performance of wastewater and stormwater networks.

Legislation for a new economic regulator was enacted in mid-2024, with further legislation due before the end of the year; however, the most controversial challenge is how to fund the much-needed improvements in the country’s water infrastructure after decades of neglect and under-funding.

For many of New Zealand’s 67 councils currently responsible for water services, the cost of improving drinking water safety, reducing water pollution and improving the quality of their freshwater is unaffordable, especially for small and rural communities with smaller ratepayer bases.

It’s been estimated that expenditure will need to at least double and potentially triple or even quadruple to make the necessary improvements and meet new regulatory requirements.  As well, much of our infrastructure is on the coast and vulnerable to sea level rise. Yet, many councils also rejected the previous government’s “affordable waters” solution which would have transferred the councils’ water assets and liabilities to new much larger entities managed by professional boards. 

That plan was repealed by the incoming government, replacing “affordable waters” with “Local Water Done Well”.   This new “locally based solution” removes the compulsory aspect of the previous government’s joined-up approach and instead sheets the responsibility of water supply back into the hands of the councils.  This means they either have to either go it alone or strike a deal with other councils.

This less prescriptive approach requires councils to fully recognize the advantages of “economies of scale”, especially in terms of affordability and adapting to the demands of the new regulatory environment. Eight years after Havelock North, councils across the country are now at different stages and different levels in their journey towards improving their services.

As the representative body for the three water sectors, Water New Zealand has been very clear. We are apolitical and support options that would see an improvement in the sustainable management and health of the water environment. Nevertheless, it is clear that the status quo is not an option and for many councils, unless they can find partners and “economies of scale”, providing safe drinking water, fit for purpose wastewater treatment and improving freshwater quality, affordably will remain out of reach.

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