The Government has scrapped its plans to amalgamate the country's water services into four mega-entities with a smaller set of 10 regional entities now proposed instead.
Election year changes on Three Waters have been widely tipped for months amid Chris Hipkins' policy bonfire, despite the appointment of mega-entity chief executives in January.
Noisy criticism over the Government's reforms had centred on plans to strip local councils of ownership and decision-making over their water infrastructure, alongside proposed co-governance arrangements with local iwi.
Local Government Minister Kieran McAnulty said ministers had "listened closely and absolutely agree" that changes "must be led at a regional level".
"Over the last few months, I've been working closely with local government leaders and relevant stakeholders on how to progress New Zealand's long overdue water infrastructure reforms," he said in a statement.
"The feedback has been overwhelmingly clear that our water infrastructure deficit needs to be addressed now if we're to save households from ballooning bills that will make water unaffordable.
"But also that the reform programme must be led at a regional level — we have listened closely and absolutely agree."
Q+A's Jack Tame digs into why the water reform programme has caused such a strong backlash. (Source: Breakfast)
Ten new regional entities would be established based on existing local authority boundaries, according to the Government's new plan.
For example, in Taranaki, a new entity would cover the geographic area within the New Plymouth, South Taranaki, and Stratford District council boundaries.
Previously, the North Island would only have had three entities, with Taranaki covered by a provider that also would have serviced Waikato and Bay of Plenty.
However, the entity boundaries have stayed the same for Auckland and Northland — both of whom will still have their water services merged in the new plan.
Other parts of the water reforms have also stayed mostly the same — including plans for iwi to retain their representation on regional representative groups, alongside councils.
Speaking today, Hipkins confirmed that there would continue to be a 50/50 iwi split on regional representative groups — a proposal loudly criticised by some.
The plan for implementing new entities has also been delayed by two years to 2026.
However, the Government has decided to drop the Three Waters name for its proposals. On Tuesday, Hipkins said he wanted the emphasis to be on the reforms themselves.
"I think it's a term that's become somewhat confused," he said. "Let's call it what it is; it's about making sure we have affordable water infrastructure improvements."
The old label, initially also involved in a $3.5 million advertising campaign for the reforms, does not appear in the statement announcing the new changes.
"By extending the number of publicly owned water entities to 10, every district council in the country will have a say and representation over their local water services entities through regional representative groups, forming a partnership between council representatives and iwi/Māori that will provide strategic oversight and direction to the entities," McAnulty said today.
The poll reveals how many people say they have a good understanding of co-governance in the context of Three Waters. (Source: 1News)
"These groups will continue to sit below the governance board, in which each member will be appointed on merit and qualification, but by increasing the number of entities we will be able to ensure the needs of every community, especially small rural towns, are heard and met."
Forced "balance sheet separation" also remains in the proposals.
The complex-sounding approach allows the larger, combined entities to effectively borrow more money than councils currently can, since they will no longer share the same balance sheet, with the entities also cross-subsidising costs across cities and towns.
But it has enraged criticism from some local government representatives who have called it an "asset grab".
"Leaving councils to deal with this themselves will lead to unaffordable rate rises. It would be setting councils up to fail and I can't in good conscience do that.
Party leader Christopher Luxon has pledged to instead enforce stricter water regulations on local councils. (Source: 1News)
"The cost of meeting the upgrades needed for our water systems is projected to be up to $185 billion over the next 30 years.
"Local councils cannot afford this on their own, and households in some areas could see rates rise up to $9730 per year by 2054 if we do nothing" McAnulty said.
The water services entities will start delivering water services from July 2026 at the latest, and entities are able to proceed before this if ready, McAnulty said.
"The need for investment is only getting greater. The recent flooding and cyclone is a taste of the extreme weather events to come, and our water infrastructure needs to be ready."
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