New Zealand's local authorities face a $100 billion-plus to replace ageing water infrastructure such as water pipes, drains and sewers and will need central government assistance to meet the bill, according to Local Government New Zealand (LGNZ).

At its quarterly briefing, the sector's lobby group said a bunch of essential underground infrastructure installed by towns and cities in the 1960s was reaching the end of its life and would need replacement in the next few years.

Back then, these infrastructures had been co-founded by central and local government, but the responsibility had moved exclusively to local government in the interim and could place a huge strain on some communities' finances - especially in those places where the populations were ageing or getting smaller.

According to LGNZ president Lawrence Yule though, the organisation doesn't want the government to take the responsibility for this anymore.

"We want to take responsibility for the so-called ‘three waters' but want to make sure it's done holistically," Yule adds.

"The current funding mechanism won't work, so we are starting the conversation."

LGNZ have been promoting a co-regulatory structure for water infrastructure for some time - similar to the shared way local and central government currently fund roading.

"This renewals curve is not a surprise, and now it's here," said Malcolm Alexander, LGNZ chief executive.

Among the things proposed by the local government to fund replacement infrastructure was the ability to earn revenue from new sources other than property rates, and to use off-balance sheet that would allow infrastructure projects to be debt-funded without blowing out local councils' balance sheets. 

"Maintaining current strong credit ratings was essential for the New Zealand local government sector," said Mark Butcher, the head of the Local Government Funding Authority.

Yule is now calling for decisions "sooner rather than later" on whether or not to make users pay for their water allocations or to use a non-market, administrative method to allocate freshwater. 

A Technical Advisory Group is due to report on the long-standing issue in December.