How we got here

Central Districts Water is being established in response to long-term changes in how drinking water, wastewater and stormwater services are regulated, funded and delivered across New Zealand. These changes reflect increasing expectations around public health, environmental protection, climate resilience and affordability, as well as the significant investment required to replace ageing infrastructure and support growth.

The decision to create a jointly owned water services organisation reflects the increasing complexity, cost and regulatory oversight associated with delivering drinking water, wastewater and stormwater services, and the need for councils to work together to ensure these essential services remain safe, reliable, affordable and sustainable over the long term.

The national context for water reform

Water reform has been a focus for successive governments for almost a decade. In 2016, the Havelock North drinking water contamination incident raised serious concerns about the safety of drinking water supplies and highlighted systemic issues in water management across the country.

Since then, new legislation and national standards have been introduced for drinking water, wastewater and stormwater. These changes have significantly increased health, environmental and reporting requirements for councils, alongside stronger central government oversight of water quality, environmental performance and pricing.

At the same time, climate change is increasing the frequency and intensity of extreme rainfall events, placing additional pressure on stormwater networks and increasing flood risk. Population growth, housing development and industrial activity are also driving the need for new and expanded water infrastructure.

Rising costs and affordability challenges

Delivering water services is becoming more expensive for all councils, regardless of the delivery model used. Key cost drivers include:

complying with new drinking water and wastewater standards
upgrading stormwater systems to manage climate change impacts
replacing ageing pipes, treatment plants and pump stations
investing in infrastructure to support population and economic growth
meeting increased regulatory, monitoring and reporting requirements.

Without change, these pressures would place increasing financial strain on individual councils and ratepayers over time.

Earlier water reform proposals

In response to these challenges, the previous government proposed major structural reforms to water services. Initial proposals involved creating four large water entities across the country. Closer to the 2023 general election, this shifted to a proposed model of 10 entities. Under these proposals, the three councils that make up Central Districts Water would have been part of a single water organisation covering the Horizons region. These reforms would have transferred council-owned water assets into new entities.

Following the change of government, the water reform programme was reset. New legislation was introduced under the Local Water Done Well framework.

Local Water Done Well retains council ownership of water assets and allows councils to choose how water services are delivered, provided the chosen approach meets legislative and regulatory requirements.

The framework is built around three core expectations:

Water services must be fit for purpose.
Water services must be financially sustainable over the long term.
Water services must be subject to stronger oversight and regulation of quality and cost.

Local Water Done Well also encourages councils to work together where collaboration can deliver better outcomes for communities.

Assessing delivery options

Between 2023 and 2025, Horowhenua District Council, Palmerston North City Council and Rangitīkei District Council undertook extensive work to assess available water service delivery options. This work was carried out both individually and collaboratively, recognising the shared challenges facing each area.

Options considered included:

continuing to deliver water services independently (the status quo)
establishing council-controlled water organisations
creating single-council water organisations
alternative models such as independent consumer trusts.

Each option was assessed against a range of criteria, including affordability, access to finance, governance arrangements, accountability, regulatory compliance, resilience to climate change, and long-term sustainability.

Some options were not selected because they were expected to result in higher costs for communities, reduced access to cheaper borrowing, or increased risk in meeting future regulatory requirements.

A key consideration in the assessment process was access to finance. Water infrastructure requires significant long-term investment, often funded through borrowing.

Jointly owned water organisations are better able to access cheaper borrowing compared to individual councils. This reduces the overall cost of infrastructure investment over time and helps manage affordability for communities.

The ability to spread financial risk across a larger customer base also improves resilience and reduces pressure on individual councils. Indications from government agencies indicated that we’d want 50,000 connections. The three councils working together have 78,776.

Community engagement and consultation

All three councils ran separate consultation with their communities over March/April 2025. Each council had options seeing them work with other councils.

This engagement provided information about the:

challenges facing water services
scale of investment required over coming decades
range of delivery options available
potential impacts on affordability and service delivery.

Community feedback consistently highlighted concerns about rising costs, the importance of transparency, and the desire to retain local ownership and accountability. This feedback reinforced the need for councils to work together while keeping water assets in public ownership.

Why a multi-council council-controlled organisation was chosen

After assessing the options and considering community feedback, in June 2025 the three councils each agreed that a jointly owned, council-controlled water organisation offered the most balanced and sustainable approach.

This model provides:

access to cheaper borrowing and improved affordability
shared risk and greater financial resilience
stronger capability to meet increasing regulatory requirements
improved capacity to respond to climate change and growth
continued council ownership of water assets
local governance and accountability.

Our Water Services Delivery Plan

Following the decision to work together, the three councils worked on the legally required Water Services Delivery Plan. This was submitted in September 2025 and approved by the government in November 2025.

The plan sets out how councils will deliver drinking water, wastewater and stormwater services under the Local Water Done Well framework. It explains how water services will meet new health, environmental and financial requirements, how services will be funded over the long term, and how councils will ensure water infrastructure is fit for purpose and financially sustainable. The plan also outlines the delivery model chosen, the reasons for that choice, and how communities have been consulted.

Read the Water Services Delivery Plan