The Coalition Government's Local Water Done Well (LWDW) policy aims to address the service delivery model challenges by emphasising local decision making, financial sustainability and regulatory compliance. There is strong emphasis on meeting economic, environmental and water quality regulatory requirements.

Under Local Water Done Well, the Government requires that water services must meet three key characteristics:
The delivery model must be fit for purpose: This means the chosen model should be structured and governed in a way that meets both the Government's requirements and our community's needs.	Water services must be financially sustainable: This means that revenue is sufficient to fund water services to meet regulatory standards and cover the costs of maintenance, renewals and ongoing long-term investment in infrastructure to meet future challenges.	The services must meet new economic and water quality regulations: New economic regulation will ensure that consumers pay fair prices for water services, and this will be enforced by the Commerce Commission. We also must meet any water quality standards set by the Water Services Authority - Taumata Arowai.

A key feature of Local Water Done Well is providing councils with the flexibility to determine the optimal structure and delivery method for their water services. To support this, the Coalition Government has introduced two Bills.

The Local Government (Water Services Preliminary Arrangements) Act was enacted in September 2024, and established the foundation for a new approach to water services management and financially sustainable delivery models that meet regulatory standards. It requires all Councils develop a Water Services Delivery Plan (WSDP), including an adopted service delivery model and implementation plan. The WSDP must be submitted to the Secretary for Local Government by 3 September 2025 for approval.

The Local Government (Water Services) Bill was introduced in December 2024 to establish the enduring settings for the new water services system. It expands the range of local government water service providers by enabling the establishment of new, financially separate water organisations. It also introduces a new economic regulation and consumer protection regime to apply to water services, to be overseen by the Commerce Commission.

More details on the coalition government reforms can be found here –Water Services Policy and legislation.

Different service delivery models under LWDW

LWDW enables councils to consider various water service delivery models including establishing new water organisations. These new water organisations are intended to enable enhanced access to long-term borrowing for water infrastructure – supporting infrastructure development, while managing costs for consumers.

Councils will continue to be able to deliver water services directly (through inhouse business units), or they can establish new water organisations that are financially and operationally independent of councils.

These models also make it easier for councils (who wish to) to enter joint arrangements to achieve cost savings, improve efficiency and improve affordability. Councils will be able to design their own alternative delivery arrangements, as long as these arrangements meet the minimum requirements set out in legislation.

Councils will have choices about which water services are provided through different service delivery arrangements. For example, they may wish to provide drinking water and wastewater services through a water organisation but retain stormwater services in-house.

Protections against privatisation

Under LWDW, the Government has committed that water services will remain in public ownership. Councils and water organisations will not be able to privatise water services.

The Bill includes the following statutory protections:

• A water service provider must not:
  • Use the assets of its water services networks as security for any purpose;
  • Transfer its ownership of water services infrastructure or of any other interest in a water service – except to another water service provider, if the transfer is a necessary part of a contract or a joint water service provider arrangement;
  • Lose control of, sell, or otherwise dispose of the significant infrastructure necessary for providing water services in its service area, unless it retains its capacity to meet its statutory obligations.
• Only local authorities and/or trustees in consumer trusts will be permitted to own shares in a water organisation.
• Shares in water organisations cannot give any right, title or interest in the assets, security, debts, or liabilities of the entity, and cannot be sold or transferred.
• Shares and assets in a consumer trust-owned water organisation can only be transferred to the territorial authority (or authorities) that established the trust.

In addition, the Bill carries over provisions in the Local Government Act that prohibit water service providers from entering into any contract or arrangement that involves a franchise or concession agreement (These are agreements under which a contracted third party would be entitled to receive a payment from a person other than the provider for the provision of the water services).