The Rural Supplies Technical Working Group recently released its Report into rural drinking water supplies. This is relevant specifically to those councils with rural drinking water and mixed-use supplies in their rohe. In this article our Chief Executive Karen Thomas outlines key takeaways from the Report and shares thoughts on future directions for this work.

Kia ora koutou,

Taituarā would like to thank the Chair and members of the Group, including our own members Clive Manley, Ruapehu District Council Chief Executive and the recently retired Rob Phillips, former Environment Southland Chief Executive. They have worked hard to ensure future rural drinking water delivery arrangements achieve safer, better and affordable drinking water services for rural New Zealanders.

They have clarified the issues and options for rural water supplies including:

  • the transfer of council-owned rural schemes to the water services entities,
  • drinking water and wastewater services to marae and papakāinga,
  • governance, management and operational matters relating to safe rural drinking water supplies, regardless of ownership.

Key takeaways from the Report are:

  1. The advice to the Department of Internal Affairs recommends that Council-owned supplies transfer to the new water entities.
  2. Privately owned rural schemes and supplies will not transfer to the new water entities.
    • In specific and limited circumstances, for some mixed-use rural water supplies (e.g. those that predominantly supply stock or irrigation and drinking water) the group proposes a five-step process that could be used to transfer the council supply into user ownership rather than ownership by water services entity. This process provides for user input and decision making in conjunction with councils.
    • Where ownership of a mixed-use rural supply is unclear the Group recommends a process that enables case-by-case consideration and negotiation between affected parties.
    • Any mixed-use rural supply that does not transfer to a water services entity will not stay in council ownership.
    • Any consideration of transferring mixed-use rural supplies to their users should occur well before 1 July 2024.
    • The transfer process must ensure that all the relevant assets, liabilities, interests, obligations and responsibilities are resolved. A plan to do this is required.
  3. Reform is not regulation – three waters reform covers Council-owned rural water supplies. Where drinking water is supplied it must be safe.
    • The Group supports a proportionate, cost-effective, context and risk-based approach to small and mixed-use supplies no matter who owns them.
    • All drinking water schemes are affected by the Water Services Act 2021 and will be required to supply safe drinking water.
  4. All drinking water schemes are affected by the Water Services Act 2021 and will be required to supply safe drinking water.
    • Existing drinking water supplies that were not registered with the Ministry of Health on 15 November 2021 have until November 2025 to become registered and seven years to provide drinking water safety plans for them, or to adopt an acceptable solution. This affects approximately 75,000 small drinking water suppliers.
    • For small and rural suppliers that were registered with the Ministry of Health on 15 November 2021 they need to provide drinking water safety plans, or to use other compliance pathways like acceptable solutions, by 15 November this year. Taumata Arowai is currently focusing on these suppliers and tools to assist them.
  5. Taituarā encourages CEOs who have Council-owned rural water supplies, particularly mixed-use supplies, to engage with and work closely with Taumata Arowai, users (and the water entities when then are set up) to ensure there is a good understanding of the operations and risks associated with their supplies and an affordable, cost-effective, risk-based, compliance pathway is available to them. Encouraging privately owned schemes to do the same is also advised.

In addition the Report includes recommendations on:

Fair Pricing and Charging

The Group was also clear that rural users should not subsidise urban users, pricing and charging should be fair, and that geographic price averaging should only be between similar types of user. In other words, the price charged to rural users should only be averaged with other rural users (and not for example commercial or industrial users).

Further work and substantial investment required

The group also recommends substantial investment to provide consistently safe drinking water for marae and papakāinga, recognising historic inequities; supports the recommendations made by the Working Group on Representation, Governance and Accountability and the use of local contractors and staff where possible.

Read the full report and supporting material

The full report as well as other material are available on the Department of Internal Affairs website. A list of the recommendations can also be found at the bottom of this page.

Future directions

While many of you will have realised that the original intent was to only transfer Council owned rural water supplies, we encourage you and your staff to engage with Taumata Arowai on practical solutions for rural supply schemes in your area (should you have them) and encourage private scheme owners to do so also.

It is likely you will need to explain to some rural advisory groups, rural water supply committees, private owners, managers, operators, users, as well as some elected members (today and post election) the differences between the reform proposals and the regulatory requirements to provide safe drinking water. I hope this note helps.

My team will also provide relevant material for your asset managers, comms staff and strategic planning advisors.

Ngā mihi,

Karen Thomas
Taituarā Chief Executive


Council-owned mixed-use rural supplies


All rural drinking water supplies owned by councils should transfer to the water services entities.


The group supports strong protection against privatisation of council-owned rural water supplies, and notes that this is already provided for in the Water Services Entities Bill. The group recommends that the provisions to protect against privatisation of council-owned rural water supplies is further strengthened through cross-party support to ensure these provisions are enduring.

Transfer process to users


There should be a mechanism—in specific and limited circumstances—for some mixed-use rural water supplies to transfer into user ownership rather than ownership by water services entity.


A five-step process to be implemented to determine if a mixed-use rural supplies transfers to its users:

  • Council identifies mixed-use rural supplies
  • Council assesses feasibility and engages with mixed-use rural supply’s users, Taumata Arowai and technical experts
  • Council consults the water service entity
  • Confirmation by an independent panel
  • Referendum of users.


Factors to be considered by all parties in the process include the criticality of the drinking water supply to consumers, the size of its drinking water customer base, the predominant use of the scheme, and the capability, capacity and financial ability of an alternative owner/operator to ensure safe drinking water is supplied to consumers.


Users of the mixed-use rural supplies will also be required to be fully informed of the consequences of transferring mixed-use rural supplies to user ownership during the referendum process.


There be a disputes resolution mechanism as part of the decision process to transfer mixed-use rural supplies to user ownership.


A 75 percent majority of votes cast in the referendum would be required for a referendum to succeed.

Rural supplies with unclear ownership


A process to be established to enable case-by-case consideration and negotiation between affected parties where ownership of a mixed-use rural supply is unclear.

Pricing and charging


There should be no cross-subsidies between three waters services i.e. drinking water, wastewater or stormwater services. Rural service users should generally not be subsidising urban service users.


Consultation on pricing and funding plans, including the types of charges proposed (e.g. a mixture of fixed and volumetric charges), for the new water services entities to be undertaken before the entities ‘go live’ and before domestic volumetric pricing is considered for new areas.


Water services entities to have the discretion to ensure pricing and charging is fair, using geographic averaging, with some discretion on the way each water services entity implements it after consulting users.


Any use of geographic price averaging to be limited to the same service and similar ‘classes’ of user so that price averaging between agricultural and horticultural water supply, and domestic drinking water supply will not occur.


There should be some exceptions to geographic averaging, including where communities have sought a different level of service to that which is provided elsewhere in the water services area.


Any increase in prices to achieve geographically averaged prices should be incrementally introduced (say over five years) to reduce price shocks.

Governance, ownership and management


The recommendations made by the Working Group on Representation, Governance and Accountability to be taken up by the Government, and governance representation from rural schemes to feed into the water services entities, to providing a mechanism to retain local voice and provide input into management and funding decisions relevant to the supply.


Support 50/50 co-governance at the regional representative group level, noting that the entity board will make skills-based appointments.


For rural supply schemes that are transferred to the entities, the group recommends that any specific scheme governance (and management) arrangements involving users are discussed between the communities served by the schemes and the establishment entities, and potentially provided for in entity constitutions or other agreements as appropriate.


Water services entities need to consider current arrangements related to management of the mixed-use rural supplies that transfer to them.


Water services entities to consider providing support to private mixed-use rural supplies on a contractual basis to ensure access to safe drinking water.


Operations and maintenance of mixed-use rural supplies to be performed by staff and contractors from the local community where possible.

Rural marae and papakāinga


Water services entities to support the resolution of service provision and affordability for rural marae and papakāinga drinking water and wastewater schemes. Additional support needs to be sustainable and enduring (i.e. not just a one-off funding boost).


Water services entities to prioritise the assessment of marae and papakāinga (including how to give effect to Te Mana o te Wai) when they are established.


Develop a coordinated work programme to address geospatial information gaps relating to marae and papakāinga.


Establish an additional working group to consider the issues around rural marae and papakāinga. Expressions of interest for group members to be invited. The working group should be formed as soon as practicable.

Regulatory proposals


Further consideration be given to the collective impact of the regulatory proposals that are being developed by DIA, Taumata Arowai, and Ministry for the Environment.


Taumata Arowai to advance work in developing multiple compliance pathways for rural and small drinking water supplies, as quickly as possible.


Clear definition of ‘Reticulation’ is provided to drinking water suppliers, consumers, and Taumata Arowai, providing certainty to ensure that the regulatory regime is suitably proportionate.


Taumata Arowai to develop option for exemptions for chlorine in certain drinking water supplies, in order to reduce the regulatory burden for small and rural drinking water suppliers.


DIA and Taumata Arowai to work with the rural sector to undertake further analysis on the scope and scale of the small and rural supply issues and developing options to resolve them.