On 5 February 2026, Property Council submitted to the Commerce Commission on the Commission’s Approach Paper on Price-Quality Path for Watercare.
Why this matters to our members
Property Council New Zealand (“Property Council”) welcomes the opportunity to submit on the Commerce Commission’s (“Commission”) intended regulatory architecture of a price-quality path (“PQP”) for Watercare. PQP is a binding regulatory decision that structurally sets the maximum revenue a monopoly provider can earn and the minimum service quality it must meet over a fixed period. The framework defines the rules for how long-lived water assets are financially recovered over time.
Our members are directly affected by infrastructure growth charges (“IGCs”). IGCs are upfront charges paid by developers to help fund new water infrastructure across Auckland.
Our view
We welcome the Commission’s proactive approach in reaching out for public consultation before the new water regulatory regime begins in 2028. Early consultation will ensure a more transparent and smoother transition to the new PQP regulatory regime.
However, we are concerned about the expected increase in IGCs from mid-2028. Higher upfront infrastructure charges will put additional pressure on development feasibility, particularly given increases in construction and labour costs.
At a high level, Property Council recommends that the Commission:
- Limits price-quality regulation to Watercare initially, and only considers extending PQP to other water service providers nationally once the regulatory regime has demonstrated efficient investment, cost discipline, and good outcomes in practice;
- Ensures any review or reconsideration provisions are clearly defined with narrow scopes and transparency from the beginning to avoid uncertainty;
- Accompany the building-blocks model with clear and enforceable regulatory rules on cost allocation and disclosure;
- Applies a transparent and conservative approach to setting the initial regulatory asset base (“RAB”), and publishes the key assumptions and modelling inputs;
- Specify an explicit and auditable mechanism within the building-blocks model to offset IGC revenue against allowed revenues, so growth-funded infrastructure is not recovered twice through regulated prices;
- Require binding price-quality path rules for IGCs, including mandatory public disclosure of IGC methodologies and growth assumptions, auditable ring-fencing and reconciliation of IGC revenues against growth-related investment, and clear assurance that IGCs are used for growth.
- Adopts a cautious approach to introducing binding quality standards in the first regulatory period; and
- Sets clear efficiency expectations for Watercare, supported by time-bound plans for cost control and productivity improvements, with independent reviews.