The Local Government (Water Services) Act 2025 (Act) has now passed into law, bringing the coalition Government's legislative reform programme known as Local Water Done Well (LWDW) to a close. This Act marks the third and final piece of legislation giving effect to LWDW, with the first having repealed the previous Government's "Three Waters" legislation and the second providing for water services arrangements in the interim.
The Act sets up an enduring water services delivery framework, providing for (among other things):
- arrangements for the new water services delivery system;
- a new economic regulation and consumer protection regime for water services; and
- changes to the regulatory framework for water quality and to the water services regulator.
The Act underwent several hundred amendments (albeit largely technical) at the Committee of the whole House stage before the Act was finalised. Originally an omnibus Bill, the Act was also divided at this stage into two distinct Acts: the main Act which consists of the substantive legislative content, and the Local Government (Water Services) (Repeals and Amendments) Act 2025 which makes amendments to other legislation (including introducing the new economic regulation regime into the Commerce Act 1986).
Developments to date
Over the past year, councils have been making decisions regarding the future of water services delivery in their respective territories. The LWDW legislative regime provides several delivery arrangements for councils to choose from, including:
- delivery within an in-house council business unit;
- transferring responsibility to a council-controlled organisation (CCO), owned individually by a council or a jointly with other councils;
- contracting out water services delivery responsibility to a third party; or
- other options, including consumer trusts or a hybrid between other options.
Many councils are well underway with forming joint CCOs with other councils to deliver water services – an approach encouraged by Local Government Minister Simon Watts. Others are opting to retain individual responsibility, whether through an in-house council unit or by setting up their own water organisation. Minister Watts appears to be taking an active interest in councils' chosen delivery arrangements, having already sent cautionary notes to six smaller councils intending to deliver water services individually, citing concerns for their ability to achieve financial sustainability without joining forces with other councils.
Councils' decisions on their preferred water services delivery model must be recorded in their Water Services Delivery Plans (WSDPs) (a requirement under the second piece of LWDW legislation), alongside other required information about their water services operations, assets, revenue, expenditure, pricing, projected capital expenditure, and more. The preparation of a WSDP is a one-off requirement for councils who have transferred responsibility for water services delivery to a water organisation; councils who choose to retain water services in-house must submit further WSDPs on a 5-yearly basis.
Councils are currently in the process of finalising their WSDPs for submission to the Department of Internal Affairs (DIA) by the 3 September 2025 deadline. Accepted WSDPs are published on the DIA's website.
Next steps
For more information on the new water services legislative framework, see our last Insights on the Select Committee report on the Act and the new economic regulation regime.
For more information about what these developments might mean for you, please get in touch with one of our experts below.