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Three Waters Economic Impact Assessment and Industry Development Study

The economic benefits of the Three Waters Reform Programme and implications for affected industries

Effective Three Waters services – drinking water, wastewater and stormwater – are essential to the wellbeing of all New Zealanders. However, New Zealand’s Three Waters system is facing major challenges, and will continue to do so without transformational reform.

The Government has proposed a reform programme that would establish a small number of asset-owning, multi-regional water services entities. The Three Waters Reform Programme is expected to enable a significant increase in investment in Three Waters services.

Deloitte Access Economics was commissioned by the Department of Internal Affairs (DIA) to assess the potential economic impact of the reform, and identify opportunities and risks for industries affected by reform. This work forms part of the basis for a Regulatory Impact Assessment DIA is preparing to assist Cabinet decision-making on the reform.


Economic Impact Assessment

This assessment aimed to quantify the economic impact of a material step-up in investment in connection with reform, relative to the level of investment that might be expected in the absence of reform. The economic impact is quantified in terms of gross domestic product (GDP), employment, wages and taxes, at a national and regional level.

Over the 30 year period we modelled from 2022 to 2051, a material increase in investment in the Three Waters sector could:

  • Increase GDP by between $14 billion and $23 billion in present value terms.
  • Grow tax revenue between $4 billion and $6 billion in present value terms.
  • Generate an additional 5,849 to 9,260 full-time equivalent jobs. While job growth is concentrated in industries such as trade, business services, financial services, and construction.
  • Lift average wages by between 0.16% and 0.26%.
  • All regions are set to benefit from reform, but not all regions are affected equally. Both provincial and rural areas are estimated to benefit more than metropolitan areas in relative terms.


Industry Development Study

This work sought to validate the findings of the Economic Impact Assessment through stakeholder interviews and case studies. The study finds:

  • Reform could enhance the visibility and scale of the investment pipeline, enabling existing New Zealand participants to scale up operations.
  • This is an opportunity to address challenges the water sector is currently facing, including the current workforce shortage (in terms of both capacity and skills), and limited awareness of career opportunities.
  • Firms did not see capital constraints as a barrier to scaling up in response to reform, provided there is pipeline certainty and workforce issues are addressed.
  • Reform could lead to signifcant productivity and innovation gains, as the industry’s structure shifts, and planned regulatory improvements play out.
Industry Development Study & Economic Impact Assessment report
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