45 Pipitea Street
Wellington
27 September 2022
Phone 0800 25 78 87
dia.govt.nz
Micky Turner
[FYI request #19995 email]
Tēnā koe Micky
Your Official Information Act request, reference OIA 2223-0090
I refer to your email of 22 July 2022 to Hon Nanaia Mahuta, Minister for Local Government,
requesting the fol owing information under the Official Information Act 1982 (the Act):
1. How Three Waters will be funded
2. Evidence of 'Operational Efficiencies' for each proposed Three Waters entity (detailed
30 year forecast for each entity)
3. Evidence of how the areas you have chosen to include in each entity create
'Operational Efficiencies'
(particularly how having Entity C split between the two islands would achieve lower
costs)
4. Actual detailed cost forecasts for each individual city council over 30 years without
Three Waters reforms
On 2 August 2022, your request was transferred to the Department of Internal Affairs (the
Department) for response as the information requested was more closely aligned to the
functions of the Department. On 30 August 2022, the Department extended the time to
respond to your request by 20 working days under section 15A(1)(b) of the Act.
Please find a response to each part of your request below. The information you have
requested in parts two to three of your request has been proactively released, or released as
part of the parliamentary process, on the Department and Parliament websites. Accordingly,
these parts of your request are refused under section 18(d) of the Act, as the information is
publicly available. Please find relevant webpage links to information in relation to your
request below.
I wil now address each question in turn.
1. How Three Waters will be funded
Three Waters services wil be funded by the entities charging property owners for their
services. The entities wil also be borrowing money to fund investment in improved
infrastructure.
Te Tari Taiwhenua
Department of Internal Affairs
The Water Service Entities, like councils currently do, will charge consumers for the service
delivery of Three Waters Services. To do so, the Water Services Entities wil develop funding
and pricing plans that set out al charges for three waters services, with the entities having to
consult with consumers and communities in developing these plans.
In addition, more customers, a larger revenue catchment, balance sheet separation from their
council owners and economic regulation wil provide water service providers with stronger
balance sheets. This wil give them greater capacity to borrow more money to fund more
investment where it is needed than councils can under current arrangements.
Increased use of debt financing also spreads the cost of infrastructure investment over a
longer period which is fairer for customers than sharply increasing charges in the short term.
Engagement with credit rating agency Standard & Poor’s indicates the water services will be
able to maintain similar issuer ratings to councils even with increased borrowing.
2. Evidence of 'Operational Efficiencies' for each proposed Three Waters entity (detailed
30 year forecast for each entity)
3. Evidence of how the areas you have chosen to include in each entity create
'Operational Efficiencies'
The Department has published reports which built on the evidence base informing the case
for change for the Three Waters Reform Programme. This included analysis of the economic
benefits of reform by the Water Industry Commission of Scotland (WICS) as well as
independent reviews of WICS’ methodology by Farrierswier and Beca. You can find these
reports via the following link;
https://www.dia.govt.nz/three-waters-reform-programme-national-evidence-base
Achieving the outcomes sought from the service delivery reforms will require that the scope
of the entities al ow for the appropriate asset and client base to work efficiently and for prices
to be affordable. Decisions on the number of new entities and their boundaries, were key to
ensuring the entities are set up for success. International evidence has indicated that each
entity wil need to serve a connected population of at least 600,000 to 800,000 to achieve the
desired level of efficiency. Below this point, entities may find it difficult to fully realise the
efficiency benefits that have been shown to be possible in other jurisdictions.
WICS’ analysis is clear that the potential efficiencies that are achievable by entities of this size
relate more to improved operating and procurement capability than geographic factors which
might otherwise be hampered by operations spanning two islands in the case of Entity C. This
view is endorsed by Farrierswier.
You may also find it helpful to see the decisions made by cabinet as a result of the evidence
referred to above – as wel as engagement with local government and Iwi. Cabinet papers
outlining decisions around the Three Waters Reform Programme and the Water Services
Entities Bil can be found on the Department’s website at the fol owing link:
https://www.dia.govt.nz/three-waters-reform-programme-cabinet-decisions-and-reform-
proposals
4. Actual detailed cost forecasts for each individual city council over 30 years without
Three Waters reforms
Te Tari Taiwhenua
Department of Internal Affairs
For detailed cost forecasts for each individual council over 30 years without Three Waters
reforms you should refer to their Long-Term Plans.
For comparison WICS’ estimates of costs for each council to meet appropriate standards and
provide for population growth can be accessed at the fol owing link:
https://www.dia.govt.nz/Three-Waters-Reform-Individual-council-models-and-slidepacks
In addition, the Three Waters Reform Programme has created a ‘local dashboard’ to show the
potential impacts of the Three Waters Reform on local authorities and households across New
Zealand. It is based on submissions by local authorities to a Request for Information (RFI)
undertaken from October 2020 to February 2021. This data is reflective of time period at
which the data was provided. It is accessible at this link:
https://www.dia.govt.nz/Three-Waters-Reform-RfI#local-dashboard
By selecting a particular council in the drop-down menu in the top right-hand corner of slide
five of the dashboard, you are able to see the average cost per household both with and
without reform as wel as other key information.
For more information you can access the Three Waters Reform Programme Case for change
and Summary of proposals at this link:
https://www.dia.govt.nz/diawebsite.nsf/Files/Three-waters-reform-programme-
2022/$file/Three-waters-reform-case-for-change-and-summary-of-proposals-15-June-
2022.pdf
You have the right, under section 28(3) of the Act, to seek an investigation and review of this
decision by the Office of the Ombudsman. The postal address of the Office of the Ombudsman
is PO Box 10152, Wel ington. Alternatively, you can phone 0800 802 602 or email
[email address].
Nāku noa, nā
Rashad Saeedi
Manager, Ministerial Services
Three Waters Reform Programme
