Southern Water Done Well

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The Future of Our Water Services: What You Need to Know

Our community faces a big decision about how drinking water, wastewater, and stormwater services will be delivered in the future.

We’ve partnered with three other councils—Clutha District, Central Otago District and Waitaki District—to form Southern Water Done Well. Together, we are working to find the best solutions that ensure sustainable, efficient, and compliant water services for our communities.

What is Local Water Done Well?

The Local Water Done Well legislation requires councils to change how they manage water services, invest more in infrastructure, and comply with stricter government regulations. While this gives councils more control over local water decisions, it also increases central government oversight.

The Government has made it clear that councils must work together to make Local Water Done Well a success.

Why Change is Necessary

Doing things the way we have always done them isn’t an option as current operating models are likely to fall short of meeting new legislative requirements, including financial sustainability.

Water costs are rising due to:

✅ Population and industrial growth
✅ Increasing infrastructure costs for upgrades and renewals
✅ Higher water and wastewater standards
✅ Additional compliance and regulation from Commerce Commission and Taumata Arowai
✅ Ageing infrastructure requiring urgent investment
✅ Mitigation measures to our changing climate

These challenges mean councils must rethink how they deliver water services to meet new regulations and community expectations.

The Journey to Local Water Done Well

The water reforms were introduced to ensure every community in Aotearoa New Zealand has access to safe, clean drinking water while also improving wastewater and stormwater management.

A key trigger for these reforms was the Havelock North gastroenteritis outbreak in August 2016, where 5,000 people fell ill and four people lost their lives due to contaminated drinking water.

Following this tragedy, extensive reviews uncovered serious issues with New Zealand’s water infrastructure, safety standards, and regulatory oversight. These findings highlighted the urgent need for stricter water regulations and significant investment in better water management systems.

Now, through Local Water Done Well, councils are working together to create safer, more sustainable, and future-proof water services for our communities.

The Current Situation

In the Gore District, our Three Waters team looks after drinking water, wastewater and stormwater. We have

  • 5,044 drinking water connections
  • 5,729 wastewater connections
  • 4,913 stormwater connections.

On average, 34% of rates for a Gore property fund water, wastewater and stormwater. In Mataura,it’s 40% of rates!

There’s no external funding for water services. Rates pay for all three waters - these are all sourced through targeted rates by those connected to the services. The Gore District has one of the older pipe networks, and many pipelines will need to be replaced over the next 30 years.We estimate we will spend $254 million over the next nine years on Three Waters capital and operational activities.

Our Challenges

We need to tackle issues with our combined wastewater and stormwater pipelines. About 40% of Gore’s and 24% of Mataura’s networks use a single pipe for both. This creates significant challenges, especially when there’s heavy rainfall. The system can’t keep up, leading to overflows in streets, properties, and the Mataura River. It also puts extra strain on our wastewater treatment plant.

We estimate that separating our wastewater and stormwater pipelines will be a $184 million investment. We also need to expand the capacity of our stormwater network to provide better protection during heavy rainfall. This infrastructure investment will help reduce the risk of property damage, improve safety during storm events, and increase our community’s resilience to changing weather patterns.

Some examples of our big-ticket itemsinclude:

  • • $21.5 million - Trunk main renewals
  • • $29 million - Reticulation renewals
  • • $63 million - Stormwater quality

What are our options?

Option One: A Jointly Owned Council Controlled Organisation. (Councils Preferred Option)

This is our preferred option for numerous reasons, which we’ve covered in our ‘upside’ key points. In short, the option offers clear long-term benefits for water asset management and environmental standards that meet community expectations and new Government regulations.

The Upside

  • Consumers would pay less for water services than under our other two options.
  • Bigger is better! Spreading costs across multiple councils makes water services more affordable for communities than if each council managed them alone.
  • A larger, well-structured entity is better equipped to meet strict water services regulations and reporting requirements.
  • Councils remain directly involved through the shareholders’ group, ensuring a community voice and that the organisation’s activities reflects community priorities.
  • A combined organisation can attract top industry expertise, operate more efficiently, and standardise service delivery.
  • Would be able to access higher levels of debt funding from the Local Government Funding Agency (LGFA).
  • Strategic procurement - buying in bulk and establishing longer-term contracts.
  • Standardisation of asset management systems, practices and data will improve planning across the Districts.
  • A shared workforce increases resilience to staff vacancies and provides improved career opportunities across the Districts.

The Downside

  • Establishing a jointly owned CCO to serve multiple locations will be complex and expensive. However, establishment costs would be debtfunded to ensure they are shared equitably between today’s and tomorrow’s customers.
  • Potential loss of jobs, internal council expertise, and understanding of water services over time.
  • No hands-on council control over managing water assets and how services are delivered.
  • May not be affordable in the long term without additional councils joining the CCO.

Option Two: Stand-alone Council Controlled Organisation.

The Council would set up a separate Council Controlled Organisation (CCO) to manage water services. While the CCO could still initially source some services from us, it would operate independently.

The Upside

  • We would wholly own the CCO, keeping us closely connected and allowing the organisation to focus solely on the Gore District.
  • The CCO would set its budgets and control all the risks of delivering three waters services.
  • Would be able to access higher levels of debt funding from the New Zealand Local Government Funding Agency (LGFA).
  • The CCO would be financially independent from the council, allowing it to more easily meet the future requirements to produce separate financial statements and water services strategies.
  • It would be solely accountable to its customers/communities for the setting of water charges.
  • There would be the certainty of long-term funding, which creates an opportunity to develop long-term, consistent pipelines of projects, creating some efficiencies.
  • Independence and a singular focus on the delivery of three waters services means that the CCO can be better aligned to meet the requirements of economic regulation and deliver the right infrastructure at the right time.
  • Core capability and higher wage jobs remain in the District compared to a jointly owned CCO

The Downside

  • Consumers would pay more for water services than under the other two options. May not be affordable long term.
  • There would be less financial and workforce resilience, as it will be smaller than existing councils and have a smaller revenue base.
  • Capacity and capability challenges smaller organisations have less opportunity to attract skilled, technical staff to specialist roles, so this model doesn’t increase our resilience and capacity to monitor compliance, respond to emergencies, manage risks, and adapt to future challenges like climate change.
  • Additional costs and complexities of establishing a CCO are created, but a stand-alone CCO does not have the scale of benefits that a joint CCO creates.

Option Three: In-house business unit.

This would see us continue managing and delivering water services on our own.

The Upside

  • The in-house business unit’s sole focus would be Gore District.
  • With no significant changes to the day-to-day operational model, existing jobs could be retained.
  • We would maintain oversight and control over the work programme and investment prioritisation (subject to regulatory requirements).

The Downside

  • Higher water charges than a jointly owned CCO. May not be affordable long term.
  • Significant additional financial costs in administration and staff requirements to meet financial and regulatory obligations.
  • Would have difficulty meeting infrastructure investment needs without significantly increasing rates.
  • Unable to access enhanced financing options.
  • We would struggle to fund other important council projects because we would need to borrow heavily for water infrastructure.
  • It would be harder to attract and keep skilled workers, as the current model is less appealing to people looking for career growth.
  • Limited flexibility to control water pricing and investment decisions, under economic and environment regulation.

The Future of Our Water Services: What You Need to Know

Our community faces a big decision about how drinking water, wastewater, and stormwater services will be delivered in the future.

We’ve partnered with three other councils—Clutha District, Central Otago District and Waitaki District—to form Southern Water Done Well. Together, we are working to find the best solutions that ensure sustainable, efficient, and compliant water services for our communities.

What is Local Water Done Well?

The Local Water Done Well legislation requires councils to change how they manage water services, invest more in infrastructure, and comply with stricter government regulations. While this gives councils more control over local water decisions, it also increases central government oversight.

The Government has made it clear that councils must work together to make Local Water Done Well a success.

Why Change is Necessary

Doing things the way we have always done them isn’t an option as current operating models are likely to fall short of meeting new legislative requirements, including financial sustainability.

Water costs are rising due to:

✅ Population and industrial growth
✅ Increasing infrastructure costs for upgrades and renewals
✅ Higher water and wastewater standards
✅ Additional compliance and regulation from Commerce Commission and Taumata Arowai
✅ Ageing infrastructure requiring urgent investment
✅ Mitigation measures to our changing climate

These challenges mean councils must rethink how they deliver water services to meet new regulations and community expectations.

The Journey to Local Water Done Well

The water reforms were introduced to ensure every community in Aotearoa New Zealand has access to safe, clean drinking water while also improving wastewater and stormwater management.

A key trigger for these reforms was the Havelock North gastroenteritis outbreak in August 2016, where 5,000 people fell ill and four people lost their lives due to contaminated drinking water.

Following this tragedy, extensive reviews uncovered serious issues with New Zealand’s water infrastructure, safety standards, and regulatory oversight. These findings highlighted the urgent need for stricter water regulations and significant investment in better water management systems.

Now, through Local Water Done Well, councils are working together to create safer, more sustainable, and future-proof water services for our communities.

The Current Situation

In the Gore District, our Three Waters team looks after drinking water, wastewater and stormwater. We have

  • 5,044 drinking water connections
  • 5,729 wastewater connections
  • 4,913 stormwater connections.

On average, 34% of rates for a Gore property fund water, wastewater and stormwater. In Mataura,it’s 40% of rates!

There’s no external funding for water services. Rates pay for all three waters - these are all sourced through targeted rates by those connected to the services. The Gore District has one of the older pipe networks, and many pipelines will need to be replaced over the next 30 years.We estimate we will spend $254 million over the next nine years on Three Waters capital and operational activities.

Our Challenges

We need to tackle issues with our combined wastewater and stormwater pipelines. About 40% of Gore’s and 24% of Mataura’s networks use a single pipe for both. This creates significant challenges, especially when there’s heavy rainfall. The system can’t keep up, leading to overflows in streets, properties, and the Mataura River. It also puts extra strain on our wastewater treatment plant.

We estimate that separating our wastewater and stormwater pipelines will be a $184 million investment. We also need to expand the capacity of our stormwater network to provide better protection during heavy rainfall. This infrastructure investment will help reduce the risk of property damage, improve safety during storm events, and increase our community’s resilience to changing weather patterns.

Some examples of our big-ticket itemsinclude:

  • • $21.5 million - Trunk main renewals
  • • $29 million - Reticulation renewals
  • • $63 million - Stormwater quality

What are our options?

Option One: A Jointly Owned Council Controlled Organisation. (Councils Preferred Option)

This is our preferred option for numerous reasons, which we’ve covered in our ‘upside’ key points. In short, the option offers clear long-term benefits for water asset management and environmental standards that meet community expectations and new Government regulations.

The Upside

  • Consumers would pay less for water services than under our other two options.
  • Bigger is better! Spreading costs across multiple councils makes water services more affordable for communities than if each council managed them alone.
  • A larger, well-structured entity is better equipped to meet strict water services regulations and reporting requirements.
  • Councils remain directly involved through the shareholders’ group, ensuring a community voice and that the organisation’s activities reflects community priorities.
  • A combined organisation can attract top industry expertise, operate more efficiently, and standardise service delivery.
  • Would be able to access higher levels of debt funding from the Local Government Funding Agency (LGFA).
  • Strategic procurement - buying in bulk and establishing longer-term contracts.
  • Standardisation of asset management systems, practices and data will improve planning across the Districts.
  • A shared workforce increases resilience to staff vacancies and provides improved career opportunities across the Districts.

The Downside

  • Establishing a jointly owned CCO to serve multiple locations will be complex and expensive. However, establishment costs would be debtfunded to ensure they are shared equitably between today’s and tomorrow’s customers.
  • Potential loss of jobs, internal council expertise, and understanding of water services over time.
  • No hands-on council control over managing water assets and how services are delivered.
  • May not be affordable in the long term without additional councils joining the CCO.

Option Two: Stand-alone Council Controlled Organisation.

The Council would set up a separate Council Controlled Organisation (CCO) to manage water services. While the CCO could still initially source some services from us, it would operate independently.

The Upside

  • We would wholly own the CCO, keeping us closely connected and allowing the organisation to focus solely on the Gore District.
  • The CCO would set its budgets and control all the risks of delivering three waters services.
  • Would be able to access higher levels of debt funding from the New Zealand Local Government Funding Agency (LGFA).
  • The CCO would be financially independent from the council, allowing it to more easily meet the future requirements to produce separate financial statements and water services strategies.
  • It would be solely accountable to its customers/communities for the setting of water charges.
  • There would be the certainty of long-term funding, which creates an opportunity to develop long-term, consistent pipelines of projects, creating some efficiencies.
  • Independence and a singular focus on the delivery of three waters services means that the CCO can be better aligned to meet the requirements of economic regulation and deliver the right infrastructure at the right time.
  • Core capability and higher wage jobs remain in the District compared to a jointly owned CCO

The Downside

  • Consumers would pay more for water services than under the other two options. May not be affordable long term.
  • There would be less financial and workforce resilience, as it will be smaller than existing councils and have a smaller revenue base.
  • Capacity and capability challenges smaller organisations have less opportunity to attract skilled, technical staff to specialist roles, so this model doesn’t increase our resilience and capacity to monitor compliance, respond to emergencies, manage risks, and adapt to future challenges like climate change.
  • Additional costs and complexities of establishing a CCO are created, but a stand-alone CCO does not have the scale of benefits that a joint CCO creates.

Option Three: In-house business unit.

This would see us continue managing and delivering water services on our own.

The Upside

  • The in-house business unit’s sole focus would be Gore District.
  • With no significant changes to the day-to-day operational model, existing jobs could be retained.
  • We would maintain oversight and control over the work programme and investment prioritisation (subject to regulatory requirements).

The Downside

  • Higher water charges than a jointly owned CCO. May not be affordable long term.
  • Significant additional financial costs in administration and staff requirements to meet financial and regulatory obligations.
  • Would have difficulty meeting infrastructure investment needs without significantly increasing rates.
  • Unable to access enhanced financing options.
  • We would struggle to fund other important council projects because we would need to borrow heavily for water infrastructure.
  • It would be harder to attract and keep skilled workers, as the current model is less appealing to people looking for career growth.
  • Limited flexibility to control water pricing and investment decisions, under economic and environment regulation.

  • Southern Water Done Well feedback form

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    Feedback is due by 5:00pm Friday 6 June.

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Page last updated: 09 May 2025, 10:12 AM