Supporting Councils through three waters uncertainty

Understanding how to fund the required investment in three waters is a significant challenge many local authorities are grappling with.

Councils are facing a substantial and increasing programme of works to deal with factors such as aging infrastructure, new regulatory requirements, as well as resilience to climate change and natural disasters.

A key element of the proposed three waters reform is the intention to create new regional water service entities, that would be responsible for three waters service delivery. The entities’ scale and balance sheet separation from local authorities is intended to enable greater capacity to borrow more money and optimise debt to fund the significant long-term investment required in water services infrastructure.

However, the recent election and transition to a new government coalition with different priorities has raised uncertainty around the future of three waters reform. While details of the Government’s three waters plan are still to be released, it appears responsibility for three waters could remain with local authorities, along with the significant challenges around funding the required investment.   

It is clear that the sector is already undergoing a major change process and whoever has the responsibility for future delivery will have a responsibility to do much better than we have been to date, and this will come at significant cost. How that can be sustainably funded is a question many councils are grappling with.

Rationale recognizes this uncertainty and has been working with several local authorities to support them in understanding how a range of future scenarios could impact their balance sheet and levels of service.

 This has included:

  • Articulating and defining the full impacts of underinvestment in three waters (including regulatory liabilities, flow on economic / productivity, social, cultural and environmental impacts).
  • Developing possible options to consider moving forward (importantly those which may address key constraints around funding).
  • Evaluating the risks and benefits of these various scenarios.
  • Providing a platform from which local authorities can commence engagement with decision makers and key stakeholders about how to navigate this uncertainty.

Our team are experts in the three waters space and we’re always keen to share our learnings. If you have any questions or would like to know more, please get in touch.