The Local Government (Water Services) Act 2025 and the Local Government (Water Services) (Repeals and Amendments) Act 2025 (the Acts), the final components of the Coalition Government’s Local Water Done Well (LWDW) reform programme, are now in force.

Following the Select Committee’s report on 3 July 2025 the Local Government (Water Services) Bill (Bill 3), was considered by the Committee of the Whole House, which on 13 August 2025 agreed to divide it into two separate pieces of legislation (discussed further below). Both Bills passed their third readings on 19 August 2025 and received Royal Assent on 26 August 2025. They became Acts the day after receiving Royal Assent. 

The Acts establish the enduring regulatory framework for water services delivery, including new governance arrangements, economic regulation, and consumer protection measures. Councils must now finalise water service delivery plans by Wednesday 3 September 2025 and prepare for the transition to the new regime.   

How did we get here?

The first stage of the reforms, the Water Services Acts Repeal Act 2024, repealed the previous Government’s ‘Affordable Water’ legislation. The second stage, the Local Government (Water Services Preliminary Arrangements) Act, set out transitional arrangements for local government water services delivery. The Acts represent the third and final component of the Coalition Government’s ‘Local Water Done Well’ reform programme. 

The Acts (originally introduced as one omnibus Bill in December 2024), establish the substantive framework for future water services delivery. Fundamentally, they provide councils with a range of options to choose from in determining how to structure the delivery of water services in the future. These options range from continuing to provide water services directly, through to different permutations of ‘water organisations’, which can be owned by one or more councils, and/or by consumer trusts. 

The Acts also provide for a new economic regulation and consumer protection regime for water services, and changes to the water quality regulatory framework and the water services regulator.

Finally, the Acts introduce a number of mechanisms to streamline and standardise design and RMA approval processes for water infrastructure, including wastewater environmental performance standards (WEPS), stormwater environmental performance standards (SEPS), infrastructure design standards (IDS), and national engineering design standards (NEDS). We wrote about the first set of WEPS, currently under development, here.

We previously summarised Bill 3’s introduction here. While the key features of the Acts remain broadly as summarised in that article, there have been some notable refinements including shifts in shareholder rights and expansions to the power of water organisations.

Changes since introduction

On 3 July 2025, the Finance and Expenditure Select Committee released its report recommending that Bill 3 be passed. It also recommended over 360 amendments to Bill 3 (a large majority of them technical in nature) reflecting the submissions received and the technical nature of the Bill. These changes span governance, regulatory design, infrastructure planning, and Treaty obligations.

We summarise some of the key changes below.

Objectives of water service providers

The Select Committee recommended that Bill 3 should expressly include ‘supporting housing growth and urban development’ as a statutory objective for water service providers. On the other hand, the Committee recommended removing the objective to provide water services that do not have adverse effects on the environment on the basis that any environmental effects associated with water services will be appropriately addressed under the RMA. These changes are reflected in the legislation as enacted.

Accountability and shareholder engagement

The Select Committee’s report emphasised that water organisations are not intended to operate like traditional Council Controlled Organisations (‘CCOs’), and to that end Bill 3 was amended to:

• Give boards greater autonomy and accountability for long-term direction by allowing them to set strategic priorities, rather than having these determined by shareholders through statements of expectations.
• Include in water service strategies a summary of shareholder comments and an explanation of whether shareholders ‘required’ changes or approved the final strategy.

Engagement policies

Water organisations will be required to adopt a ‘significance and engagement’ policy that covers all major decisions, not just contracts (this is broadly comparable to the significance and engagement policies that councils are required to adopt under the LGA). These policies will cover things like entering into significant contracts, transferring ownership or control of key water assets, and making substantial changes to service levels.

Facilitating new transfer arrangements between councils and water organisations

Changes to the settings for ‘transfer agreements’ (whereby councils will transfer some or all responsibilities for water services) will mean that councils will be able to transfer any responsibilities under the legislation to a water organisation, except:

• The power to make bylaws and regulatory plans.
• Their role as a shareholder in a water organisation.
• The power to delegate responsibilities, functions, duties, or powers under the Local Government Act.

The transfer agreements themselves will need to set out content such as (but not limited to):

• The geographic boundaries of the service area being transferred.
• The specific liabilities being transferred (including those related to stormwater, which can be particularly complex).
• The responsible decision-makers for key financial and operational matters (i.e., the territorial authority (TA) or the water organisation).
• How disputes between the TA and the water organisation will be resolved.

Changes were also made at the Select Committee stage to clarify that no person is entitled to require a TA or water organisation to provide a water service to them. This change provides certainty for both councils and water organisations by clearly defining the limits of their obligations.

Stormwater management

Water organisations will be required to develop stormwater network risk management plans within three years identifying hazards and setting out how risks will be managed (previously 2 years in the Bill as introduced).

Additionally, water organisations will be required to enter into service agreements with transport corridor managers for local roads to ensure coordinated management where stormwater infrastructure interacts with road networks (noting that The Local Government (Water Services) Act 2025 still prevents councils from transferring responsibility for ‘transport corridor stormwater infrastructure’). Other changes clarify key definitions and enables the use of bylaws to manage risks on private land.

The ability to grant exemptions from certain drinking water requirements has also been extended from a maximum of five to fifteen years.

Financial sustainability and economic regulation

The Select Committee also strengthened the legislation’s financial sustainability requirements. Dividend payments to shareholders will only be permitted if they do not compromise the provider’s ability to maintain and improve water services. The Acts also bring water services under the Commerce Act’s economic regulation regime, introducing a new purpose statement, higher penalties for non-compliance, and a levy-making power to recover regulatory costs from providers.

Māori interests and Treaty obligations

The Acts require all persons exercising functions under the Acts to act consistently with existing Treaty settlement obligations. For the Waikato River, Te Ture Whaimana o Te Awa o Waikato will prevail over planning documents under the Resource Management Act. The legislation also clarifies processes for accessing Māori land and recognises additional Treaty settlement legislation, such as for Ngāti Rangi. However, the Acts still do not contain a more general ‘Treaty principles’ clause.

The Committee of the Whole House, the Third Reading and the Bill passing

Following the Select Committee’s report, Bill 3 proceeded to the Committee of the Whole House for further consideration. It concluded its review on 13 August 2025.

As part of this process, Bill 3 was divided into two separate pieces of legislation. The Local Government (Water Services) (Repeals and Amendments) Bill comprised what was formerly Part 5 of the original Bill, (relating to Amendments to Other Legislation) and included Schedules 5–12 of the original Bill. What remained of the original Bill continued as the Local Government (Water Services) Bill.

Perhaps the only notable additional changes at the Committee of the Whole House Stage were that:

• A new subpart 5 was added to Part 2 (Structural arrangements for providing water services), which sets out ongoing obligations for TAs in relation to water services delivery plans.
• This subpart requires TAs that have not transferred responsibility for water supply and wastewater services to a water organisation to regularly submit water services delivery plans to the Secretary for Local Government.

Following on from Bill 3’s division on 13 August, the legislation passed into the House for the third and final time. The House voted in favour of both Bills becoming law and the Bills passed on 19 August 2025. The Bills, having received Royal Assent on 26 August 2025 have now become Acts.   

Conclusion

The passage of these Acts marks a new chapter for Local Water Done Well and establishes the framework for water services delivery. However, the Government has stepped back from its earlier suggestion that the reforms would deliver lower household water bills than Labour’s Three Waters model.

The focus has shifted to ‘financial sustainability’. Early council forecasts indicate significant increases in household bills over the next decade, with some areas expecting costs to double. For example, Local Water Done Well plans produced by councils so far show average annual water bills are projected to rise by about NZ$900 in Christchurch, NZ$1,700 in Hamilton, NZ$1,200 in Dunedin, and NZ$1,800 in Selwyn.

Another emerging trend is the relatively high number of councils opting to ‘go it alone’ and continue providing water services directly (or via a wholly owned CCO). The extent to which these arrangements are approved by DIA, and/or are the subject of the Minister’s backstop powers (or subsequently come under pressure from the economic regulator), will remain to be seen.