What Is a Council-Controlled Organisation?

In New Zealand, a Council-Controlled Organisation (CCO) is an entity that is owned (wholly or partially) by a local council but run at arm’s length. CCOs are often set up as independent companies or trusts to deliver specific services using commercial disciplines and expertise not available within the council [4]. For example, Watercare Services Limited – Auckland’s water and wastewater provider – is a CCO 100% owned by Auckland Council but structured as a limited liability company under the Companies Act [3].

Key characteristics of CCOs include:
- Council Ownership: The council is the shareholder and can appoint or remove the board of directors [4].
- Independent Governance: The board of a CCO governs the organisation’s decisions, not the elected councillors [5].
- Specialist Focus: CCOs are grouped by function to achieve integrated service delivery across a region [4].

In short, a CCO is owned by the public (via the council) but operates like a private company with its own board and management [4].

Hamilton City Council is handing YOUR water,sewer pipes and operations to a new company, AIWAI — a so‑called “Council‑Controlled Organisation.”
If you’ve seen what happened in Auckland, you’ll know why this raises alarms.Watercare, Auckland’s CCO, didn’t exactly set a shining example — in some areas the cost to connect to water has been reported as high as $50,000. Now we’re inviting the same model into Waikato, and I’m worried. I think you should be too.

Not Actually “Controlled” by the Council

Despite the name, a “Council-Controlled”organisation is often not truly controlled by elected officials on a day-to-day basis. As Auckland Councillor Greg Sayers bluntly put it, “It is a misnomer to call [Auckland Transport] a Council Controlled Organisation – it is not controlled by elected members, and therefore not ultimately by Auckland’s ratepayers.” [5]

Watercare’s independence has been acknowledged at the highest levels. In 2021, then-Mayor Phil Goff described Watercare as an “independent” CCO that “makes its own decisions,” even when he disagreed with its proposed price hikes [7]. Watercare’s board had approved a decade-long series of water bill increases without direct council initiation [7]. This illustrates that major financial and operational decisions at CCOs are made by the company’s directors, not by elected councillors.

Watercare – A Publicly Owned, Privately Run Company

Watercare Services Ltd is a prime example:
- Company Structure: Watercare is registered as a limited liability company and acts as such [3].
- No Council Funding: Unlike core council departments, Watercare does not receive funding from council rates or from central government [3]. All revenue comes from customer payments (water bills and service charges), and it reinvests that money into operating costs and infrastructure [3].
- Arm’s-Length Obligations: By legislation, Watercare is required to manage its operations efficiently and keep costs to customers as low as possible [3]. Yet at one stage the CEO of Watercare was reported as being the highest paid executive among all CCOs in Auckland [11].

In summary, Watercare operates much like a private utility company, albeit one owned by the public.

“No Rates Without Representation” – AccountabilityConcerns

The phrase “no rates without representation” evokes the principle of “no taxation without representation. ”Traditionally, council rates are decided by elected councillors. However, when services like water are handled by a CCO, fees can be imposed without direct democratic oversight [7][10].

With CCOs like Watercare, the challenge is to balance financial independence with accountability. Currently, the accountability comes in indirect forms, but many feel it isn’t as strong as direct council control – hence the push for reform [6].

Water Bills: Invoices Go to Homeowners, Not Tenants

Watercare only sets up accounts under the property owner’s name, not the tenant’s [9]. This means invoices will go to homeowners if the tenants are not paying. Landlords may on-charge the water usage to tenants, but legally landlords must pay the fixed daily charges[8].

Numerous Tenancy Tribunal cases have found tenants paying hundreds of dollars in fixed charges they shouldn’t have [8]. Industry groups have suggested Watercare issue separate invoices to landlords and tenants to avoid confusion [1].

Key Points

- CCOs are not typical council departments:decisions are made at board level, not by councillors [5][7].
- Watercare is council-owned but self-funded through user charges [3].
- Democratic accountability gap: “No rates without representation” applies [2][10].
- Water bills go to homeowners; tenants may be overcharged if unaware of rules[8][9].

Are CCOs Really the Best Option?

While CCOs were created to deliver services more efficiently and at arm’s length from politics, in reality they are expensive structures to run. Each CCO has its own board of directors, executive team, legal and governance overheads, and compliance costs—all layered on top of what ratepayers already fund through council itself.

For example, Watercare maintains its own corporate functions (HR, finance, legal, communications) completely separate from Auckland Council, even though ratepayers ultimately own both. That duplication drives up operating costs rather than reducing them. Critics, including some current and former councillors, have argued that “CCOs were meant to save money, but the overheads of running them like private companies often make them more expensive.”

There should be alternatives:

• Bringing key functions back in‑house under direct council control,     so governance and corporate services aren’t duplicated.
• Exploring shared services between CCOs and councils to strip out     duplicated admin layers.
• Re‑thinking whether all services need a CCO structure at all—some     could be managed as business units within council, subject to full     democratic oversight.

Bottom line: CCOs like Watercare may have been set up with good intentions, but they are not the only way to deliver essential services. When the cost of running a CCO starts outweighing its benefits, we owe it to ratepayers to look seriously at alternatives that deliver the same service with less overhead and stronger accountability.

References

[1] NZ Herald – Landlord and tenant water bill confusion.
[2] Interest.co.nz – Brian Easton on three waters accountability.
[3] Watercare – Our Organisation (official website).
[4] Auckland Council CCO governance FAQ.
[5] Greg Sayers, Auckland Councillor on CCO control.
[6] NZ Herald – Wayne Brown plans to reform CCOs.
[7] NZ Herald – Watercare decision to double water bills.
[8] NZ Herald – Tenants pay landlords’ water charges.
[9] Watercare – Who is responsible? (official website).
[10] Kapiti News – Three Waters and local voice.

[11]Stuff - $775k Auckland Council agency salaries must be cut – but it’s not the CEO’s fault