Integrity Briefing: Wellington Water – A Case Study in Infrastructure Failure and Incompetence

The latest damning reports on Wellington Water’s procurement failures is not just a scandal — it’s a case study of everything that is wrong with New Zealand’s infrastructure management. Waste, inefficiency, and a culture that privileges corporate contractors over ratepayers have created a situation where Wellingtonians are paying three times more than necessary for essential water services.

Yet, despite the scale of the failure, accountability remains elusive. Wellington Water's chairperson Nick Leggett, has acknowledged the problems but remains in his role. His dual position as head of the Infrastructure New Zealand lobbying group which represents major corporate interests in the sector —raises serious concerns about conflicts of interest and a lack of genuine oversight. This debacle exposes the deep flaws in how public infrastructure is managed in New Zealand, where the lines between government service provision and private profiteering are increasingly blurred.

A Culture of Contractor Capture

Two damning reports came to light today. First, a report by AECOM was released, which pointed to a dysfunctional culture at Wellington Water, showing that ratepayers were being ripped off by a contracting model that charged three times what other councils were paying. Later in the day, another equally damming report on Wellington Water, carried out by Deloitte, was leaked to The Post.

The two reports paint a picture of an organisation prioritising contractor relationships over ratepayer value. Rather than securing competitive pricing, Wellington Water’s “contractor panels” have operated as an exclusive club, ensuring lucrative deals for a handful of firms while stifling competition.

The lack of financial controls meant that contractors were paid automatically, without adequate scrutiny, and project managers hired through consultancy panels were effectively monitoring their own firms. The result? Inflated costs, lacklustre service delivery, and a maintenance system where costs per kilometre have tripled while Wellington’s pipes continue to leak at an alarming rate.

This is not an isolated problem. Across New Zealand, from Transmission Gully to the Interislander ferry replacement project, the same themes emerge: public money is being funnelled into private hands with minimal oversight. Whether it’s due to incompetence, negligence, or outright corruption, the outcome is the same – the public is left to foot the bill.

The Role of Nick Leggett: Watchdog or Lapdog?

Nick Leggett’s response to the crisis at Wellington Water has been telling. While he has apologised and promised reforms, he has largely framed the problems as systemic rather than tied to specific leadership failures. But this crisis did not appear out of nowhere. The warning signs have been there for years, ignored by those responsible for governance.

Leggett’s position as chair of Wellington Water while simultaneously heading Infrastructure New Zealand presents a glaring conflict of interest. Infrastructure NZ is an organisation that advocates for greater private sector involvement in public infrastructure. And before heading Infrastructure NZ, Leggett was the lobbyist for the trucking industry. Can someone deeply embedded in the industry that profits from these procurement models be trusted to regulate and reform them effectively?

The reluctance to hold leadership accountable is symptomatic of a broader problem in New Zealand governance: an unwillingness to challenge those in positions of power, particularly when they have strong ties to the corporate sector. If the head of a public agency presiding over multi-million-dollar failures is not held responsible, then who is?

Of course, Leggett is only the most recent highly-paid manager at Wellington Water. For years, astonishing sums were paid to Wellington Water chief executives. And now it turns out that they were basically enabling their contractors to fleece ratepayers for years. All the time, there has been a growing number of Comms staff at Wellington Water. It was reported last year that the number of communications staff had grown from three to eight, with a combined cost of $889,000 last year – the latest to join the team is Green Party candidate Stephanie Rodgers, who is one position away on the Green Party List from being the next entrant to Parliament.

The Bigger Picture: A System in Crisis

Wellington Water is just one symptom of a much larger crisis in New Zealand’s infrastructure approach. Across the country, projects run over budget, deadlines are routinely missed, and the same consultancy firms and contractors continue to receive government contracts despite poor performance. Councils, already stretched thin financially, are forced to increase rates or cut services to compensate for the incompetence of outsourced infrastructure management.

At its heart, the problem lies in a governance structure that lacks transparency and real accountability. Public-private partnerships and contractor panels are often sold as efficiency measures, but in practice, they create closed loops of unaccountable spending. Instead of open-market competition and robust contract oversight, we get cost blowouts and a culture where failure is rewarded rather than punished.

What Needs to Happen

If the Wellington Water scandal is to have any meaningful outcome beyond another round of empty apologies, several key steps must be taken:

1. Nick Leggett must resign. Accountability must start at the top. His position at Infrastructure New Zealand makes it impossible for him to credibly oversee the necessary reforms at Wellington Water. Too often, senior managers are allowed to exit with their reputations intact, leaving ratepayers to pick up the bill. The revolving door of top executives means accountability is constantly deferred.

2. An independent audit of all contractor relationships and spending over the past decade must be conducted. It is clear that the costs associated with Wellington Water’s projects far exceed reasonable market rates. Investigators should determine how much has been overpaid and whether there has been deliberate price-gouging. As Wellington City Councillor Ben McNulty has posted on X, “We need to now understand just how many millions of our investment has been pilfered off to line the pockets of the private contractors. Serious questions now need to be asked of the governance board, the regional water committee and the contractors involved”.

3. A complete restructuring of water infrastructure governance is required. The current model of public-private partnerships and contractor panels has failed. Future models under the new Government’s “Local Water Done Well” programme should be restructured to bring essential service provision back under greater public control with robust oversight mechanisms in place.

4. Stronger procurement oversight across all local government infrastructure projects. Wellington Water's issues are not unique. To prevent similar failures in the future, an independent national body should be established to oversee and benchmark council procurement

5. Greater transparency in local government decision-making. Ratepayers deserve to know where their money is going. Councils should be required to publish detailed breakdowns of infrastructure spending and contractor payments, with clear justifications for cost variations.

Conclusion

Wellington Water’s procurement scandal should be a reality check as the country embarks on billions of dollars of infrastructure spending. The failures in financial oversight, the culture of contractor capture, and the sheer waste of public money highlight systemic problems in New Zealand’s infrastructure management. But unless there are real consequences—starting with Nick Leggett's resignation and a fundamental rethink of how public projects are managed—this will simply be another scandal that fades away while the waste and inefficiency continue.

Increasingly in case studies like Wellington Water, and more widely with public infrastructure, we see a cosy little cabal enriching themselves at the public expense and destroying the basic infrastructure of places like Wellington as a byproduct.

New Zealanders deserve better. It’s time for an infrastructure system that prioritises public good over private profit.

Dr Bryce Edwards

Director of The Integrity Institute

Read more:

Tom Hunt (The Post): Wellington Water ‘putting contractors ahead of ratepayers’ (paywalled)

Nick James (RNZ): Wellington Water report reveals alleged theft, structural and contractor issues

Georgina Campbell (Herald): Call for Wellington Water chairman Nick Leggett to resign - A Capital Letter (paywalled)

Andrea Vance (The Post): Wellington Water financial controls ‘insufficient, informal, unreliable’ (paywalled)

Andrea Vance (The Post): Money down the drain: Scathing Wellington Water report explained (paywalled)