Govt lobbies breakaway councils over water plans

Friday, 1 August 2025

Stratford mayor Neil Volzke says his district has decided not to join with neighbouring councils under the Local Water Done Well plan.

The Government is lobbying breakaway councils to stick with proposed regional water entities, warning some are “close to the line”.

The Department of Internal Affairs (DIA) has issued letters to six councils which have decided not to enter regional water groupings, advising some against the move, and urging them to provide drafts of their water service plans.

A DIA spokesperson confirmed the councils to receive letters to produce draft plans were: Kawerau, Mackenzie, Waitaki, Whakatāne, Gisborne, and Stratford.

Though the National Government campaigned on letting councils retain control of water services, a growing number of councils choosing not to enter regional entities raises the prospect of Government intervention.

Retaining control was part of the reason why the Stratford District Council decided not to join a Taranaki water entity last month. Mayor Neil Volzke said a regional entity also offered his council no cost benefit in the coming 10 years, and an “insignificant” cost benefit after about 15 years.

“The community made it loud and clear … 92% of the respondents said they wanted it [water] retained in-house.”

Though Volzke said his council’s view of the cost benefit came from DIA modelling, the department earlier this month sent Stratford a letter saying it had “concerns that the council will face significant barriers to achieving financial sustainability through a standalone model”.

Local Government Minister Simon Watts says the Local Water Done Well policy allows for different water prices within a single entity.

“As part of a Taranaki regional grouping, we believe that your council would have been significantly better placed to address these barriers,” the letter read.

The DIA also asked that a draft copy of its water service plan be provided by Thursday, July 31. Final plans under the Government’s Local Water Done Well regime are due on September 3.

Volzke said Stratford decided to ignore yesterday’s deadline, but the plan would be ready for September. He said it was “definitely possible” the Government may intervene.

“It does make a mockery of the consultation process when you go off and ask the community how they see it, you make a democratic decision like 30 or 40 other councils around the country, and then they basically try and influence what happens after that.”

Waitaki Mayor Gary Kircher, whose council also received a DIA letter, said his council was “under no illusion” that if it could not produce a financially viable plan it would be “told” what to do.

Of the six, Stratford, Mackenzie, and Waitaki were advised they would “likely be better placed” in a regional grouping. The DIA had been consistent in telling councils of the benefits of multi-council water entities, the spokesperson said.

Another council left a prospective regional grouping on Thursday. Wairoa District Council decided to withdraw from a long-planned Hawke’s Bay water entity with Central Hawke’s Bay, Hastings, and Napier councils, saying it would allow the council the “most flexibility as the master of its own destiny”.

Local Government Minister Simon Watts said his department’s lobbying effort was because some councils were “close to the line”, and the Government wanted to make sure councils knew their obligations to provide financially sustainable water plans.

“I want to ensure that councils are very clear around where they stand, and I don't want any surprises,” he said.

“The reality is a council may make a decision to go it alone, but that doesn't necessarily mean that their plan is going to be financially sustainable.”

If the Government declines to accept a plan, it could appoint a Crown facilitator or water services specialist to assist with producing an acceptable plan. A Crown water specialist could direct councils to adopt a new plan, if needed.

“Those powers haven't been used yet, but there's a lot of speculation amongst elected members around the country about whether and in what circumstances they might be used,” said Nick Davis, partner at consultancy firm Martin Jenkins.

Also complicating the objective of achieving financial sustainability and efficiency in regional water entities was a trend in some regional groupings to “ring-fence” financial arrangements, in order to prevent one council burdening another.

In such cases, this may prevent harmonisation of water prices across the region - meaning different prices for different parts of a water entity’s territory - a move which prevents cross-subsidisation of the cost of infrastructure.

“A big concern for many councils is that ratepayers in their district will face higher charges because of past underinvestment by their neighbours. This is leading some groups of councils to enshrine principles that prevent harmonisation of water charges, at least until there has been some equalisation of asset condition and levels of service,” Davis said.

Local Government Minister Simon Watts said the Local Water Done Well policy allowed for different water prices within a single entity, if each council agreed to this.

But he said a number of councils, including in Waikato, had “recognised that working together in a harmonised manner is going to deliver better services”.