Three things new water entities must get right

After a period of significant reform and uncertainty, the Government’s Local Water Done Well reforms are now in place.

Councils around the country are establishing new entities to deliver water services to their communities, with many opting for council‑controlled organisations (CCOs).

With greater financial independence, these entities can manage their own debt and revenue and can access debt financing to fund investment in infrastructure.

CCOs must decide how they will charge for their services and determine the most effective approach for billing customers.

With a dedicated team supporting the sector, ANZ is already working closely with the first new water entities, both single and multi‑council owned, and is looking forward to engaging with more.

ANZ has established banking services for these organisations and has been supporting the seamless transition from local councils to water CCOs.

Three clear take‑outs have emerged:

Know your customers

For many customers, receiving a separate water bill will be new, making it essential to understand payment preferences and behaviours.

ANZ has undertaken extensive analysis of its payments data and has strong demographic insights into how customers of different ages, and in different parts of the country, choose to pay. These insights can help shape a CCO’s approach to billing, payment options and customer communications.

For example, ANZ payment data reveals that council bill payers in the regions are less likely to use Direct Debit than those based in urban centres.

The value of Direct Debit payments tends to be higher than other payment types and are preferred by older New Zealanders, with younger bill payers preferring manual methods.

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Get payments systems right

Separating banking services from the local authority and transitioning them to the new water entity can be complex. Getting it right is critical to a smooth changeover.

Ensuring systems can interface securely and seamlessly is a foundational requirement, and one where ANZ’s team has deep practical experience.

We’re able to help with the establishment of new processes around Direct Debits and Bill Payments, reducing manual paperwork and improving the accuracy of reconciliations.

The transition of payment systems also gives CCOs the opportunity to adopt more modern, scalable and accessible payment systems.

These include the ability to send secure payment requests to customers for authorisation via their banking app for customers who prefer alternative payment methods. 

Have an eye for the long term

As water entities begin accessing funding through the Local Government Funding Agency (LGFA), how they manage their finances will be critical.

ANZ is familiar with the LGFA funding and security arrangements and is already working with CCOs to provide complementary short-term lending, overdrafts and interest rate and foreign exchange hedging products.

Local Water Done Well is intended to ensure New Zealand has water infrastructure that is sustainable, safe and efficient.

Achieving this will require long-term investment in infrastructure, supported by strong financial capability.

ANZ’s infrastructure finance specialists are already working in the regions, leveraging their experience to support water CCOs through their establishment.

This expertise and a coordinated approach to transition can deliver greater efficiencies, from start-up through to planning future funding and financing needs.

Sangita Bishop, Head of Transaction Banking NZ, ANZ Institutional sangita.bishop@anz.com

Dean O’Connor, Director, Business Development NZ, ANZ Institutional dean.o'connor@anz.com

Hannah Crosby, Head of Project Finance NZ, ANZ Institutional hannah.crosby@anz.com