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The Three Waters Reform programme has been described as the biggest shake-up in local government in decades and comes after councils across the country found themselves overwhelmed by creaking infrastructure.
The programme will look to transfer council water services into a small number of what are being called multi-regional entities. Public ownership is to be prioritised.
During 2021, councils and communities can decide whether to opt in or out of the reform programme.
Local Government Minister Nanaia Mahuta said under-investment in water infrastructure was a key motivator for central government stepping in.
She conceded that the reception at local government level had been mixed.