Windbag: Metro Water to the rescue

The Spinoff

12 hours ago

Wellington's councils have agreed to create a new water service entity. Will it be the answer to the region's pipe crisis?
Windbag is The Spinoff's Wellington issues column, written by Wellington editor Joel MacManus. Subscribe to the Windbag newsletter to receive columns early.
It's no secret that Wellington's water network is a shambles. At this point, it's one of the city's defining traits. Just last week, Johnston Street became the latest in an ever-growing list of streets to be flooded by a burst pipe. There's really no need to rehash all the ways in which the water system is failing, but here are a few stats: 45% of the Wellington region's drinking water is lost to leaks before it reaches the tap; 21% of pipe infrastructure is worn out; and for wastewater pipes, it's 33%. The region's water infrastructure needs $15-17b of investment over the next 20-25 years to maintain service and keep up with population growth.
There is plenty of blame to go around. The existing water entity, Wellington Water, has been shambolic at times. Councils have underfunded water for decades. Earthquakes haven't helped the pipes either. If you want to point the finger at someone, check out my handy user's guide to working out who to blame for Wellington's water issues.
'Our three waters system has for many years been largely out of sight, out of mind,' a report by Andy Foster's mayoral taskforce on three waters concluded in 2021. Their recommendation was clear: 'Tinkering is not going to cut it. Transformational reform is required.' Then, councils and the government spent four years tinkering and arguing about the exact specifics of that transformational reform.
There are no organisational restructures or legislative tweaks that can change the underlying problem – namely, that all the pipes are munted and someone has to pay for it. But it has been clear for years that Wellington Water needed to be replaced with a new, more powerful entity with different financial powers. First, this change was going to be part of Labour's Three Waters Reforms. Then, Labour's Affordable Water Reforms. And now, they're part of National's Local Water Done Well.
A technical advisory group led by former mayor Kerry Prendergast (one of the people most responsible for the chronic underfunding) released a lengthy report last year on a recommended regional approach. With the final vote last week, all five of the metropolitan councils – Hutt City Council, Porirua City Council, Upper Hutt City Council, Wellington City Council and Greater Wellington Regional Council – have now confirmed they are on board with the plan.
Wellington's new water entity is called Metro Water. Except it won't actually be its name. It's just a working title until they think of a better one. But for now, Metro Water is the name in all the documents, so it's what I'm going to use. As of July 2026, Wellington Water will be dissolved, and Metro Water will be in charge of all water services in wider Wellington.
It won't be a complete changing of the guard. Metro Water will absorb all of Wellington Water's staff below the senior management level. Like Wellington Water, it will be a council-controlled organisation owned jointly by the five councils, with an independent board featuring representatives from Ngāti Toa Rangitira and Taranaki Whānui (yes, that's right, co-governance *gasp*).
However, rather than councils owning the pipe assets and paying Wellington Water to run them, councils will transfer ownership of their pipes to Metro Water's books. Importantly, Metro Water will have the ability to take out loans directly. This matters because most councils are approaching their borrowing limits. Metro Water will be able to take out larger loans and spread the costs over a longer term, which means lower annual costs.
The technical advisory group estimates this could lower ongoing costs up to a third. The annual cost per connection, which currently sits at $1,711, would rise to $2,596 over 20 years under Metro Water. The business-as-usual approach is estimated to cost as much as $4,000 per year. The downside for Metro Water is that an independent entity likely won't have access to the same cheap loans that councils get. So they're essentially paying more, but spreading it over a longer period.
This is essentially the same accounting trick that Auckland Council used earlier this year to separate Watercare's balance sheet from the council's, which was a large reason why Auckland had one of the lowest rate increases this year, at 5.8% for council rates and 7.2% for water rates. By comparison, Wellington City Council had an all-inclusive 12% increase.
For ratepayers, there will be one obvious immediate change: water metering. Households will receive a separate bill for water usage. On the whole, this will be more equitable – suburbanites who waste bathloads of water on oversized lawns will pay more than people living in water-efficient apartments and townhouses. But the change will also sting renters, who will find themselves paying a separate water bill that was previously lumped in with their rent.
The most surprising part of this new solution is how unsurprising it is. There is very little here that is different to how things would have looked under Labour. The Three Waters Reforms didn't make sense everywhere – it was messy in Auckland, which already had a combined water services operator, and it was controversial in rural areas, where there were concerns about how it could affect water access for irrigation (and of course, there was lots of scaremongering about co-governance) – but in Wellington, it was always obvious that the solution would involve councils transferring ownership of the pipe assets to a combined independent entity that would introduce water metering. National's policy gave councils the ability to choose their future, while Labour's would have dictated it. But in the end, they reached the same outcome.