We deliver safe, financially sustainable and reliable water services across the district. We honour Te Ture Whaimana and enhance the health of the Waikato and Waipaa rivers. Our efforts focus on seamless planning and investment, improving customer service and financial efficiency, developing a skilled workforce, creating a stable operating environment, leveraging economies of scale, and ensuring regional contributions.

Water is a significant issue, and we have been exploring a range of options to meet our vision.

New Zealand faces growing challenges in providing sustainable and affordable water services due to infrastructure limitations, environmental obligations, climate change, and the pressures of population growth.

Government launched its reform programme ‘Local Water Done Well’ in 2023, which places several new requirements on us, and once enacted will transform the way water is managed in New Zealand. As part of these requirements we must consult on how water services are delivered to you. We have outlined two options on the next pages. No matter what option we choose, the costs to deliver water services are increasing.

There is a set process to make decisions on the model for delivering water services and our detailed water plan, for efficiency we have combined the consultation with our draft Long Term Plan. Once we’ve heard your feedback and made a decision on the delivery model, we will reflect this in our Long Term Plan, and then prepare and submit the water services delivery plan to government by September 2025.

Forming a Council Controlled Organisation (CCO) with Hamilton City Council.

We are considering forming a joint water company with Hamilton City Council. The company would be a Council-Controlled Organisation (CCO), that is publicly owned and under New Zealand law could not be privatised. A CCO differs from a Council in that it operates as a company governed by an independent Board of Directors.

This proposed joint CCO would own our water and wastewater assets and be responsible for delivering those services. The joint CCO would also provide stormwater services under contract to both councils, and possibly to other councils.

A CCO must meet expectations set by their shareholding councils and report on these annually. For this CCO, it is proposed Directors are appointed by a Shareholders Forum based on their expertise in areas like finance, infrastructure, legal matters, Maaori tikanga, environmental issues, engineering, and strategic planning, which are vital for decisions on costly infrastructure projects.

Growth challenges and funding opportunities mean both councils need more certainty and must build critical infrastructure in the most affordable way, faster. Plus, we must meet the government’s September 2025 deadline for submitting our water services delivery plan that offers the best long-term outcome for our people.

While this CCO option may have smaller economies of scale than the multi-council Waikato Water Done Well option, it will still have significant scale benefits. It will also accommodate growth and delivery of strategic infrastructure, ensuring our communities have the right things in place, at the right time and ultimately over time at the right cost.

No matter what happens, both councils remain open to future regional cooperation.

• Long term financial benefits for ratepayers.
• Critical infrastructure built faster and cheaper for growing communities and a growing local economy.
• Improved health of the Waikato River, honouring its cultural, recreational and environmental significance.
• Spreading costs fairly and over a longer period under new borrowing rules to smooth costs for ratepayers over time.
• Greater purchasing power, savings over time, and operational efficiencies are passed on to ratepayers.
• It is more likely to attract and retain specialist staff.
• Set-up costs will be off set by increased efficiencies over time.
• Skilled, independent directors appointed by a shareholder’s forum, made up of representatives from Hamilton City Council, Waikato District Council and Waikato-Tainui. Each Council within the CCO would have equal voting rights.
• Oversight from the Commerce Commission, Taumata Arowai and Waikato Regional Council.
• Our two councils already work well together in other activities and have successful shared services that benefit both communities.
• Continued partnerships with iwi and tangata whenua.
• Better positioned to handle unexpected events like flooding or natural disasters.

• There is less control over the work programme as the CCO will prioritise work across the two councils.
• It will take some time to realise the benefits of the scale and financial strength of the CCO.
• There is uncertainty if the CCO will take on the debt associated with water and wastewater.

Continue using an external contractor

The other option is a contractual arrangement between our council and a waters service provider. With this option we would continue our current contract with Watercare, who currently plans, services and maintains our network, until June 2028. We would then need to have an alternative service provider in place.

Working with Watercare, we have made significant improvements in efficiency, introduced world-leading infrastructure and worked hard to keep increased costs under control. However, under Local Water Done Well legislation, a contractor model has some disadvantages:

• Less economies of scale, and waters is a business
• where size and scale matter.
• Council would not have access to the borrowing
• capacity available to CCOs, making it harder to deliver infrastructure investment needed for growth.
• Watercare is considered a leader in the industry,
• and it would take time and investment in systems for a new contractor to deliver the same service.
• Affordability for our customers is likely to be a
• bigger issue with this option.

This is not Council’s preferred option because it will not allow the same level of borrowing as a CCO model, and it will be harder for us to meet the requirements of the new waters legislation.

Another option we considered was joining Waikato Water Done Well, a project where Waikato councils identify shared water service challenges and collaboratively design a new multi-council Council Controlled Organisation (CCO)1 to manage drinking water, wastewater, and sometimes stormwater services.

Under Waikato Water Done Well, participating councils would transfer responsibility for their water services to the new CCO which they would collectively own and have input into its strategic priorities.

A full business case has not yet been developed for Waikato Water Done Well. It is still unclear at this point how many councils would join, and how long it would take to become a full asset-owning CCO. As a result of these uncertainties, we discounted this as an option for our district.