The Government will repeal the controversial Three Waters reforms by 23 February and will pass two two laws to replace it – the first by mid 2024 followed by the long-term replacement by mid 2025.

PM Christopher Luxon and Local Government Minister Simeon Brown announced the move at the post Cabinet press conference today.

“The Government will pass a bill to repeal Labour’s divisive and unpopular Three Waters legislation by 23 February 2024 as part of our 100-day plan. This will restore continued local council ownership and control of water services, and responsibility for service delivery,” Brown said.

The repeal law would include some provisions to allow councils to address water services in their long-term plans ahead of the permanent changes.

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He said the government’s replacement would be put in place through two separate pieces of legislation. A technical advisory group was being set up to advise on the implementation of it.

Brown said the first bill would be passed by the middle of this year and would set out provisions related to council service delivery plans and transitional economic regulation.

That would include streamlined rules for setting up council-controlled organisations under the Local Government Act 2002 to allow councils to start moving the delivery of water services into more financially sustainable configurations, if they wished to do so.

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The second bill would set up the long-term replacement regime. It would be introduced by December, and passed by mid-2025 – just ahead of local body elections in October that year.

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He said that second bill would also set up regulatory backstop powers, to be used if councils were failing to meet the requirements to deliver financially sustainable and safe water services.

The long term regime would include requirements for financial sustainability, an economic regulation regime, and a new range of structural and financing tools for councils.

Those included a new type of financially independent council-controlled organisation.

It would also change the water regulator’s legislation to ensure it was fit for purpose and workable for drinking water suppliers.

He said the technical advisory group would include experts in finance, infrastructure and local government. It would provide advice on policy and legislation that would allow local councils to appropriately recover costs and access the long-term debt needed to fund the required investment in water infrastructure.

There is an estimated shortfall of $130b to $185b in water infrastructure investment over the next 30 years. Labour has questioned whether the Government’s plan would add more costs to ratepayers than Three Waters.

Brown said councils would need to put forward financial plans, including ring-fencing funds that consumers pay for their water specifically for water infrastructure.

Brown said councils were up to the job, despite councils being in control of their water infrastructure so far which has led to the current infrastructure deficit.

Wellington Water did not have the discipline of a council-controlled organisation, Brown said, nor did it have the ring-fencing of revenue.

Councils can opt to work together and have balance sheet separation to be able to draw down more debt, but it would be voluntary rather than mandatory under Labour’s Three Waters plan.

Brown said it was up to councils whether they use water meters, but he added that meters were better for detecting leaks and for measuring water usage.

The ring-fencing would mean that councils wouldn’t be able to choose the “nice-to-haves rather than the must-haves”.

Regulatory backstops already existed for councils in legislation, and Brown said he was still working through what it would look like for water infrastructure.

“We don’t want to have to step in, but ultimately we want to ensure all councils have long-term plans in place, and for the regulatory requirements to be taken seriously,” Brown said.

Brown said the Government was not planning to provide funding to set up CCOs, which would be up to those councils that wanted to form one.

“This is what councils across the country said they wanted.”

Brown said the previous Government spent about $1.2b on Three Waters, and there was about $150m left over which he said should be spent on water infrastructure.

“We are obviously shutting it down as quickly as possible and as cheaply as possible.”

Asked about guaranteeing the debt for Watercare in Auckland, Brown said there was no intention to guarantee CCO debt, and options were being worked through for Auckland at the moment.

Brown said cancelling two projects for Three Waters, including the IT project, would save $340m.

Luxon said it didn’t make sense for the Government to guarantee the CCO debt because CCOs would be able to borrow a lot more than individual councils would.

Brown rejected the claim that the changes would just shift the bill from taxpayer to ratepayer.

He said he had made “no considerations” about a Crown monitor for Wellington, where half the water is being lost due to leaks and the city has faced water bans this summer.

Brown said it was up to councils to work with local community in putting forward their plans for water services, though there was no requirement to consult iwi.

“We’ve opposed co-governance and mandated entities on those communities,” Brown said.

Luxon said councils were already moving to put CCOs in place.

One regulator would ensure enough money was being invested, while another regulator would ensure the water quality was good enough, he said.

Luxon said he wasn’t worried about whether he was on the wrong side of public opinion by ruling out supporting the Treaty principles bill beyond first reading.

Asked if he had put Seymour in his place after Seymour essentially questioned Luxon’s word on the Treaty principles bill, he said he had lots of conversations with ministers and party leaders, and the relationships were “positive”.

On lobbyists, Luxon said he personally supported a 12-month “cool-down” period where ministers couldn’t become lobbyists, and Justice Minister Paul Goldsmith was still looking into the issue. On the lobbyists this term having access to parliamentary buildings and having their names secret, Luxon said that was a decision for Speaker Gerry Brownlee.

The Technical Advisory Group members

Andreas Heuser (chair), managing director at Castalia Limited. Andreas has a background in economic and policy projects specialising in energy sector strategy, water reform, and natural resource economics.

Raveen Jaduram, director of the New Zealand Infrastructure Commission. Raveen has a background in water infrastructure, including six years as the Chief Executive of Watercare.

Wendy Walker, chief executive of Porirua City Council. Wendy has a background in local government, strategic planning, and public management.

Mark Reese, partner at Chapman Tripp. Mark specialises in finance and infrastructure and has knowledge and experience across legal and financial aspects of project and asset financing.

Simon Weston, chief executive of Whangārei District Council. Simon has a background in infrastructure, construction and local government in the United Kingdom, Auckland, and Northland.