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Government Announces Allocation Of Three Waters Funds For Councils

The Government has today set out the regional allocations of the $761 million Three Waters stimulus and reform funding for councils announced by Prime Minister Hon Jacinda Ardern this month.

"I want to thank Councils around the country for engaging with the Central Local Government Steering Group who have been explaining the intent of the stimulus package and the water reform approach.

“Councils are keen to get on with investing in critical water infrastructure and services and stimulate the local economy. Today we are announcing the funding formula to support councils and regions in the distribution of Three Waters funding grants ,’’ said Local Government Minister Nanaia Mahuta.

“I’m pleased to say that, after careful consideration, Ministers have come up with a model that we believe will best serve the dual purpose of the fund.

“Investing in water infrastructure is about investing in the health of New Zealanders. Infrastructure investment is a key component in the Government’s 5 point economic plan to recover from Covid. Four years ago more than 5000 people got sick and up to four died in the Havelock North campylobacter outbreak and we don’t want to see that happen again.”

Ministers are still considering the package and approach for Auckland as they are further along in their service delivery arrangements. The challenge will be to how best advance these arrangements to leverage the respective balance sheet of Auckland City Council and Watercare. This approach would still be consistent with the Governments overall direction for reform.

"I'm pleased to reiterate that of the $761m, an allocation of $51 million will go to support Taumata Arowai, the new water regulator and we acknowledged the leadership of the Hawkes Bay who have taken a regional approach to their waters challenge and have been allocated $50 million of stimulus funding."

"Today’s announcement also provides $30 million to help non-council rural water supplies to meet costs in the face of the new regulatory regime for drinking water."

Councils that agree to participate in the Three Waters Services Reform programme will be eligible to access a portion of the investment package which is structured into two components:

1. A direct allocation to each council, comprising 50 per cent of its notional allocation; and

2. A regional allocation, comprising the sum of the remaining 50 per cent of the notional allocations for each council in the relevant region.

The total regional allocations are set out in the table appended below.

“The regional allocation component is to encourage Councils to collaborate with each other. I have taken on board the recommendation of the steering group who have suggested greater clarity in the event that those conversations are premature but want to start the stimulus investment and reform approach,’’ says Nanaia Mahuta.

While councils must sign up to a Memorandum of Understanding by 31 August to access their allocation, each regional group of councils will have until 30 September 2020 to agree on how best to apportion the regional funds to the individual territorial authorities that make up the region.

“I look forward to seeing the sector take advantage of this support for the immediate and longer-term benefit of their communities,’’ Nanaia Mahuta says.

Three Waters Investment Package: Regional allocations

RegionFunding allocation ($m)
Bay of Plenty$42.23
Hawke’s Bay$50.00
West Coast$15.25


Questions and Answers

Q: What is the purpose of the investment allocation?

A: The investment package has been designed to:

  • Support investment across the economy, helping to stimulate economic activity and jobs in all regions of New Zealand;
  • Support the objectives of the three waters services reform by encouraging as many councils as possible to participate in the reform programme.

Q: How does the formula work?

The Government has agreed to a notional allocation framework based on a nationally-consistent formula, with some adjustments to take account of exceptional circumstances.

The general approach to determining each authority’s notional allocation is based on:

  • The population in the relevant council area, as a proxy for the number of water connections serviced by a territorial authority (75 per cent weighting)
  • The land area covered by a local authority excluding national parks, as a proxy for the higher costs per connection of providing water services in areas with low population density (25 per cent weighting).

Q: How do councils qualify for their funds?

A: Territorial authorities that agree to participate in the Three Waters Services Reform programme, and that sign a Memorandum of Understanding and Funding Agreement with the Crown, will be eligible to access the investment package.

Q: How is the package structured?

A: The investment package is structured into two components:

  • A direct allocation to each territorial authority, comprising 50% of that territorial authority’s notional allocation; and
  • A regional allocation, comprising the sum of the remaining 50% of the notional allocations for each territorial authority in the relevant region.

Q: What is the purpose of the regional allocation and is there a timeframe for this?

A: The regional allocation is to encourage territorial authorities to have collaborative three waters investment conversations with their neighbouring councils, and to advance collective participation by councils in the reform programme.

Each regional group of councils will have until 30 September 2020 to agree on how best to apportion the regional funds to the individual territorial authorities that make up the region.

Q: Are there any exceptions to this general approach to allocation?

A: Several adjustments have been made to the general approach outlined above, to take account of a small number of exceptional circumstances:

  • $30 million has been set aside for non-council rural drinking water suppliers to help address the challenges these suppliers are facing in delivering safe drinking water to consumers. There are a range of private supply arrangements in rural and remote areas, and affordability challenges are particularly acute for some non-council drinking water suppliers including marae.
  • An allocation of $50 million for the Hawke’s Bay region which supplements the formula-based allocation with a top-up in recognition of the leadership and progress that region has demonstrated in exploring reform of three waters arrangements. This has contributed to building momentum for change and represents tangible progress towards service delivery reform.
  • Exploring alternative solutions to progressing water services delivery reform in the Auckland region. Significant progress has already made on aggregation of water services through the Auckland Governance Reforms. In addition, the Auckland region faces several unique challenges associated with meeting future three waters investment which require a bespoke approach. Discussions will be held with Auckland Council on the potential for further water services delivery reform in the region.

Q: What is the process for accessing funding?

A: To access the investment package, territorial authorities must:

  • Agree to participate in the first phase of the three waters services reform programme by signing the Memorandum of Understanding (MOU) by 31 August 2020
  • Enter into a Funding Agreement that specifies what funding can be spent on and the conditions attached to the funding; and
  • Specify the projects that funding will be applied to in a Delivery Plan, to be submitted to Crown Infrastructure Partners for approval prior to release of funding.
  • Further details will be made available shortly on the Department of Internal Affairs Three Waters Reform webpage:

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