Bryce Edwards: Can Three Waters be salvaged, or will Nanaia Mahuta have to go?

The Government’s Three Waters reform programme is still in crisis, despite the supposed fix coming in yesterday with the release of yet another report with recommendations for improvements.

The Government seems determined to push through a deeply unpopular set of reforms for drinking, waste, and storm water, taking assets and responsibilities off local government and handing over control to four big entities that will operate under a Treaty-based co-governance model.

None of the report’s 47 recommendations are very significant. This is unsurprising as the working group was stacked, and given very tight terms of reference, meaning it was always more an exercise in public manipulation than good public policymaking.

In particular, the working group were not allowed to examine the core of Nanaia Mahuta’s Three Waters model – setting up the new entities under a co-governance model in which significant power is shifted to iwi, who would have half the control over the four new entities. That remains the elephant in the room, which Mahuta and her Government are extremely reluctant to discuss. The suspicion is that by avoiding talking about the shift to co-governance, the Government is hoping major constitutional change can simply be achieved without public debate.

Of course, there could be very good reasons for introducing a co-governance model. The problem is the Government has yet to make the case. Accordingly, surveys continue to show the public is deeply unconvinced by the concept. And it probably doesn’t help that whenever questions are raised about it, they are met with allegations of “racism” or “scaremongering”.

The other line often used by the Government is that anyone opposed to the Three Waters model is “opposed to change”. This is unfair as all critics have argued that significant change to water management is required. Opponents have actually put forward alternative models, which the Government has so far refused to consider or debate.

The latest working group’s recommendations, range from ideas that will make no real difference, to some that will make the reforms even worse. The highest profile recommendation of giving Claytons “shares” to local government, gives the appearance of ownership but means absolutely nothing in practice.

Other issues that remain unaddressed are water charges, water metres, and royalty payments. Although it’s been clarified that the local government owners of the water assets will be unable to extract any royalties, critics have pointed out that mana whenua groups will be allowed to do exactly that. Such claims will continue to have salience until Mahuta and the Prime Minister resolutely rule this out. And the possibility that big increases in water charges will be levelled on the public, or even privatisation of the assets, have not been refuted.

Dissent on Three Waters is now building rather than dissipating. The latest report appears to have embedded opposition rather than eroding it. Local authorities are quickly joining the opposition umbrella group, Communities for Local Democracy. This now has the affiliation of 30 of New Zealand's 67 councils.

The worry for the Government is that such widespread and grass roots opposition will have a major impact on the upcoming local government elections. Candidates opposed to the Three Waters model and the way that Mahuta has dealt with local government may attract support for their stance.

At the national level, it might also give a platform for political forces that can foster anger at the way the reforms have been imposed, and the general iwi co-governance model, which some will argue is merely the start of a new constitutional pattern of politics in which democracy is eroded.

For example, yesterday Winston Peters’ New Zealand First party put out a press release stridently opposing the reforms, positioning the party on the side of working class Māori and against tribal elites who are set to benefit from co-governance: “Like so many other elitist proposals demands have been made in the name of ordinary Maori whilst the benefits will go straight to a small Māori elite making these demands.”

There is still a chance that the Government will back down on Three Waters. If opinion polls continue to narrow between the left and right blocs, then Jacinda Ardern will start to look at what areas of the Government reform programme are eroding public confidence. Three Waters, or at least the co-governance model, is likely to be identified as a roadblock to re-election in 2023.

The alternative is that the Government gets out and actually sells the reforms to the public. This is what has been sorely lacking (beyond the infamous propaganda ad campaign). But that will require more than disparaging co-governance critics whose arguments are resonating widely with the public.

Any U-turn on Three Waters might actually see Mahuta lose the Local Government portfolio. It’s long been rumoured that inside the Beehive there has been dissatisfaction with the Minister’s stewardship of water reform.

Early in the year, Stuff journalists predicted Mahuta will be sacked from the portfolio in an upcoming Cabinet reshuffle. Here’s what they forecast: “Moving Mahuta away will help to dampen the vitriol from those riled by the prospect of Māori involvement in governance of water entities, and allow her to travel more as foreign minister.”

Mahuta would keep her Foreign Affairs portfolio – which is of increasing importance. But it’s becoming clearer that she doesn’t have the capacity for more than one major portfolio, and she has the wrong temperament for the local government one, given her inability to consult with the sector, and her dogmatic approach to reform.

Such a move would be very embarrassing for Ardern and the Government, and an explicit acknowledgement that they have bungled Three Waters, but it may be necessary.

Certainly, the Government may wish to have her out of the portfolio before the local government candidates begin their campaigns, which will surely utilise opposition to Mahuta and Three Waters, setting up an early warning of what Labour might be facing in 2023.

Dr Bryce Edwards is a politics lecturer at Victoria University and director of Critical Politics, a project focused on researching New Zealand politics and society.