By Nick Leggett, Chief Executive, Infrastructure New Zealand
New Zealand’s water system is changing – structurally, institutionally and culturally.
The change we are seeing in Aotearoa New Zealand’s water system is necessary. For too long, we have under-invested in drinking water, wastewater and stormwater assets; relied on goodwill rather than system discipline; and deferred hard decisions about resilience, growth and environmental protection.
As we move into a new era of water organisations delivered under Local Water Done Well, one thing must be clear from the outset: passing legislation and standing up new entities is not the same as fixing the system. Regulation is essential, but regulation alone will not deliver safe water, resilient networks or public confidence. If we treat reform as a box ticked once structures are in place, we will fail.
The transition will take time. At times it will be uncomfortable, and it will only succeed if we actively back the change, respond to emerging problems and keep communities at the heart of every decision.
Reform will be a journey, not a magic switch. The creation of new water organisations represents one of the most significant public service transformations New Zealand has attempted in decades. The scale of the task, absorbing assets, harmonising pricing and standards, and building capability in organisations and the wider sector, while establishing trust with communities and iwi partners, cannot be underestimated.
International experience, particularly from the United Kingdom, shows that institutional reform is a long game. Even with strong regulators and clearly defined roles, water systems take years to stabilise and decades to mature. Early years are often marked by tension – between regulators and operators, between national expectations and local realities, and between investment needs and bill affordability.
New Zealand should expect the same. We should not interpret early friction as failure, nor should we pretend it won’t happen.
The worst possible response would be to declare the job done once regulation is in place and organisations are legally established. That mindset risks creating brittle institutions that are technically compliant but socially disconnected. Nobody should be thinking ‘job done’.
Strong regulation matters. It sets minimum standards, enforces environmental outcomes, and provides transparency and accountability around asset renewal and maintenance; however, regulation is not a substitute for leadership, investment or community trust. Critically, economic regulation will take time to develop and mature.
The UK experience is instructive. Despite being one of the most mature water regulatory regimes in the world, the system continues to face public anger over environmental performance, affordability, and perceived distance between water companies and communities. Regulation has driven improvements, but it has not eliminated public skepticism. Many will say that private ownership of most UK water entities is responsible for this situation, paying dividends to investors rather than investing in the assets. That is possibly true, but where was the effective regulation to stop this from occurring?
The lesson for us is that regulation works best when paired with strong operators, clear public narratives, and continuous engagement with customers and communities.
New Zealand’s new water entities will need to meet high regulatory expectations as the regulators mature, but they will also need to explain what they are doing and why they are doing it. Water reform will only succeed if members of the public believe it is being done with them, not to them. These assets have been built by communities over generations. They are paid for by households and businesses. When something goes wrong – boil water notices, sewer overflows, flooding – it is the local people who bear the consequences.
If communities feel disconnected from decision-making, confused about who is responsible, or shut out of conversations about cost and performance, then support for reform will erode quickly. Once lost, that trust will be difficult to regain.
This is particularly critical during the establishment phase of new organisations. Change fatigue is real. So is skepticism. Clear, consistent communication about priorities, trade-offs, timeframes and costs must be a constant, not an afterthought. New water organisations will have to be rooted in their communities, and they should be over-communicating from day one. New water leaders should ask simple questions: Would a reasonable customer understand why these decisions are being made? Have we explained why bills are increasing?
The separation from councils means that greater public interest should naturally be borne by water organisations. Greater scale and scope will have a benefit on asset condition, and performance and delivery over time, as borrowing and investment will be able to be increased to meet community and regulatory expectations. Elected councils as shareholders might start out as being the ‘critical friends’ of water organisations; however, if things go badly, they may end up being more ‘critical’ than ‘friend’, which will pile additional public and media pressure on those entities.
A false choice often creeps into water debates: community affordability versus environmental protection; asset investment versus customer bills; national standards versus local voice. These goals are interdependent. Poor environmental outcomes ultimately drive higher costs. Under-maintained assets fail more often and cost more to fix, which we are seeing in the Wellington region, where network fault runaway is occurring in the water network as fixes consume more time, money and focus, and planned maintenance budgets are eroded as a result.
This all means that entities need to focus on:
- clearly linking investment decisions to service improvements
- showing how environmental standards translate into healthier waterways and safer water, and doing so in partnership with iwi
- being up-front about what it costs to maintain assets that meet modern expectations.
Communities are far more likely to support change when they understand the logic behind it and can see tangible benefits. One of the most consistent lessons from here and overseas is how limited our collective understanding of water assets remain.
Many networks lack complete, consistent data on condition, performance and risk. That makes long-term planning harder, investment less targeted and public conversations more abstract than they need to be. Building a robust, shared understanding of assets is foundational. It underpins everything: resilience planning, climate adaptation, growth support and affordability.
This is not glamorous work; water organisations won’t get thanked for doing it better, but it is essential.
There is no escaping the reality that New Zealand needs to invest significantly more in water infrastructure over coming decades. Growth, climate change, higher standards and historical under-investment all point in the same direction.
Investment must be:
- long-term, not reactive
- planned across whole asset lives, not electoral cycles
- matched with delivery capability, and building workforce capacity and skills.
While scale brings benefits in technical capability, financial strength and consistency, it also carries risks. Large organisations can drift away from the communities they serve if not deliberately anchored. Local knowledge and accountability matter in water. The new water entities must find ways to remain present, accessible and responsive in the regions.
Perhaps the hardest discipline in reform is persistence. There will be long moments when the transition feels slow, messy or politically uncomfortable. That is when pressure to retreat, reset or over-correct will be strongest. New Zealand needs to stick with reform, but not blindly. We must be willing to adjust settings, respond to clear evidence and address unintended consequences as they emerge.
Backing reform means resourcing it properly, supporting new organisations through early challenges, and resisting the temptation to declare success – or failure – too early.
Water reform is not just a structural exercise; it is a renewal of our social contract to preserve the environment, maintain public health, and ultimately provide confidence to business and communities that what falls from the sky for free is delivered with value to our taps.
If New Zealand gets this right, we can deliver safer water, healthier environments, stronger resilience and fairer outcomes for future generations. If we lose the public along the way, the road will be rocky and, ultimately, more expensive.