Barrie Saunders: Three Waters – a totally unnecessary battle

The Three Waters proposal driven by Local Government Minister Nanaia Mahuta is a totally unnecessary, very divisive battle with local government and the people of New Zealand.  

The focus has been on whether there should be co-governance with iwi leaders, and also, whether it adequately prevents privatisation, which I see as a red herring maybe designed to divert attention from the real issues.  

The critical question is whether the failings of local government are such, that their Three Waters assets should be confiscated by the state, reformulated into four entities, and then handed back into a convoluted governance regime involving iwi and local government nominees.   

Having looked at the papers behind the proposals I do not believe they meet the necessary threshold.  Yes, there are problems, as Local Government NZ has recognised for many years, but they do not in my view justify central government overriding local government in this heavy-handed manner.  

The first real issue is water quality, which the government has dealt to by establishing the water quality agency Taumata Arowai.  It has only just started operating but will have a real role in ensuring New Zealanders have access to quality water across the whole country.   Anyone who says the Three Waters proposal is necessary to ensure quality supplies is either seriously ignorant or just telling lies.  

The Three Waters advertising last year was dishonest in that it implied the nationalisation was required to ensure quality water, when the Taumata Arowai had already been established in law.  That was a shocker for which heads should roll in the public service.    

The second real question is how to finance and manage the three waters systems throughout the country.  Clearly over the next 30 years the capex requirements will be high, maybe $180 billion, but I note many in the sector considered it to be grossly inflated.   Some local authorities may lack the expertise to manage the upgrades required, or have the ability to finance them with their current limits on borrowing.  

Short of local government imposing excessive burdens on their ratepayers or central government underwriting local authority debts, there are a range of options which can be found on the website of the now 31 local authorities opposing the governments’ plans.  Three of these councils are taking legal action.  For more information see: https://www.communities4localdemocracy.co.nz  

If after exhausting all options with local government, which it has not yet done, the Government then decided decisive action was required it would require a careful plan.  The logical course would be to collaboratively work through the issues with local government and come up with an agreed formula.  I suspect instead of just four entities there would be more like 10, with Auckland City left entirely alone.

Some of the boundaries defy the common-sense test.  Gisborne to Nelson including Wellington is Entity C, which is not rational, particularly when it’s remembered that Horizons in Manawatu is actually split with Entity B.  The logic of Entity C is to accommodate Ngai Tahu, which in the 19^th century controlled the South Island outside of the Nelson area.        

At that point the Government might well decide to underwrite the new entities to reduce their borrowing costs.  The alternative, which the Government has decided on, provides the proposed entities with such a level of independence from local government, it can borrow freely.  The massive risk to ratepayers is that insulated from local government politicians the entities will be able to gold-plate their systems, and charge the 100pc captive customers.  No wonder Standard and Poors likes it!!

I see the Government may establish a regulatory agency to ensure this doesn’t happen but I remain sceptical it will be effective.   Monopolists always have good explanations for their cost structure.   I remember been told by the head of NZ Railways, when they employed 23,000, they were about as efficient as they could get.   Now KiwiRail employs fewer than 5000.  Mahuta’s claim Three Waters will create, presumably an additional 6000-9000 jobs, reinforces my scepticism.  

The co-governance concept comes from iwi leaders who rejected the Key Governments’ declaration, fresh water belongs to everyone and as representative of the people, it was the Government’s job to regulate usage, in conjunction with local government.  

Fresh water is not the same as dams, pipes and sewage processing, assets built up by local governments since 1840.   The water ownership issue should be dealt with directly by the Government and not conflated with Three Waters.  Mahuta has further deepened suspicion about Three Waters by refusing to declare iwi will not be able to demand water royalties.

The net result is, like Putin’s war on Ukraine, we have a very unnecessary battle within this country to deal with some real but not insurmountable problems.  I hope the National Party commits itself to pressing the reset button, assuming the current Government is too pig headed to do that itself.       

In the meantime, it would be nice if the missing in action media, could really drill down into the issues, rigorously analyse the problem, weigh the alternatives and provide some real clarity.   That might regain it some credibility presently lacking on Three Waters.  And while doing that remember, just because people oppose co-governance, doesn’t mean they must be racist as asserted by one writer.

We have a high-quality democracy which is in serious danger of being degraded by a radical interpretation of the Treaty partnership concept.   No one should be surprised when its defended.  I would have thought this would be of some interest to the media, or is that too much to expect?

Barrie Saunders has a background in Government Relations and blogs at www.barriesaunders.wordpress.com.