"The Government has put on hold the Drinking Water Subsidy Scheme to enable a review aimed at ensuring best use of the money in the scheme," Health Minister Tony Ryall has announced.

The subsidies aim to improve drinking water supplies in small communities of under 5000 people.

The drinking water subsidy scheme originally had $117.8 million in funding for 10 years from 1 July 2006. About $30 million of this has already been given to marae, community-owned suppliers and territorial authorities. 

Applications for a further $27.5 million in subsidies have been received for the current round.

Mr Ryall says "It is important that we ensure that the scheme is targeting communities most in need of assistance. The Government is concerned that it currently runs on a first-come first-served basis and does not adequately target disadvantaged communities which have the greatest need for this funding."

"The current applications will be the last to be assessed under the existing criteria, before the review of the scheme targets it on communities most in need and ensures best value for money."

"No new applications for subsidies will be taken until the review is completed, which is expected to be early next year. The programme is then expected to reopen with new criteria."

The Government will consult further with local government on the new criteria.

The programme providing technical advice to water suppliers serving 5000 people or less is still available and will continue.