Auckland's controversial request to take an extra 200 million litres of water a day from the Waikato River will now be heard by a board of inquiry.

But in the meantime Hamilton City Council has done a deal with Watercare to give it 25 million litres a day from its unused water allocation while it waits on the outcome of the inquiry.

Environment Minister David Parker has today referred the controversial application - lodged by the council in 2013 for future use - to a board of inquiry under Part 6AA of the Resource Management Act 1991.

Parker said the sourcing of drinking water for Auckland was nationally significant and the application affected not only Auckland but also other activities in the Waikato and the river itself.

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"The inquiry will need to consider the viability of alternatives, including the treatment of storm and/or wastewater. Water taken for Auckland from the Waikato already includes treated water from outfalls from storm water and treated wastewater upstream of its take."

The board of inquiry will be made up of three people and led by a current or retired Environment Court judge.

The Waikato River Authority has been asked to name an appointee to the board of inquiry, which it is entitled to do under section 29 (5) of the Waikato-Tainui Raupatu Claims (Waikato River) Settlement Act 2010.

Parker will appoint the third person on advice from the Environmental Protection Committee.

The board of inquiry has up to nine months to make a decision, but Parker expected interim solutions like transferring 25 million litres of water a day for the forthcoming summer to be transferred and settled outside of this.

Instead the inquiry would sort through important issues such as whether Auckland should be allowed the 200 million litres of water a day over other commercial users in Waikato, he said.

He said Auckland Council's request to fast track the application under the Covid-19 bill had been rejected because of concerns it could breach settlement conditions.

Parker said he was surprised it has taken seven years to get to this point but the application was made for water Auckland did not think it would need until 2030.

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And even if the application was granted now, Auckland didn't have the capabilities to process an extra 200 million litres per day at the moment.

He said Auckland's drought situation and population growth has given Auckland authorities "a bit of a fright" and everyone including Hamilton City Council was trying to help.

The inquiry comes after the Government, Waikato Regional Council and Hamilton City Council have been working with Auckland and other interested parties over several months to come up with a solution to Auckland's water crisis.

Auckland mayor Phil Goff welcomed the announcement by the Environment Minister to fast track Auckland's resource consent for the water take in the Waikato by referring it to a Board of Inquiry.

"We have argued strongly that the current system is broken and Auckland needs to be able to present its case without further delay."

Goff said the council would continue to work in good faith with the Waikato authorities to deal with the potential crisis Auckland may face over this summer and were also exploring every solution to increase Auckland supply and better conserve water to avoid Auckland facing a severe water shortage."

Waikato Regional Council chairman Russ Rimmington last week slammed the Auckland Council for its backhanded approach over the application for an extra 200 million litres a day. He instead supported it taking 100 million litres a day during high flow periods.

Yesterday the Waikato River Authority said Auckland should pay for more water from the Waikato River and suggested up to 10 cents a litre, or $20 million a day, to support the restoration and protection of the Waikato River.

The Waikato River Authority is asking Auckland to pay $20 million a day for the water taken from the river. Video / Supplied

Hamilton mayor Paula Southgate said the confidential deal enabled Watercare to use some of its allocation and take up to 25 million litres per day from the Waikato River would not impact the availability of water for Hamiltonians.

She said it helped the urgent needs of a neighbouring city, while protecting the health of the river and safeguarding water supply for Hamilton.

"This is a critical time for Auckland which is facing dire economic and social impacts unless this is sorted. Watercare asked us for assistance in May and we have done a huge amount of work since then to provide that help.

"But my council is very clear that any arrangement must have the health of the river at its heart, must pose absolutely no risk to Hamilton's water users both now and in the future, and needed full consultation with Iwi.

"Currently Hamilton does not have the capacity to treat all the water it is allowed to take so was letting Watercare tap into this. The council had agreed to it for one year and wanted to see tangible evidence that Watercare was taking steps to protect the river and find more sustainable long-term solutions to its water needs.

"The Waikato River is not an infinite resource. Part of this deal means Watercare will halt its emergency take of water from the river and we expect to have discussions around how, over time, Auckland can reduce its dependence on the river as a percentage of its water needs."

Waikato Regional Council chief executive Vaughan Payne said the board of inquiry would provide a robust assessment of the application against the Resource Management Act, test whether the water requested is in fact needed now and in the future and look at the viability of alternative water sources.

Payne said it was the council's understanding that Watercare did not require 200 million litres of water, which was why it never requested the application be fast-tracked.

He said it was important the board engaged with all the other applicants ahead of Watercare to fully understand the implications.

During drier months there was only 251 million litres of water a day left to allocate to other users and Watercare wanted to take 80 per cent of that allocation, he said.

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