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Funding for Councils

In July 2021, the Prime Minister and Minister of Local Government announced a comprehensive three waters support package, and has since announced further financial support for councils.

The Government has developed, in close partnership with Local Government New Zealand, a package of $2.5 billion to support the sector through the transition to the new water services delivery system and to position the sector for the future.

Better Off funding guidance and application

Councils can apply for the first $500 million of Crown funding from the Three Waters reform better off support package by submitting an online Funding Proposal.

The remaining $1.5 billion is available from 1 July 2024. The funding is for local government to invest in local community wellbeing.

This package will ensure that local authorities are supported through the transition process, the financial impacts of reform are managed and importantly, all councils and communities will transition to the new system for delivering three waters services in a better position.

There are two broad components to this support package:

  • $2 billion of funding to invest in the future of local government and community wellbeing, while also meeting priorities for government investment (the “Better Off” component)

  • $500 million to ensure that no local authority is financially worse off as a direct result of the reform (the “No Worse Off” component).

The Better Off component of the support package, which comprises $1 billion Crown funding and $1 billion from the new water services entities, is allocated to territorial authorities on the basis of a nationally consistent formula that takes into account population, relative deprivation and land area. This formula recognises the relative needs of local communities, the unique challenges facing local authorities in meeting those needs, and differences across the country in the ability to pay for those needs. Territorial authorities will be able to use this funding to support the delivery of local wellbeing outcomes associated with climate change and resilience, housing and local placemaking.

The No Worse Off component of the support package comprises an estimated $500 million contribution from the new water services entities to ensure that no local authority is in a materially worse position financially to continue to provide services to its community as a direct result of the reform. This includes an up to $250 million provision to support councils to meet the unavoidable costs of stranded overheads associated with the transfer of water assets, liabilities and revenues. The remainder of the No Worse Off component will be used to address adverse impacts on the financial sustainability of territorial authorities.

In addition to a $2.5 billion support package, the government has set aside a $44 million fund to assist councils with the costs and resourcing necessary in early transition work to set up the new three waters system.

Transition Support funding guidance and application

On 19 July 2022, the Associate Minister of Local Government Kieran McAnulty announced a $44 million support package for councils to ensure that they have the necessary resourcing to implement the Three Waters reforms.

This will provide every council with at least $350,000 in additional funding to support transition-related activities, including:

  • Gathering transition-related information, including responding to requests for information from the National Transition Unit.
  • The supply of information and resource to support councils’ preparation for transition.
  • Participation in local transition activity and local transition teams.
  • Responding to any additional requirements or processes mandated by the Water Services Entities Bill (once enacted) and supplementary legislation
  • Any other activities that your council reasonably considers necessary to support transition and that give effect to the intent behind the funding agreement.

This funding recognises the short-term challenges that councils are facing, especially under the strain of staff shortages, winter illnesses and COVID. It acknowledges that resources are needed to help ensure that Aotearoa New Zealand’s communities needs are met, and the benefits gained through the improved delivery of three waters services are achieved.

To access the funding, councils will need to complete and return the application form to threewaters@dia.govt.nz with a copy to legalnotices@dia.govt.nz by 30 September 2022.