Rural communities have some of the worst leaky water pipes in the country with some regional councils losing as much as 50 percent of the water put into their pipes.
That's an estimate from an industry group, Water New Zealand.
It said leaks are harder to identify in rural areas, where pipes are spread across a wide area.
This week RNZ revealed that Auckland's drinking water pipes are leaking up to 50 million litres a day, at a time it is enduring its most severe water shortage in decades.
Aucklanders have been asked to save 30 million litres of water a day while storage dam levels are low - but the city pipes are leaking as much as 50m litres daily.
A data scientist at the sector group, Lesley Smith, said leaky pipes are a nationwide problem.
"There's more than one network in New Zealand where more than 50 percent of water going into the pipes isn't coming out the other end.
"It tends to be our smaller councils that have bigger problems with water loss and I guess that partly reflects the funding constraints that are faced by those communities," Smith said.
She believes the trend towards more water meters in homes will help pinpoint problem areas.
Minister for Infrastructure Shane Jones said the problem is not about cracked pipes, but a broken system.
"We must come up with more robust institutions that can meet the cost for better water delivery," he said.
Jones has rebuffed the idea of the government dishing out money to help councils repair failing water infrastructure and said councils must work together to solve the problem.
"Deliver a muscular model that is fiscally capable of bearing the weight throughout New Zealand of water reform, don't look to the taxpayer for billions of dollars unless you're capable of fixing the system as opposed to only fixing cracked pipes."
Regional councils are often not capable of meeting the full costs of upgrades, because their ratepayer base is too small, Jones said.
In Auckland water managers also don't know how much water has leaked over the past five months - a period where usage restrictions came in, and in which there was a huge increase in pipe breakages due to the drying out and contracting of the ground.
However, Water New Zealand said Auckland actually had one of the better rates of 'real water loss' in the country.
Watercare chief executive Raveen Jaduram said they had started a proactive leak detection programme.
Over the next year council will examine 6000km of pipes and an improved response time of a maximum of five day when council staff receive reports of water leakages.
Rain has been in short supply for the last 18 months in Auckland. From January to April this year the city received less rainfall than it has ever had since records began.