Surging cost of water services begins to become clear across New Zealand

Saturday, 16 August 2025

Johnston St in central Wellington flooded on Monday after a burst drinking water pipe sent water surging down the street. The incident caused traffic delays and prompted urgent repairs.

The surging cost of water services across the country is becoming clear, as councils finalise their 10-year plans to deliver to the Government.

Household water bills in Christchurch are expected to increase by $900 a year on average. In Hamilton the hike could be $1700. In Nelson the rise may be more than $750. In Dunedin there could be a $1200 lift. In Selwyn the surcharge should increase by $1800 a year.

The growing picture of the price of delivering water services across the country has emerged from water service delivery plans councils are preparing to deliver the Government on September 3. Water bills are expected to double in some cases such as Wellington, as reported by The Post earlier this week.

While those seeking to fix the water infrastructure problem - a mix of historical underinvestment, deficient systems, and population growth - have long expected costs to increase, the specific price increases are now being defined after years of Government wrangling over reforms.

The Government has not stipulated what counts as affordable for water charges in its Local Water Done Well reforms, which rely on councils to set the terms of water service delivery, after the Department of Internal Affairs (DIA) assesses and signs the plans off as “financially sustainable”.

Water bubbling up from the footpath in Johnson Street, Wellington.

Local Government Minister Simon Watts said the Government’s policy was “the best approach” to resolve water infrastructure challenges while also providing councils control.

“It is clear that the solution to addressing years of underinvestment in water infrastructure comes at a cost to consumers,” he said, in a statement.

Because of this the Government would be subjecting the plans to external scrutiny, the Commerce Commission would “ensure value for money for consumers”, and councils could create multi-council water entities to “provide the greatest benefit” in managing costs.

But more than 40 water service providers look to be emerging from council discussions, more than the prior Labour Government policy which sought to create 10 across the country to achieve economies of scale.

Labour Party local government spokesperson Tangi Utikere said people would be looking at the figures and be “pretty shocked with what’s coming their way”, as the number of water providers ended up “far larger” than the Government would have expected.

Local Government Minister Simon Watts speaking at the Building Nations infrastructure conference where he discussed Local Water Done Well.

“That's why we're starting to see huge costs that households will have to carry because of the Government's permissive nature to allow councils and communities to basically do what they want.”

Though councils have not been directed on the affordability of water rates, the DIA has been advising councils that a “reasonable target” for affordable water charges was 2.5% of the estimated annual median household income.

This was guidance and not a requirement, as the department, in a statement, said “some councils may need to exceed this benchmark” due to historic underinvestment.

The DIA has so far received and accepted plans from four councils, Selwyn, Waimakariri, and a joint Hamilton and Waikato District Council plan.

Many councils, particularly those plotting region-wide entities, will be finalising their plans in the coming week. Other plans have become public as councils hold meetings on their contents.

How water billing works will differ, particularly for regions that have chosen to create separate entities. Water charges may be part of overall rates bills for councils that keep water service delivery in-house.

The estimates given by councils in their water service delivery plan are on the basis of the average household - volumetric charging for water use may determine the exact charge a person receives.

Auckland has a special arrangement with Government which means it didn’t have to provide such a water service delivery plan. The average Auckland water bill rose by 7%, from July, under a new Watercare model.

Cost increases across the country

Christchurch City Council was the latest to make its water services delivery plan public, publishing it within a council agenda on Thursday afternoon.

Having decided to deliver water services alone through an in-house model, the plan showed Christchurch would make capital investments of around $250m or more each year until 2033/34, and install water meters across the city along the way.

Work at Christchurch's fire damaged waste water treatment plant on June 22, 2022 to remove material that causes stench when wet.

Generally, councils or their water service entities take on debt to make capital investments in water infrastructure, using the fees and charges for water services levied on ratepayers to pay for the operation of water systems, and to pay off the debt.

So for Christchurch, the average charge per household was expected to rise from $2296 this year to $3201 by 2033/34 -- amounting to 2.2% of the median household income.

Hamilton City Council and neighbouring Waikato District have produced a joint water services plan celebrated by Watts.

Both councils have large capital investment planned in their water services over the coming 10 years. For Waikato District, the total spend between 2024/25 and 2033/34 was expected to be $950m, and for Hamilton $2.7b.

The current average charge per water connection was $1381 per year, according to both councils’ plan. This would rise progressively to $3175 by 2033/34, which would be 2.6% of the median household income.

Nelson City Council has decided to stick with an in-house model and not work with neighbouring Tasman District Council, and planned to make $483 million in capital investments in the coming decade.

Average water charges would increase from $1328 to $2112 over the 10-year period, an average annual increase of 5.3%, and reaching at most 1.9% of median household income.

Dunedin City Council has also decided to keep water services in-house, and planned $1.03b in capital expenditure by 2033/34.

The current annual water and drainage rate, as Dunedin calls it, is $1556 per year. This would increase to $2782, at 2.2% of the median household income.

Rotorua Lakes Council planned to initially deliver water services alone until 2028, when it may develop a multi-council water entity.

In this photo from 2023, the Hamilton City Council Western bulk water mains was at risk of breaking due to erosion on the banks of the Waikato River. The twin water pipes can be seen from the Mangakotukutuku Stream catchment in Melville.

It planned to spend more than $80m on capital investment this and also next year, with this figure declining to $24m by 2033/34.

The average charge for water per connection was $2499 this year and would increase to $3290 by 2033/34, rising no higher than 2.7% of the median income along the way.

Councils in Central Otago, Clutha, and Gore are together planning a joint council-controlled organisation under its “Southern Water Done Well” plan.

In the decade the plan covered, there would be $560 million of capital investment.

The projected average charge per residential connection, currently $2211, was expected to increase to $3705 per household in 2033/34, reaching 3.3% of the median household income.

Waimakariri District Council, which administers Canterbury towns such as Rangiora and Kaiapoi, planned to deliver water services in-house and invest between $12m and $37m a year for the coming decade.

Water charges would rise from $1738 to $2268 over the 10 years to 2033/34, an average increase of 3% per year. At most the charges would be 2% the median household income.

The pipes near Diane Calvert's home in Khandallah were recently replaced, allowing the councillor a glimpse of the rusted insides of Wellington's aging drinking water system.

Selwyn District Council, which has set up its own council-controlled water service provider and remains open to working with neighbours in the future, indicated in its plan it would spend between $50m and $75m per year in the coming nine years on capital investment.

The average charge to households for water services was expected to effectively double from $1725, including GST, a year in 2025/26, to $3531 in 2033/34, reaching 2.2% of the median household income.

Palmerston North, Horowhenua, and Rangitīkei councils plan to combine their water services into a joint council-controlled organisation, with varied levels of capital investment expected in its services.

For Palmerston North City residents alone, water charges of $1100 a year would increase to $2493 per household, being 1.3% of the median household income.

How the councils responded

The Post approached several of the councils with the highest forecast bill increases, seeking comment on whether the rise in costs was reasonable.

Nelson mayor Nick Smith told The Post the average annual increase of about 5% was “a bit higher” than he would have liked, but it would be worse to not make investments in the system.

“The easiest thing to do with water services is to not keep up the renewals of the network, and then to end up with water pipes bursting all the time. Nelson is determined to avoid that,” he said.

The main feedback he had heard from constituents was one of relief, he said.

“Nelson was very nervous that if we ended up in a water entity with Wellington, upgrading its services will be the priority and we will be neglected, and that we [would] likely be whacked with a substantive bill for the $10-odd billion that was required for the capital to get its services up to nick.”

Gary Connolly, chief financial officer for Hamilton City Council, said while he recognised the cost pressures many ratepayers were facing, “IAWAI [Hamilton and Waikato Council-controlled organisation] is committed to keeping any future cost increases as low as possible, while still meeting the requirements for financially sustainable operations, complying with new regulations, and preparing for the growth in our communities”.

Without the establishment of IAWAI, it would not have been possible to deliver on the Government’s expectations, added Connolly.

“The WSDP [Water Services Delivery Plan] uses an affordability benchmark of 4.5% of household income. The average water services charge per household is below the 4.5% benchmark in every year of the cost projections.”

Selwyn District Council chief executive Sharon Mason told The Post the projected costs per household were expected to be “around 2-7% cheaper than the alternative in-house model that we considered” at the end of the 10-year period.

Earlier this week the final draft blueprint for Wellington’s new water entity, for now dubbed Metro Water, said Wellington’s councils would need to find an extra $2.6 billion in the next decade to fund the new water company while households could pay up to $5700 for water each year by 2034.

Said Hutt Mayor Campbell Barry this week, “We should not be under any illusion that things are going to be less expensive, but they are less expensive than what it would have been,” while Porirua Mayor Anita Baker said, “I knew they were going to be large,” but “You can’t be not shocked by the numbers”.

Dame Kerry Prendergast, the former mayor heading the Metro Water’s advisory oversight group, this week said the household bills were not a problem constrained to the capital.

“If you look around the country, there has been under-investment in infrastructure for a long time. The reality is that pipes only last a certain amount of time.”

Additional reporting: Stewart Sowman-Lund