Joint workshop on Enhancing efficiency and sustainability of Water Supply and Sanitation presentation - Alan Sutherland, New Zealand case study

1. www.watercommission.co.uk
14th June 2021
New Zealand case
study

2. www.watercommission.co.uk
The structure of the New Zealand water industry is
highly fragmented…
• New Zealand’s water industry – collectively known as ‘three waters’ covering drinking
water, wastewater and stormwater – serves around 4.3 million citizens (88% of the
total population of 4.9 million).
• The services are provided by 67 Local Authorities – the only exception being
Watercare, which provides water and wastewater services to around 1.6 million
citizens in Auckland. The smallest Local Authority serves around 200 people (Chatham
Islands), while the largest excluding Auckland serves around 385,000 (Christchurch)…
• Historically, responsibility for overseeing the performance of three waters services
has been split across several government departments. These are:
– The Department of Internal Affairs is responsible for overseeing all Local Government
activities, including three waters.
– The Ministry of Health sets drinking water quality standards; and
– Regional councils (of which there are 16 across New Zealand) are responsible for monitoring
environmental compliance
• Maori and Iwi also have important interests over the three waters.
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3. www.watercommission.co.uk
In 2016, an incident triggered a wide ranging inquiry into
the three waters industry in New Zealand…
• In 2016, the town of Havelock North experienced an outbreak of waterborne
disease. Of the town’s 13,000 residents, 5,500 fell ill and four died.
• In 2017, a three waters inquiry was established. The terms of reference
were:
– Examine the challenges facing New Zealand’s three waters system; and
– Develop options and recommendations for system-wide performance.
• The inquiry identified the following issues:
– A fragmented regulatory system with poor coordination between related responsibilities at
local and national levels.
– Failure to reflect community and Iwi/Maori values and expectations.
– Unclear roles and responsibilities.
– Weak - and sometimes absent – accountability for outcomes.
– Variable capability across providers and regulators to deliver good outcomes and fulfil
responsibilities.
– Insufficient system oversight, compliance, monitoring and enforcement.
– Lack of assistance and support to meet compliance requirements.
– Poor information to citizens and communities.
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4. www.watercommission.co.uk
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This inquiry led to a reform programme
with the following objectives…
• Significantly improving drinking water quality and environmental
performance of the wastewater network.
• Ensuring access to three waters services is equitable and affordable
for all.
• Improving resource coordination at a larger scale, unlocking
strategic opportunities and economies of scale.
• Increasing resilience of services - to both short- and long-term risks.
• Ensuring the industry is financially sustainable – addressing some of
the constraints faced by small suppliers and councils.
• Improving transparency and accountability of performance by three
waters service providers.

5. www.watercommission.co.uk
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Since the programme started, subsequent
work has identified…
• Operating costs are double the levels incurred by the leading
companies in Great Britain in 2004.
• Historic underinvestment in asset replacement – since 2015,
councils have spent between 40-60% of their economic depreciation.
• Levels of service and compliance in New Zealand lag well behind
those of counterparts in Great Britain. Performance is around the
level of the England and Wales industry in the late 1980s and
Scotland in the early 2000s.
• Overall, around NZ$120 Billion and NZ$185 Billion of investment is
needed over the next 30 years to address these issues.

6. www.watercommission.co.uk
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To date, the programme has resulted in the
following initiatives and proposals…
• In December 2019 the Water Services Regulatory Bill established Taumata Arowai, a
new independent regulatory body responsible for overseeing and enforcing drinking
water quality standards. This body will have a broad remit:
- it administers the drinking water quality regulatory framework;
- it can issue binding guidance on wastewater and stormwater standards; and
- it facilitates capacity building in the water industry.
• While final decisions are yet to be made, the recommendations of the three waters
review involve:
– creating 3-5 new regional water companies as asset-owning entities operating on a self-
sustaining and commercial manner, at arms’ length from the Councils. These would remain in
public ownership with new governance arrangements in place to ensure that Iwi interests are
well represented; and
– establishing an economic regulator to set price limits, set allowed for investment and
oversee the performance of the new entities.
• Subject to final decisions, the New Zealand Government plans to have the new
entities established and full regulation in place by July 2024.

7. Water Industry Commission for Scotland
First Floor, Moray House, Forthside Way, Stirling FK8 1QZ
E: enquiries@watercommission.co.uk
T: +44(0) 1786 430200
www.watercommission.co.uk
www.scotlandontap.gov.uk
@WICScotland