Ever since the government decided to hand the bill for wastewater upgrades to ratepayers, we’ve all been waiting to find out what that really means for our wallets. So far, it’s been a lot of shrugging and sidestepping — and the last government’s attempt to shuffle the costs around with new entities didn’t exactly inspire confidence.
A couple of weeks ago, we asked our Mayor for answers. No luck. A recent council press release? Same story.
That’s when we turned to Tamahere councillor — and part-time Raglan local — Mike Keir. He didn’t mince words, and his message was clear: big rate hikes are coming, especially for wastewater. If you own property in town, this one’s going to hit close to home.
Under the current Long Term Plan, households on full council water services could see their targeted wastewater rates more than double by 2033 — climbing from $1,567 to over $3,300 if projected increases of 14 percent this year and 8 percent annually continue.
As water treatment costs rise, debt balloons and housing developments are delayed, Keir is signalling he may take a shot at the mayoralty to push for structural change.
A National Crisis, a Local Bill
The push to reform New Zealand’s ageing water infrastructure began with tragedy. In 2016, thousands fell ill and several people died after drinking contaminated water in Havelock North — a wake-up call that rippled across the country. In its aftermath, the government imposed stricter water quality standards on every council.
To meet them, the Labour government initially proposed creating four large regional entities, modelled on systems in Scotland and Wales. That centralised plan was eventually scrapped. Instead, councils are now expected to tackle upgrades themselves, by forming voluntary regional clusters.
“We’ve got about 60 councils — other countries have one or two water companies. That creates a lot of duplication and inefficiency,” says Keir.
“The previous government came up with a model where the cost was going to be spread nationally. That’s gone,” he explains. “Now we’re doing a national upgrade — and paying for it locally.”
The infrastructure may be national, but the bill is landing in local letterboxes.
How Much Will It Cost Us?
Quite a bit — and for many ratepayers, the increases are only just beginning. Households on full council water services are facing a maximum of 14 percent rates rise this year, followed by ongoing annual increases of 8 percent through to 2033. If those projections hold, on the higher end, a rates bill of $1,567 today could rise to over $3,300 within nine years — more than double. Even households not connected to council water are looking at a 6 percent increase this year and could see their rates climb by around 96 percent over the same period.
These aren’t isolated spikes — they compound over time, adding up quickly. “It just keeps stacking up,” says Keir.
Why Will It Cost So Much?
Much of the pressure on councils comes from the Government’s decision to put responsibility for water infrastructure on to local authorities — and by extension, ratepayers.
Waikato District Council currently collects around $35 million in annual revenue from water services, mostly from the 14,000 to 15,000 households connected to council water and wastewater. These households typically pay between $2,000 and $2,500 per year.
But that revenue falls well short of what’s needed. Over the next decade, council is forecasting:
- $70 million in water capital expenditure in the 2025–26 financial year
- Over $120 million annually from 2029 to 2031
- Spending easing back to $70 million in the three years after 2033
Raglan’s new wastewater plant — replacing a 60-day pond system with a modern three-day treatment process — cost nearly $30 million — funded by a ratepayer base of just a few thousand. “We’re already operating on a district scale, where smaller communities are subsidised,” Keir notes. Similar upgrades are on the horizon for Huntly and Ngāruawāhia.
At the same time, operational costs, maintenance, and compliance requirements continue to rise. Targeted water rates alone don’t cover these expenses, meaning debt and general rates are being increasingly relied upon to bridge the gap — placing additional pressure on ratepayers across the district.
Treading Water: Why Councils Are Struggling to Keep Up
By global standards, New Zealand’s water systems hold up well. But for local councils, the cost of maintaining them is spiralling.
Currently:
- $2.6 billion — Total value of Waikato District Council’s assets
- $300 million — Value of water infrastructure
- $200 million — Annual council revenue
- Approx. $130 million from rates
- Approx. $70 million from subsidies and development contributions
- $350 million — Current council debt (at the borrowing limit of 175% of revenue)
Under new government rules, high-growth councils can borrow up to 350% of revenue — allowing up to $700 million in borrowing. But Keir is cautious.
“We’re maxed out,” he says. “We’ve gone from under $100 million in debt to $350 million in just a few years. I don’t think doubling that is a good idea.”
He notes that while borrowing makes sense for assets with a 100-year lifespan — “it spreads the cost across generations” — the scale of debt is becoming unsustainable.
What frustrates Keir is the growing disconnect between New Zealand’s financial reality and its spending habits. “People don’t seem to realise this,” he says. “We used to be a rich country — we’re not anymore. But we’re still acting like we are.”
He’s quick to clarify that he’s talking about the nation as a whole. “There’s still plenty of private wealth in New Zealand, but it’s increasingly concentrated in fewer hands. We’re starting to create class structures — and that’s concerning.”
That gap between expectations and affordability, he argues, is driving many of the pressures councils face.
Debt, Borrowing and the Intergenerational Burden
The new government’s solution for water infrastructure issues - Waters Done Well - essentially asks councils to increase their debt ceilings to fund necessary upgrades. With limited ratepayer revenue and escalating infrastructure costs, borrowing has become the go-to solution. Waikato District Council’s debt has ballooned:
- $350 million in current debt — the maximum under the old borrowing cap
- New rules allow up to $700 million for high-growth councils
While some argue this borrowing is necessary for long-term infrastructure, Keir is wary of pushing the burden onto future generations.
The council currently pays about $10 million a year in interest — and that figure will rise if borrowing continues or interest rates climb.
“These are 100-year assets. It makes sense to spread the cost,” he says. “But borrowing to the max isn’t wise. We’ve got to be careful.
Keir notes that transferring water services into a CCO will reduce our projected debt levels below the 175% threshold — but that doesn’t mean the costs disappear. Ratepayers will still be covering the debt, just through a different structure. It’s similar to when public transport funding was shifted to regional councils — the expense didn’t go away, it just changed where it showed up on the balance sheet.
Hamilton Partnership: A Risky Merger?
To build scale and efficiency, Waikato District is planning to form a joint water services company with Hamilton City — essentially a smaller version of the original Three Waters plan. The merger must be in place by July 2026, with an establishment board currently being formed.
But Keir has voiced serious concerns.
“Hamilton’s debt is maxed out, and their credit rating has been downgraded,” he says. “Our credit rating is AA+. If we merge, lenders will look at the bigger partner — and we could end up paying higher interest because of their situation.”
Waikato District Council has maintained its AA+ credit rating, but is now on a watchlist due to the potential financial impacts of water reforms. In contrast, Hamilton City Council was recently downgraded from AA- watch to A+ watch, reflecting increased fiscal pressure.
While there are potential benefits — shared infrastructure, coordinated planning, cost efficiencies — Keir says the risks haven’t been fully assessed, and the public hasn’t been given enough information.
“I don’t have all the details, and I’m sitting in the room,” he says. “Although realistically, you cannot design this solution by committee, we have to have some faith that the right people will be involved for the right reasons.”
Regulatory Burdens and Declining Productivity
Beyond finances, Keir believes a deeper structural issue is hampering council performance and inflating costs: overregulation. With a background running civil engineering and roading companies, he says productivity has fallen sharply due to compliance requirements.
“In the 1990s, I could finish 10,000 square metres of pavement a week. By 2015, I was down to 5,000 — half the productivity, same staff, same machines. That’s the cost of compliance.”
He describes a “tick-box culture” in areas like environmental and safety management and with traffic control as a prime example — regimes he believes prioritise audits over outcomes.
“We’ve regulated ourselves into incompetence,” he says. “I’ve seen jobs where environmental controls cost more than the earthworks themselves.”
Keir argues that councils, like many sectors, have allowed compliance systems to expand unchecked — often led by people with little practical experience.
“I’ve had auditors turn up who’ve never built a road in their life.”
He believes this culture doesn’t just raise costs — it delays projects, drives contractors out of the market, and contributes to burnout. In the context of water reform, it means ratepayers get less for every dollar spent.
A Bid for Change — and for Mayor?
After nearly three years on council, Mike Keir says his ability to make meaningful change has been limited — and that’s why he’s considering a run for mayor in this year’s local elections.
“I can’t change the system as a councillor. Maybe I can as mayor.”
If he decides to go ahead, Keir says he would focus on five key areas:
- Rates: Cap increases below cost-of-living, aiming to reduce projected rises from 8% to 2–3% annually over the next decade
- Efficiency: Cut compliance costs, reduce regulatory barriers, and streamline council operations
- Governance: Build support from councillors and work with the new chief executive to shift the council’s direction
- Infrastructure: Take a more strategic, modular approach to water and roading projects
- Systemic reform: Push for broader changes to the rating system and local government funding
“It’s broken,” Keir says of the current system. “So what do you do with something that’s broken?”