Local councils look set to combine their water services as they face growing pressure to upgrade ageing infrastructure.
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The cost of upgrading waste, drinking, and storm water is estimated to be billions of dollars and councils say they can't afford it.
Most water assets and services are owned and delivered by local councils and funded by ratepayers.
Key players say that doesn't work.
Stephen Selwood of Infrastructure New Zealand wants everyone to be charged for the water they use.
And he said councils need to group together to fund water services.
"Aggregation in some form is essential, coupled with regulation both environmental and economic because obviously you want to monitor the environmental outcomes more effectively and it's very clear we're struggling to do that here in New Zealand."
Local Government Minister Nanaia Mahuta said combining service providers would make it easier to get finance.
She said some regions are keen to discuss aggregation but others worry it is a step towards amalgamation.
"Any approach going forward requires local government support and engagement and we've been doing that and this issue and concern that they have that the aggregation of water service delivery is a precursor to the amalgamation of councils is not well-founded."
Ms Mahuta said the government will have a proposal on the water reforms by June.