The government announced in March 2017 its intention to takeover TasWater, arguing there was a crisis in the sector and the company had failed to improve water quality and deteriorating infrastructure in a timely manner.

This led to 14 months of open warfare between the government, headed by Treasurer Peter Gutwein, and the councils and TasWater chairman Miles Hampton.

Local Government Association of Tasmania president Doug Chipman reached out to Mr Gutwein following the March election which spurred into motion up to three weeks of secret negotiations, resulting in the memorandum of understanding.

Under the agreement, the state government will have a 10-per-cent stake in the company, though will not receive dividends, and a 50-per-cent say over its corporate plan.

For that, it will contribute $200 million over ten years, which would have otherwise paid to councils under its failed takeover legislation last year.

Dividend payments to councils will remain unchanged.

TasWater will accelerate $1.8 million water and sewerage infrastructure investment program and consumer prices will be capped at 3.5 per cent until June 2025.

Under TasWater’s pricing model, prices were forecast to go up 4.5 per cent.

The agreement will also include the works needed to improve Launceston’s combined water and sewerage network.

Mr Hampton said water and sewerage reform was one of the most significant micro-economic reforms to be undertaken in Tasmania in decades and recent debate had been robust.

"We believe that when this MOU is implemented, we believe the uncertainty our staff have lived with over a period of time is behind us," he said.

Labor local government spokesman David O’Byrne said the party would wait to see the legislation in detail before it decided on whether to support the arrangement.

He described the government’s move as an embarrassing backdown.

Tasmanian Chamber of Commerce and Industry chief executive Michael Bailey said the chamber supported the agreement and it would work directly with the government regarding issues with TasWater.

“This will also bring certainty around price for business, industry and Tasmanian consumers,’ Mr Bailey said.

TasCOSS chief executive Kym Goodes said the move would enable greater scrutiny of TasWater.

“We expect we will see an increase in the voices of consumers directly to all planning, pricing and service decision-making,” she said.

Property Council of Australia state executive director Brian Wightman said he was pleased to see negotiations had replaced debate – even if it had not led to the organisation’s wishes to see the government take control of the water body.

He said the organisation would be pushing for several key performance indicators to be delivered under the agreement including improved governance arrangements, an increase in compliant water treatment plants, and additional capital for infrastructure improvement.

Master Builders Association of Tasmania president Lyndon Fenton said recent building and construction sector growth over four years was at risk of unwinding due to delays as a result of bottlenecks.

“MBT is satisfied that today’s announcement will fundamentally address any sewer and water-related concerns moving forward,” he said.

Launceston mayor Albert van Zetten said without too much detail, the plan sounded like a fair compromise.

Circular Head mayor Daryl Quilliam said he was confident that councils would support the MOU.

“To give up 10 per cent say for $200 million over 10 years is a good result,” he said.

“If we sat down and had a chat to begin with, it would have avoided all the unnecessary bickering and we could have got on with the job much sooner.”

Burnie mayor Alvywn Boyd said he was waiting for more detail, having been notified over the agreement through media.

“The councils have put up a good fight all the way though,” he said.