David Hammond, Head of Consulting and Public Sectors at Tribe Executive, continues his discussion on whether water reform resolves performance pressures or redistributes them, and what this means for leadership, governance, and how success should now be assessed.
Water reform is being implemented to address long-standing financial and infrastructure pressures in local government. Moving water services into dedicated entities is expected to improve balance sheets, reduce borrowing pressure, and support more sustainable long-term investment.
However, its most significant impact may sit elsewhere. As water services move out of councils, the operating model of local government changes with them.
In part one of this article, published in the February 2026 issue of LG magazine, I considered whether these reforms resolve those pressures or shift them elsewhere. That question remains central. If a major operational and capital function is removed from councils, the rest of the council system needs to adjust. The issue is not only what improves but where the pressure moves to.
To test this, we surveyed nine local government leaders – mayors and chief executives – and the responses were consistent. The prevailing view was that water reform does not reduce pressure. It redistributes it across other parts of the organisation. In this sense, water reform is not only an infrastructure or financing change. It alters how councils operate and what the community will expect of them in the future.
The metrics that matter after water reform
For water reform to deliver lasting improvement, councils will have a smaller set of measures covering financial sustainability, delivery, capability, and public trust.
This is what I think will be significant across the sector to anchor council performance
metrics (below):
| Metric area | Critical metric | Why it matters |
| Financial sustainability | Rates increase trajectory | The clearest signal to the public |
| Debt as a percentage of operating revenue | How much future choice remains | |
| Delivery | Capital programme delivery versus plan | Whether plans are realistic |
| Asset renewal versus depreciation | Whether assets are quietly failing | |
| Capability | Vacancy or turnover in key roles | Early warning of delivery trouble |
| Compliance | Non-water regulatory performance | Avoiding future shocks |
| Trust | Public satisfaction and confidence | The licence to govern |
These measures mark a big shift from traditional council performance frameworks. In the past, performance focused on delivery outputs, asset management, and capital programmes. The future places more weight on community, streamlining regulation for developers, and negotiating outcomes to try to get water capital priorities across the line, while other councils are doing the same. It is a very different sort of pressure and will significantly change the profile of chief executives.
The survey responses pointed to where pressure is likely to re-emerge. Financial sustainability and rates management were identified by most respondents as the main area of focus, followed by inter-council and regional collaboration.
This suggests that water reform does not reduce financial pressure. It makes it more ‘visible’. In the past, large capital programmes as a driver of rate increases were publicly acceptable (sort of). Now the things that will drive rates increases are going to look like council wish lists – not essential.
At the same time, shared water entities require coordinated decision-making. Investment priorities are set across multiple councils, rather than by one alone. This requires alignment of different priorities, financial positions, and community expectations. Chief executives will come under scrutiny in their success or lack of success in getting their council’s priorities up the list.
Other pressures remain. Growth, development, and community infrastructure continue to demand attention. These areas are highly visible and directly affect communities. Water services may move out of councils. The underlying pressures do not.
Post-waters’ chief executives
In the past, the focus was on infrastructure delivery, asset management, and running capital programmes – the domain of engineers and accountants.
Those responsibilities still matter, but they are no longer the main focus. The survey shows a broader set of skills will now be needed.
Financial discipline remains important but so too do the following: working with communities on development projects and partnerships; partnering with commercial developers to align growth and infrastructure timing; negotiating with other councils on shared water investment priorities; and reducing red tape in the council to support local development.
This reflects a shift from an infrastructure-focused role to one that is more focused on internal systems and community outcomes. Chief executives now need to work more across organisations, and this requires influence rather than direct control.
There is also more focus on how well councils run their own policies and processes. As water services move out, planning processes, regulatory systems, and policy settings become more visible and more important. The role is now more balanced between working externally and improving internal performance.
Risk and opportunity
A key concern from the survey is the belief that water reform solves the main problems facing councils. This creates a real risk. Financial measures may improve in the short term. Debt may reduce and capital programmes may become easier to manage.
However, the underlying issues remain. Delivery capacity is still limited by attracting the right staff to areas, and funding. Community infrastructure and funding issues (think halls, event centres, pools, libraries) will rise in significance.
If councils treat reform as a solution rather than a reset, they are likely to expand into the available financial capacity afforded to them post the waters exiting. It would be easy to fill the borrowing capacity now available with new community projects. It is a risk or an opportunity depending on your perspective.
By removing a major area of cost and complexity, councils have space to reconsider their priorities, service levels, and community approach. Those that use this opportunity well are likely to strengthen financial discipline, align delivery with realistic capacity, and improve the performance of internal systems.
Those that do not are likely to see pressure re-emerge, often within a short period, by spending into community infrastructure. The pressure does not disappear. It moves.
Conclusion
Water reform does not remove the challenges facing local government. It changes how they show up. The evidence suggests a shift in both performance measures and leadership requirements.
Traditional KPIs focused on delivery, assets, and capital programmes are no longer sufficient on their own. Greater weight now sits on community relationships, alignment with commercial development, and internal red-tape streamlining.
This changes how performance is assessed. It moves from what councils deliver to how decisions are made, how trade-offs are managed, and how well the organisation operates as a system where all departments align.
The implications for chief executives are direct. The role shifts away from being primarily infrastructure-led to one that is more focused on community engagement, partnerships, negotiation, and the performance of internal systems. Influence across councils and alignment with shared priorities become core parts of
the role.
Water reform therefore represents a shift in both organisational KPIs and chief executive capability. It is not simply a change in assets. It is a change in how performance is defined and how leadership is exercised.
As one respondent noted: “The pressure hasn’t gone away – it’s just moved into areas where we have less room to hide and more need to make clear choices.”
David Hammond can be contacted: 027 4446368.