Government ready to use ‘stick’ over water reforms

Thursday, 7 August 2025

Local Government Minister Simon Watts has warned he will use the “stick” if councils do not produce financially sustainable water service plans by September 3.

But he continues to be positive about the Local Water Done Well reforms prompting a majority of councils to create regional water entities, as another regional arrangement collapses and there could be as many as 40 water service providers across the country.

Watts, speaking to Infrastructure NZ’s Building Nation’s conference in Wellington on Thursday, said ratepayers were “sick and tired” about talk of water service entities.

“They want to get the pipes built. They want to get the infrastructure to their new subdivisions. They want to make sure that things are happening, and they're just tired of the sort of, I guess, the politics at one level.

“People hate the flip-flop portion, and I get it, but there's a cost of doing nothing, and there's a cost to delay.”

The Coalition Government campaigned on repealing the prior Government’s Three Waters reforms and created a new policy that punted decisions on regional water entities back to councils. Decisions are due on the minister’s desk on September 3.

As councils have settled on their plans in recent weeks, regional entities in Waikato, Northland and elsewhere have emerged. The Department of Internal Affairs (DIA) expects, based on current information, 10 regional water entities will be created.

But some councils have withdrawn from plans for regional entities in places such as Taranaki - leading the DIA to pressure the councils to reconsider.

Another, Tauranga City Council, pulled out from a prospective Western Bay of Plenty water entity this week, which Tauranga Mayor Mahe Drysdale said would be disappointing to their neighbour, as it might not be able to produce a financially sustainable plan on its own.

Analysis by consultancy Martin Jenkins now tallies more than 40 probable water entities across the country, from 67 councils. The prior Labour water policy proposed 10 water entities, capturing all councils across the country, to achieve efficiency and scale.

Watts said the majority of councils were forming regional groups and “that is without Government forcing, that is without Government writing a cheque, that is without complex governance arrangements”.

“You're seeing … a majority of councils move in the right direction.

“Yes, we've got a few that are still struggling and working their way through, but I have every confidence that they will get to where they need to get to, and we'll see where we are on the third of September.

“The challenge for me is, I've been very clear … if you haven't submitted a plan that's financially sustainable, then it is a high probability that I'll be deploying a ministerial advisor, a person within that council, because you've had it long enough to do it yourself, and you haven't done it.”

This was the “stick”, he said.

Watts also acknowledged the civil construction sector has struggled with a lack of work, as councils redrew water infrastructure plans.

“In my left ear, I'm hearing a lot of feedback from those tier two, tier three infrastructure entities in the country, going, ‘Hey, we're not seeing this through the activity flowing through because councils are doing a whole lot of planning and thinking about what they need to do,’” he said.

“They're finding it tough, like many New Zealanders. So that's why it is so important that we get moving from the structure to the doing, and we're going to have to work together around that.”

Watts on the phone to Tauranga

Drysdale, speaking to The Post on the sidelines of the Building Nations conference, said he was an advocate for working with Western Bay of Plenty, but he lost out 6-4 on the council table.

“We've gone on a journey with Western Bay, and I feel like that we've sort of taken the certainty away from them, which I think is disappointing, but that was the will of the table.

“We understand that Western Bay are going to struggle to deliver a plan by themselves that is sustainable. They didn't even actually consult on an in-house plan because it wasn't a financially sustainable option.”

Tauranga City Council had consulted with ratepayers about joining a multi-council entity but instead decided to “tentatively agree” to join one from 2028, without naming the council it might join with.

Drysdale said there had been “a number of conversations with ministers and DIA” in recent days.

Watts was sending Tauranga a message that if they can’t work with Western Bay of Plenty on water infrastructure, it as “not a great platform” to progress a regional deal with the Government.

The Western Bay of Plenty region is one of three such deals the Government is negotiating.

Drysdale said Watts had given councils a “warning” about using the Government’s stick at the event on Thursday.