FAQs
Why is this consultation happening?
Consideration of water reform has been underway in Aotearoa New Zealand for almost a decade, reflecting ongoing efforts by successive governments to ensure safe, reliable, and sustainable water services.
Local Water Done Well is the current government’s plan to address Aotearoa New Zealand’s water infrastructure challenges through an increased focus on long term financial sustainability. The Local Government (Water Services Preliminary Arrangements) Act 2024 (WSPA Act) is the first legislation to support Local Water Done Well and sets out several transitional provisions, including a requirement for all councils to prepare and submit a Water Services Delivery Plan (WSDP) to the Government.
The WSPA Act requires all territorial councils to consult on at least two delivery models, one of which must be the existing approach, and the other required to be either a Water Services Council Controlled Organisation (WSCCO) or a joint local government arrangement.
What is a Water Services Delivery Plan?
A WSDP must describe the current state of water assets and services and identify the future arrangements for delivery of water services and how financial sustainability of water services will be achieved.
Why has Council indicated its preferred model is a WSCCO?
We’ve carefully considered a range of different models to determine the best way to deliver water supply, wastewater, and stormwater services in the district, and we’re proposing a new Water Services Council Controlled Organisation (WSCCO) as our future delivery model for water services.
A Water Services Council Controlled Organisation offers an approach that introduces independent expert governance to exclusively prioritise and deliver water services in the best interests of the Queenstown Lakes District and free from political influence, and all while meeting regulatory requirements.
Minimising the cost to households for water services in the long term has been an essential part of QLDC’s assessment of the different models available, given costs are already projected to increase significantly as outlined in the Long Term Plan 2024-2034 and regardless of any change to the delivery of water services. Other considerations included a solution’s ability to attract and retain the best staff, adapt to changing requirements without disruption, provide for effective and efficient management and delivery of water services, maximise public value and minimise waste, and enable community interests and priorities.
With the proposed WSCCO model, we estimate household charges for water to be, on average, 5.2% higher in the short-term (2024-2034) compared with an in-house model, but 10.1% lower on average in the long-term (2034-2044) compared with that same in-house model.
WSCCOs have different borrowing requirements from the Local Government Funding Agency (LGFA), which would require higher water charges initially to deliver the same services and capital projects QLDC currently has planned. This does mean the WSCCO would generate more revenue in the short-term, repaying debt faster and leaving the WSCCO with an estimated $37 million less debt than the in-house model by 2034.
With less debt and less costs associated with interest on borrowing, household water charges with a WSCCO are estimated to drop below the in-house model.
How would a WSCCO be funded?
It is expected the WSCCO would access borrowing through the Local Government Funding Agency (LGFA), which provides finance to the local government sector at preferred rates. QLDC would need to support these borrowings, either by way of a guarantee or an uncalled capital facility, which could potentially be called on in the unlikely event of a default. This support would be identified in our financial notes but not listed as a debt because it's unlikely the WSCCO would default. If needed, the WSCCO would increase water charges to repay the loan, in line with legislative financial sustainability requirements.
WSCCOs have different borrowing requirements from the LGFA compared to councils, which would require higher water charges initially. As the WSCCO would still deliver the same services and capital projects as currently planned, this means it would generate more revenue while costs remain the same, meaning debt can be repaid more efficiently. By 2034, the WSCCO is estimated to have $37 million less debt than the in-house model, reducing the combined debt of QLDC and the WSCCO by $37 million.
How would the in-house delivery of water services work as an alternative?
Under this alternative option QLDC would continue to deliver water services inhouse. However, this model would also be subject to various new requirements which will be introduced by the LGWS Bill – including meeting statutory objectives and financial principles (ringfencing and financial sustainability requirements), separate planning and reporting requirements for water services, and being subject to a new economic regulation regime.
Changes would have to be made to maximise QLDC’s ability to comply with the new legislative and regulatory frameworks for water service delivery. This could include establishing a separate water services directorate with a General Manager that reports directly to the Chief Executive. Analysis of this option, and comparison to the WSCCO option, has assumed that changes to optimise performance are made.
Will water services be more expensive for ratepayers under a WSCCO?
Based on expenditure outlined in the Long Term Plan and considering adjustments from the Annual Plan 2025, QLDC is already projecting average annual household costs for water could increase from approximately $1,500 today to $4,500 by 2034, regardless of which delivery model for water services is selected. Household costs would increase further under both delivery models to meet new financial sustainability requirements and for either model to operate in a new, more complex regulatory environment.
Water charges are anticipated to be higher under a WSCCO in the short term, but lower under a WSCCO in the longer term due to LGFA borrowing arrangements. As mentioned above, a WSCCO must increase revenue in the short term to meet the LGFA requirement, but because it isn’t spending any more than is already planned, the additional revenue will repay debt faster. The WSCCO then has less debt and therefore lower interest and debt repayments in the longer term, which will require less revenue.
Would a WSCCO reduce Council control over water services?
The proposed WSCCO would be fully owned by QLDC, but the organisation would be governed by its own independent specialist board and management. QLDC would be the only shareholder and would appoint board members based on the skills and experience needed for proper governance of the new organisation.
The developing legislation, through the LGWS Bill, will prevent a WSCCO from being privatised which means that the WSCCO will remain wholly owned by QLDC.
Would the proposed WSCCO lead to privatisation of water services?
No. The developing legislation, through the LGWS Bill, will prevent a WSCCO from being privatised which means that the WSCCO will remain wholly owned by QLDC.
How would the proposed WSCCO affect debt that QLDC is planning to take on through the LTP 2024-2034?
A large portion of QLDC’s current and future debt is tied to water services. Our proposal recommends transferring ownership of water assets and the responsibility for water services to a WSCCO, along with the associated debt. Currently, QLDC uses revenue from all activities to secure debt for water services, which is repaid through water-specific rates. This limits the debt capacity available for other QLDC activities.
By moving water services to a WSCCO, QLDC would have significantly more debt capacity for non-water related investments.
How does the proposed WSCCO compare with the in-house model for average household costs?
Until approximately 2034, household water charges with a WSCCO are expected to be on average $174 (5.2%) higher each year than with an in-house model.
Over the longer term (2035 – 2044), WSCCO charges are expected to be on average $491 (11.2%) lower each year than an in-house delivery model.
When will the Council make a decision on the proposal?
The Council intends to make decisions about the proposal in a Council meeting on Thursday 31 July 2025. This meeting will be open to the public.
What happens after the Council makes a decision on the proposal?
We then need to prepare and submit a Water Services Delivery Plan (WSDP) to Department of Internal Affairs (DIA) by Wednesday 3 September, describing the current state of our water assets and services as well as the future arrangements for delivery of water services.