Hamilton City Council
Te kaunihera o Kirikiriroa
Our Council is planning changes to future-proof our water services for our community.
Hamilton delivers safe, high quality, well-maintained drinking water, wastewater and stormwater to all Hamiltonians. This is crucial for protecting our environment, supporting public health, and enabling sustainable growth, while meeting our regulatory responsibilities.
We are better off than many other councils, but like many councils, and especially high-growth metros, we face significant future funding challenges for waters infrastructure. This is a national issue, and Government is introducing new requirements for councils as part of its Local Water Done Well policy to address this.
Local Water Done Well offers councils new options to deliver water services and fund waters infrastructure, and places new requirements on councils. Councils must develop a Water Services Delivery Plan by September 2025. These Plans must provide a long-term assessment of councils’ water infrastructure, how much they need to invest, and how they plan to finance and deliver it through their preferred water service delivery model. Councils must show they can deliver water services that meet regulatory requirements, support growth and urban development, and are financially sustainable.
To continue to deliver safe, high-quality water services while responding to Government direction, our Council's preferred long-term solution is a multi-council regional asset-owning waters company. In the shorter term, we are creating an internal business unit for water services, and planning for a Hamilton-only Waters Council-Controlled Organisation (CCO). The design of this CCO would enable other councils or regional organisations to partner with it in the future.
Implementing these decisions will require significant work and consultation with our waters staff and Hamiltonians.
We are a long way from any change to the way we deliver our day-to-day water services. We don’t yet know whether we will be a standalone organisation or partnered with others, but we have got time to get it right.
Hamilton City Council is the largest waters service provider in the Waikato and, if involved, would be the major contributor to economies of scale in an aggregated Waikato entity.
Hamilton has previous experience in considering aggregation of water services in the Waikato. In 2014/15 In November 2014 a study identified a CCO model provided significant cost savings for customers and councils. Progressing a CCO model for the region failed after Waikato withdrew, and Waipa elected not to continue to seek a joint model with Hamilton.
Waters currently accounts for around 30% of the Council’s annual operating expenditure, 54% of the proposed capital expenditure over the life of the 2024-34 Long-term Plan, and 30% of the assets owned by the Council. Solving the funding challenge for waters assets is critical for the financial sustainability of the Council.
At its meeting of 12 September 2024, Council confirmed its preferred long-term solution would be a multi-council regional asset-owning waters company which provides stormwater services to its shareholders. In the shorter term, Council is developing a standalone council-controlled organisation with provision for other councils to join in the future.
Noting that Watercare is ending its contract with Waikato District Council (WDC), Council requested staff consider an option to supply water services to WDC. Any work on this option is subject to WDC formally endorsing collaboration with Hamilton City Council.
Council will ring-fence and clearly and separately show all waters costs and revenue by mid-2025 and design a Hamilton-only CCO model as a baseline option, able to be established by 1 July 2026.
The design of this CCO must enable other regional partners or shareholders to be able to join in the future.
These decisions also mean:
For complete transparency of waters-related financial activity, Council will need to separate waters related charges from the General Rate and Uniform Annual General Charge and change the Development Contributions policy. These decisions will require a Long-Term Plan (LTP) amendment next year and full public consultation.
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One of the greatest challenges for our city, and our country, is future-proofing our waters services.
Getting water, wastewater and stormwater right underpins everything we do in the city. It’s critical for public health, economic development and looking after our environment, not just for existing communities but those of the future.
There’s no question costs for our future water services will increase in Hamilton, and across the country.
What we need to do is find the structures that offer the best value for ratepayers and make the most of every dollar.
As a major city experiencing rapid growth, Hamilton faces major funding and financial pressures.
We need greater investment to maintain our networks and upgrade them for growth.
Current funding tools don’t allow councils to borrow what we need or spread this cost over long periods.
We are mindful that any waters delivery solution for Hamilton must support Te Ture Whaimana - the legislated vision and strategy for the health of the Waikato River.
Through Local Water Done Well, Government is supporting greater efficiency in waters management nationwide. It will mean fundamental change, but it’s needed.
The best outcome for Hamilton is likely to be one which realises the benefits of a boundaryless approach across the wider region. This will support the best land use, transport, development, and sustainability outcomes.
We take raw water from the Waikato River into our single water treatment plant, where it is treated to provide high-quality drinking water. We treat on average, around 65 million litres of water every single day, or around 750litres per second.
To protect our river system and provide for everyone along it, Hamilton has limits on how much water we can take from the river. Our current consent expires in 2044. At current usage, we’ll need more than our consent allows before then, so we have to get smarter about using water wisely and reducing waste.
Water treatment plants use complex scientific systems to screen, filter and disinfect before it is ready for Hamiltonians to drink. Our drinking water is safe, meets all applicable standards, has multiple barriers against potential contamination and is monitored continuously.
Once the water is treated and ready to drink, massive underground pipes (water mains) are used to transport the water to storage tanks (water reservoirs). Our drinking water reservoirs are used to store the water so there is enough to use throughout the day. The busiest times for water use are in the morning when people wake up and shower, and again in the evenings when people cook dinner, shower and water the garden.
All the water we supply to more than 60,000 properties through our city system is treated drinking water. This includes the water people use for watering their gardens or washing the car, so careful use of this resource, especially over summer is important. At peak times in summer, our demand for drinking water is almost double our winter average.
Water we use from this supply, other than outdoor use, ends up in our wastewater network.
Our wastewater is more than just the waste from flushing our toilets. It includes all the ‘used’ water from household kitchens, bathrooms, and laundries, and from business and industry. To protect our environment and public health we need to contain and manage wastewater.
It’s a team effort between council and the community to make sure we don’t put the wrong things into our wastewater system, to improve and maintain our pipes and pumping stations, build resilience and storage capacity for weather events and peak flows, and support sustainable residential and economic growth.
Our network includes around 900km of pipes, more than 130 pumping stations and six major pipeline bridges.
All the wastewater from more than 64,000 connections flows to our Pukete Wastewater Treatment Plant and is treated to a high standard before being released into the Waikato River.
Waikato Te Awa has special cultural and historical importance to iwi. Te Ture Whaimana o Te Awa o Waikato (Vision and Strategy for the Waikato River) has a vision for a future where a healthy Waikato River sustains abundant life and prosperous communities who, in turn are all responsible for restoring and protecting the health and wellbeing of the Waikato River and all it embraces, for generations to come.
We have multiple systems to protect our environment from the impacts of wastewater overflows and a major part of our investment is maintaining our pipes and plant, as well as building new storage facilities to make our network more resilient.
Heavy rain can increase the flows in our wastewater network, and climate change is likely to increase the impacts and frequency of heavy rain events.
Our stormwater system is designed to manage flows from rainfall across the city, which flows into gutters and into the pipe system before being released into the Waikato River and other Hamilton waterways.
Stormwater is not treated, so it's important our systems and processes minimise the effects of stormwater on the environment.
Our stormwater network includes collection, conveyance, treatment, and discharge services.
We have more than 700km of pipes in a system which includes ponds, wetlands, and open watercourses, to collect and release rainwater into the city’s waterways.
In 2023 legislation was passed by the Labour-led Government to remove the costs of water services from councils (and transfer to new organisations) in stages. Following the 2023 election, the new Government has repealed this legislation.
The previous Government’s reform intended to reduce future cost impacts for councils and the public through economies of scale in regional organisations. The new Government has advised councils are to self-determine future service delivery arrangements via a water services delivery plan (to be submitted by September 2025).
Two new pieces of legislation drive the changes. The Local Government Water Services Transitional Provisions Bill), sets out guidelines relating to how councils will manage water services and water costs and makes it easier for councils to establish council-controlled organisations (CCOs) under the Local Government Act 2002.
In August 2024 Government announced decisions which will form the basis for further legislation expected in December, the Local Water Done Well Bill. At the same time, they announced new funding options available to councils and new water council-controlled organisations (CCOs). The Local Government Funding Agency (LGFA) will offer lending of up to 500% of debt to revenue levels for future Waters CCOs and up to 350% for high-growth councils. Waters CCOs must meet various criteria to access this borrowing.
New water services companies would manage drinking water and wastewater - councils retain legal responsibility and control of stormwater services. The Minister also confirmed there will be no new central Government funding made available towards transitioning to new water services organisations.
The Local Water Done Well Bill will also provide guidelines for long-term financial sustainability, a complete economic system for controlling water-related costs, and a new range of structural and financing tools, including a new type of financially independent CCO.
Major structural change to the delivery of water services nationwide has been a focus of local and central government for some years. A water contamination issue in Havelock North in 2016 was the catalyst for Government review and inquiry.
A two-stage Government inquiry was held, the first stage focused on identifying the direct causes of the outbreak, the second looking at the wider regulatory context and ways to reduce the likelihood of another outbreak in the future.
The Inquiry found widespread systemic failure of water suppliers to meet the high standards required for the safe supply of drinking-water to the public.
In mid-2017 a Three Waters Review, in parallel to the Inquiry, raised further questions about how effective the existing regulatory framework and about the capability and sustainability of New Zealand’s water service providers. Later work identified massive funding shortfalls in waters infrastructure provision, with initial estimates of $185B over 30 years.
Between 2020 and 2022 the Labour-led Government introduced new water regulations, a new regulatory body (Taumata Arowai) and structural changes to delivery – creating new entities to take over water services delivery from councils.
Following the 2023 elections, the new National-led government repealed legislation relating to service delivery, replacing it with its Local Water Done Well policy. Councils were required to put the costs of waters back into their LTPs. This has had significant rating impacts for many councils.
In early 2024, Government announced councils (or groups of councils) are required to prepare a Waters Plan for DIA approval. This plan will include 10-year high-level projections for future provision of water services, with a detailed three-year plan.
Enabling legislation in 2024, and in 2025 will provide options for CCO arrangements and establishment of economic regulation.
High quality water services are crucial for protecting our environment, supporting public health, and enabling sustainable growth, while meeting our regulatory responsibilities. Like many councils, and especially high-growth metros, we face significant future funding challenges for waters infrastructure. This is a national issue, and Government is introducing new requirements for councils as part of its Local Water Done Well policy.
Government has introduced law changes which place new requirements on the way councils deliver water services. Councils (or groups of councils) must have an approved water services delivery plan by September 2025. Further new laws provide options for CCO arrangements and new economic regulation of water services. Additional funding (via the Local Government Funding Agency) is available for water services organisations which meet government requirements and for high growth councils. Any new waters organisation would deliver only drinking water and wastewater services – councils remain responsible for stormwater. Hamilton is responding to these changes and identifying the best future options for our communities.
Council has identified a series of success factors it wants to achieve through any change to water services:
In September 2024, Council confirmed its preferred long-term solution is a multi-council regional asset-owning waters company. In the shorter term, Council has instructed staff to create an internal business unit for water services, and to start planning for a Hamilton-only Waters Council-Controlled Organisation (CCO). The design of this CCO would enable other councils or regional organisations to partner with it in the future.
As Watercare is ending its contract with Waikato District Council, elected members also approved staff to work with Waikato District Council on a jointly owned waters CCO, subject to Waikato District Council formally endorsing collaboration with Hamilton City Council as its preferred option for the delivery of water services.
Council remains open to regional partners in a multi-council CCO and is happy to discuss options with those councils which share the same priorities and have the mandate for partnership from their communities.
In the next few months there is a huge amount of work to understand the detail, impacts and workability of any change to the way we deliver water services. We need to separate waters assets, debt, costs, and revenues from other council activities, identify any impacts on staff and model the financial impacts on the remaining council organisation. As water services would be a separate charge from rates, we would need to make changes to our rating structures and identify a different way for people to pay a fair share of the costs for water services. Once we have analysed potential options and understand the costs and benefits, we will hold full public consultation about any proposed change.
There should be almost no change in the day-to-day delivery of your water services. You would still get high quality, treated water when you turn on your tap and your wastewater would be treated to a high standard. You would see water and wastewater charges shown as a separate charge to your council rates and your water services organisation may have a different name or website. The changes would be at a higher level – the new organisation would be able to invest more in maintenance and the infrastructure required for growth, it may be a bigger organisation sharing costs across a wider area, and it would be able to use these efficiencies to reduce future costs to consumers. The costs to deliver water services are increasing for everyone, but this new approach would help lessen the increases, allow the costs to be spread over a longer period, and ensure costs are shared by future generations who use new waters infrastructure. Government regulation would set limits on what the organisation could charge, and how much it needs to invest in the future.
Meters provide a way to charge for water services based on usage rather than through household rates, and Government has indicated it sees metering as a logical approach for future water charges. Councils that have meters have also seen much better efficiencies in water usage. We’re limited on how much water we can take from the river, and we are required to promote efficient use of water. More efficient usage also means very expensive assets like our treatment plants can do the job for longer, which saves money down the track. There’s a lot of things to consider and any decision is some time away.
A CCO is an organisation that is ultimately accountable to Council but can run independently. A waters CCO would have a specific focus on drinking water and wastewater services and would have its own governing board and operational teams. The responsibility for stormwater would stay with Council. This is because how we manage our stormwater is so closely linked to how we manage other services such as roads and parks.
If a new organisation is to deliver Hamilton’s future water services, we expect changes to how rates and water services are charged over the next couple of years. We can’t yet confirm what the total combined charges would be, but you won’t be charged twice for the same thing. The first stage would be next year, when we split the costs of water services from general rates and show it on your existing rates bill. The second stage would be when a new waters organisation is operating. That would bill the consumer directly (like your power company). Council would still charge rates, but they wouldn’t include any charges for services charged for by the new organisation.
Last updated 13 September 2024