Part 5: Local authorities: Planning to meet the forecast demand for drinking water

Public entities’ progress in implementing the Auditor-General’s recommendations 2012.


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

Local authorities – city and district councils – are responsible for supplying drinking water to about 87% of the country's population and for managing water supply infrastructure estimated in 2009 to be worth $11 billion. There are many challenges involved in supplying good quality drinking water now and forecasting future demand. Some councils face more challenges than others, depending on a variety of environmental, economic, and social factors.

The scope of our performance audit

Our audit looked at whether eight councils were managing their drinking water supplies effectively enough to meet the likely future demand for drinking water.

We selected a representative sample of eight councils for the audit. These 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 did not include any councils in the Auckland region as part of our audit because of the re-organisation of Auckland local authorities. At the time of writing, we are carrying out work looking at how effectively Auckland water services are managed.

Our findings and recommendations

We found that all eight local authorities in our sample were able to ensure the security of supply of drinking water. However, in some instances, continuing to provide security of supply depended on better forecasting and planning, and upgrading infrastructure. We found that some pressures, such as competition for water, the need to consume less, and the cost of upgrading infrastructure, were likely to become more challenging.

Only three of the eight local authorities 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 detailed forecasting techniques that were likely to be accurate enough. They had planned well to meet forecast demand and followed their planning strategies consistently. As a result of this, they were well placed to meet the forecast demand for drinking water in their districts.

The other five local authorities had further work to do (for some, a lot of work) to make their forecasts more accurate and to carry out their strategies to meet demand. However, the local authorities knew what they had to do and were making progress. As long as they keep improving, these local authorities should be better placed within the next 10 years to meet the forecast demand for drinking water.

Our report made eight recommendations and encouraged all local authorities to consider each of these recommendations and to act on them where appropriate.

Local authorities' progress in improving how they manage demand for water

In October 2011, we surveyed all 67 city and district councils to find out what progress they had made in acting on the eight recommendations in our 2010 performance audit report. Forty-nine local authorities (73%) responded to our survey.

The responses of local authorities to our recommendations

Our survey of city and district councils to assess progress with the recommendations in our 2010 report showed that, of the 49 local authorities that responded:

  • 35 (71%)7 had considered whether the information they used to prepare water demand forecasts was accurate and up to date;
  • 41 (84%) were using accurate and up-to-date information in their forecasts of demand;
  • 41 (84%) either had verified the reliability of drinking-water demand forecasts or were doing so;
  • 33 (67%) were evaluating the costs and benefits of demand strategy options; and
  • 39 (80%) were defining targets for performance measures and measuring progress against them.

Twelve local authorities had prepared comprehensive demand management plans, and another 26 were preparing such plans. About half of these plans (complete or in progress) to manage demand included strategies for sustainable development. Examples of such strategies included encouraging rainwater and grey water for non-potable use and promoting water-efficient showerheads and other devices.

Good progress has been made in supplying drinking water more efficiently. Since February 2010, 36 local authorities (73%) have reduced the amount of water that is unaccounted for to an acceptably low level.

Progress in carrying out independent benchmarking has been slow. We encourage local authorities to work faster to measure progress in supplying drinking water more efficiently.

We reviewed how well the local authorities that we had audited (except for Christchurch City Council) had acted on our recommendations.

The local authorities have made good progress in addressing our recommendations. Most of our recommendations have been or are being addressed.

Although Christchurch City Council was included in our 2010 performance audit, we have not followed up how well it has responded to our recommendations. The damage to Christchurch's water infrastructure in the earthquakes of 2010 and 2011 is a significant challenge for the Council in planning the supply of drinking water to its community.

The two local authorities that we had identified as needing to improve most (South Taranaki District Council and Central Otago District Council) have made good progress. Both of these local authorities now use accurate, up-to-date information on water consumption to prepare drinking water demand forecasts and have verified that their forecasts of demand for drinking water are reliable. They have improved the efficiency of drinking water supplies by reducing the amount of water that is unaccounted for to an acceptably low level.


Accurately forecasting demand for water is essential in long-term planning and has implications for the water infrastructure that communities require. Evaluating water asset requirements, infrastructure needs, and other funding demands throughout all council activities is an important prioritisation process that will be finalised as councils prepare their 2012–2022 long-term plans. These plans are to be completed and adopted by 30 June 2012.

A number of local authorities have told us that they have used our audit framework to assess how well they forecast demand for drinking water. We encourage any council that has not yet used our framework to do so.

7: Percentages are of the number of respondents to our survey.

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