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Three Waters: Government announces $2.5 billion package to support local government transition

Home Insights Three Waters: Government announces $2.5 billion package to support local government transition

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Published on: July 16, 2021

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The Government yesterday substantially increased the size of the carrot to encourage local authorities to participate, by announcing a $2.5 billion package to support local government transition through the reforms to New Zealand’s drinking water, wastewater and stormwater services.

The package was announced by the Prime Minister at the Local Government NZ conference, where she laid out the Government's commitment to, and strong case for, large scale reform of the water sector. Although receipt of the new funds is not expressly linked to each local authority participating in the reform, it is clear from the package design that participation will be required. The package consists of:

"No worse off" component

"Better off" component

$500 million to provide certainty for local authorities that they will be supported through the transition process, and to ensure the financial impacts of reform will be managed.

$2 billion for councils to invest in the future for local government, urban development, and the wellbeing of their communities.

This “no worse off” component seeks to address the costs and financial impacts that councils would incur such as the transfer of water assets, liabilities, revenue and staff to a new water services entity. The funding also ensures councils will be able to continue to sustainably perform their non-water related roles and functions.

This “better off” component of the support package, which comprises $1 billion Crown funding and $1 billion from the new water services entities, is allocated to councils on the basis of a nationally consistent formula. Councils will be able to use this funding to support the three waters service reform, and focus on other local wellbeing outcomes associated with climate change and resilience, housing and urban design and planning, and community wellbeing.

 
The proposed package aims to:

  • support local government to invest in the wellbeing of their communities, so that all councils and their communities are better off;

  • ensure no council will be financially worse off after reform; and

  • makes clear that the Government will cover reasonable transition costs.

 
The funding package comes on top of the $761 million committed to the reform programme in 2020, and $296 million announced in Budget 2021 for the costs involved with the establishment of, and transition of, assets and liabilities to the new water entities.
 
A link to the Government's press release can be found here.

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