Palmy partners with other Councils on new regional water organisation
Published on 04 June 2025
Palmerston North City Council has today confirmed, as a first step, it will form a new water services organisation with Horowhenua and Rangitīkei District Councils.
Whanganui and Ruapehu District Councils are yet to make their decision, however the door is open for them to join in the coming weeks.
The new jointly owned council-controlled organisation (CCO) will be responsible for delivering drinking water and wastewater services across the districts. We will continue to consider how we manage stormwater, as our stormwater network also involves our roading network and parks and reserves. One option we’re considering is that we retain ownership of our stormwater assets but contract the day-to-day operations to the new organisation.
The changes to how water is managed are a result of the government’s Local Water Done Well programme. It requires councils to manage water differently in the future, with new regulations and borrowing rules which encourage council collaboration. As recently as last week, councils received a letter from the government reinforcing the need for regional collaboration.
Today’s decision follows years of work preparing for water reform and more intensive work over the past year of financial modelling, inter-council collaboration, and community consultation.
It also aligns with clear direction from central government, which has repeatedly encouraged councils to work together on water services.
Mayor Grant Smith said the decision represents a future-focused response to increasingly complex challenges in the water sector.
"We are dealing with tougher regulations, ageing infrastructure, and major investment needs. Working with our neighbouring councils means we can meet these challenges more efficiently, while keeping community interests at the centre. We also want to thank the many people who gave feedback during the consultation earlier this year. The community strongly supported collaboration with other councils, and this decision reflects that."
Under the new financing rules set by the government, Palmerston North doesn't have the option to stand up an in-house business unit. That’s primarily due to the scale of planned infrastructure upgrades, particularly the Nature Calls wastewater project.
Many other councils across the country are in the same position as us. We need to balance investment across a wide range of activities, including our transport network, libraries, parks, rubbish and recycling, community facilities and much more.
Under the new model, councils, as shareholders, will continue to own their water assets. However, the new organisation will take over daily operations, infrastructure management, and service delivery. A shareholder council will be established that includes elected members from participating councils, who will elect an independent, skills-based board to govern the new organisation. The organisation will be subject to a Statement of Expectations, established by the shareholding councils, as well as regular reporting to councils and government regulators.
Mayor Smith said the structure balances local control with regional strength.
"This is not about giving up control. It is about delivering services in a smarter and more sustainable way. We will still own our assets, but we will manage them in a way that gives us the best chance of success and the best outcomes for water services for our community and region."
The councils will now begin working on their water service delivery plan. This needs to be submitted to the government before 3 September. The government has indicated we will hear back on whether our plan has been accepted in mid-December.
At the same time, we will work with the partner councils on confirming governance arrangements and creating a statement of expectations to establish the foundational documents required for creating the new organisation.
At this stage, we expect to start transitioning to a new water organisation in 2026/27.
Mayor Smith says residents will be kept informed throughout the process via the Council's website and social media channels at key milestones.
"We are grateful to our community for the time and thought they put into this process. Your input helped shape a decision that will benefit our city and our region well into the future."