Clutha District Council-owned mixed-use rural water supplies assessment report reveals findings around ownership and operation options

A report published today reveals the benefits, issues and risks of two ownership and operation models for Clutha District Council-owned mixed-use rural water supplies under the Three Waters reform. 

Council-owned mixed-use rural water schemes are due to transfer to the new Water Services Entities (WSEs) from 1 July 2024 as part of the Three Waters reforms. The Water Services Legislation Bill, currently before Parliament, will implement a recommendation from the Rural Supplies Technical Working Group to enable users of qualifying schemes to seek ownership and operation separate from a Water Service Entity. 

The decision recognises that these supplies provide water for farming purposes as well as drinking, and often have unique community governance, operating and/or funding arrangements, with a strong sense of community ownership that has been in place for many years.

The Department of Internal Affairs (DIA) has been working with the Clutha District Council and farmers involved in the District’s mixed-use rural water supplies to examine ownership and operation options. Independent management consulting firm Morrison Low was commissioned to undertake an assessment that looks at the two options: serviced under Water Services Entity D; or a community user ownership model.

Hamiora Bowkett, Executive Director of the Three Waters Programme for DIA, says “we support the conclusions of the Morrison Low report, including that ownership and operation of mixed-use rural schemes by water services entities will result in lower financial and operating costs for users. We also accept the need for ongoing farmer input to the management and operation of the schemes given that their primary purpose is to support farming activity.”

Scheme Chairs of the Clutha Rural Water Steering Group say “we very grateful to have worked in a collaborative forum with the DIA and Clutha District Council to look at the benefits, and challenges of local community ownership versus going into Water Services Entity D. While there is no recommendation as to which is the best long-term option, it is an important step towards making a fully informed decision.”

Clutha District was selected for the assessment because of the large number of mixed-use rural schemes in the area, and interest from the farmers and council to assess potential options for ownership and operation. 

Clutha District Council Mayor Bryan Cadogan says “The assessment doesn’t make recommendations about whether schemes like ours in the Clutha District should opt out of the Water Services Entity ownership model or not but is available so that people in our community can be better informed if they decide to make such choices.”

While the report does not make recommendations, the findings illustrate issues to be addressed under either Water Service Entity or community ownership. The report will support future decisions by users of Clutha District’s mixed-use rural water schemes on whether or not to seek direct ownership, as well as the approximately 90 such schemes across the country. The report will also inform decisions by Government on how Water Service Entities might best involve farmers in the future management of mixed-use rural water schemes.

Snapshot of the assessment findings:

o Under Community Ownership, there is greater local knowledge and control by users, however costs would significantly increase, individual liability is high, and operational challenges will be difficult to meet at this smaller scale.

o Under Water Service Entity ownership, the scale allows for greater operational capability and capacity, greater ability to access sufficient capital to meet future investment needs, and economic regulation and consumer protection. However, under the current proposed governance arrangements of the water services entities, there is a risk of less influence from those currently involved in running these schemes, and uncertainty around future pricing and service levels until funding and pricing plans are produced. 

Visit the Three Waters website to read the report and find out more about council-owned mixed-use rural water supplies.