Part 11: Planning to meet the forecast demand for drinking water

Local government: Results of the 2008/09 audits.

In February 2010, we published the performance audit report Local authorities: Planning to meet the forecast demand for drinking water. We carried out this performance audit of local authorities to help us form a view about how well prepared the country is to meet the likely future demand for drinking water.

Access to good quality water for drinking, bathing, clothes washing, and cooking is essential to our health and well-being. In a country that, as a whole, has reliable annual rainfall, numerous lakes, rivers, and streams, and a small population, the public expects supplies of drinking water to be secure for years to come.

Local authorities are responsible for supplying drinking water to about 87% of the country's population, and they manage water supply infrastructure estimated in 2009 to be worth $11 billion. Each year from 2009 to 2019, local authorities collectively have budgeted for about $605 million on operational expenditure and $390 million on capital expenditure to maintain and manage water supplies.

There are many challenges involved in supplying good quality drinking water now and forecasting demand in the future, and concern has been raised publicly that some local authorities may not be well equipped for the task. Some local authorities face more challenges than others, depending on a variety of environmental, economic, and social factors.

The local authorities we audited

The local government sector is large and diverse, so we selected a representative sample of eight local authorities.

The eight local authorities that we selected for our performance audit were Tauranga City Council, Opotiki District Council, South Taranaki District Council, Kapiti Coast District Council, Nelson City Council, Tasman District Council, Christchurch City Council, and Central Otago District Council. We thank them all for their participation and assistance.

We did not audit any local authorities in the Auckland region because we plan to do a separate performance audit when the transition to one local authority for Auckland is complete.

What we found

All eight local authorities are able to ensure the security of drinking water supply in their districts at present. However, providing security of supply into the future depends on, in some instances, significant improvements in forecasting, planning, and upgrading infrastructure. Some of the challenges, such as increasing competition for access to water, the need to reduce consumption, and the costs associated with upgrading infrastructure are only likely to increase in difficulty.

Only three of the eight local authorities in our sample were managing their drinking water supplies effectively to meet future demand for drinking water. Nelson City Council, Tasman District Council, and Tauranga City Council had forecasting techniques that were reasonably detailed and likely to be accurate enough. They had good planning behind their strategies to meet the forecast demand, and were consistently implementing those strategies. As a result of this effective management, they were well placed to meet the forecast demand for their drinking water.

Christchurch City Council, Opotiki District Council, and Kapiti Coast District Council were adequately managing their drinking water supplies, and were adequately placed to meet the forecast demand for drinking water. They had more work to do to improve the accuracy of their forecasts and implement their strategies to meet future demand.

South Taranaki District Council and Central Otago District Council were poorly placed to meet the forecast demand for drinking water. They had a significant amount of work to do to improve forecasts and upgrade drinking water supply infrastructure.

We made eight recommendations in our report. We encourage all local authorities to consider the applicability of each of these recommendations, and implement any that are relevant to them.

Improving how supplies of drinking water are managed

Opportunities for local authorities to improve how they manage their drinking water supplies include:

  • improving the information available for demand forecasting;
  • using more tools to assess and verify the reliability of their demand forecasting;
  • preparing comprehensive demand management plans; and
  • putting more emphasis on improving the efficiency of their drinking water supply systems.

In our view, local authorities need to put more emphasis on the efficiency of their water supply systems. That emphasis should include, among other things, active leakage and pressure control programmes. This should result in more efficient and sustainable use of water. It should also result in savings on expenditure on new infrastructure because any infrastructure upgrades will be sized and timed more accurately to meet actual demand.

One way to transparently measure progress would be to use an industry benchmarking tool to assess performance and encourage continuous improvement. An example is the Water New Zealand Pilot National Performance Review 2007/08,75 which involved eight water supply authorities. Another example is the Auckland water industry annual performance review 2006/07.76

Although all of the eight local authorities were using some water demand management tools, we consider that the next step is to prepare water demand management plans that integrate strategies for water supply and demand and are tailored to local circumstances. This will enable local authorities to get more benefits from water demand management.

The benefits of more comprehensive and integrated water demand management plans include:

  • saving capital costs through delaying or eliminating infrastructure development;
  • achieving cost savings in wastewater management through reducing the water that goes through the system;
  • saving operating costs associated with energy and maintenance, in both the treatment of water to a potable standard and its reticulation;
  • delivering consumer benefits from lower water- and energy-related costs; and
  • promoting the resilience of the overall water system, by reducing competing demands for water in areas where water resources are constrained.

It is essential that local authorities also consider drought strategies as part of their management of water demand to minimise the effect that a lack of water can have on a community.

Follow-up since our report was published

It is important to note that those local authorities in an adequate or poor position to meet the forecast demand are improving how they manage their drinking water supplies. They know what they need to do and are implementing improvements. For example, since the fieldwork for this audit was carried out in late 2008, the two local authorities that we considered to be poorly placed have made changes that will improve how they monitor, manage, and predict water demand:

  • South Taranaki District Council has completed upgrades on its main water supply system for Hawera. This includes installing a new water treatment plant, new water intake, new production bores, and two new reservoirs that have enhanced the security of the drinking water supply. South Taranaki District Council is also installing water meters and improving its information about water use, which is enabling it to run its water supply systems more efficiently.
  • Central Otago District Council has installed water meters for 80% of the connections to the Cromwell water supply. The remainder are scheduled for 2010/11. It has also installed an additional pump station for the Alexandra water supply, which will lower water pressure and reduce pumping costs and water leakage.

Provided those improvements continue, within the next 10 years these local authorities should be better placed to meet the forecast demand for drinking water.

75: Available from Water New Zealand (

76: Available from Auckland City Council (

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