Strengthening governance requirements within the Local Government (Water Services) Bill
The Local Government (Water Services) Bill establishes the enduring settings for the new water services system. The objectives of the Bill are to ensure water services are safe, reliable, environmentally resilient, customer responsive and delivered at the least cost to consumers and businesses.
The Bill was introduced to Parliament in December 2024. It reflects key policy decisions announced by the Government in August 2024.
The Bill sets out key details relating to the water services delivery system, the economic regulation and consumer protection regime for water services, and changes to the water quality regulatory framework along with governance requirements for the new water organisations.
The Bill marks a pivotal moment in the governance of the country’s water infrastructure. The reforms could lead to the establishment of numerous council-controlled organisations (CCOs) or water organisations underscoring the critical need for robust governance frameworks. Effective governance and strong leadership will be essential to ensure these entities deliver safe, sustainable and efficient water services.
The approach proposed is deliberately flexible and affords significant scope for councils to choose to deliver internally, or either jointly or severally through a CCO or consumer trust model. The scale of the operations that the water service providers will govern – ranging from small councils managing water services independently to large private regional collaborations – raises significant operational, financial, regulatory and strategic challenges. Independent and experienced governance, technical expertise and financial resources will be essential to manage these complex water services effectively.
In our submission we have recommended a number of amendments and clarifications to further support the intent of the Bill, particularly as they relate to independence of appointments, need for competency-based appointments, complexity of long-term planning requirements, and role clarification between directors and elected members. There are some areas, such as tenure, that we do not consider are best dealt with through legislation, and we suggest guidance could be developed to support local authorities in relation to water organisation governance.
We have also sought some clarification around consumer trusts particularly as they relate to both elections and director appointments and the governance and structure of in-house delivery models. Additionally, we have highlighted our concerns in relation to exemptions, particularly exempting the requirement for competency-based appointments.