Friday, March 25, 2022

Henry Armstrong: Stop This Disgraceful Three Waters Confiscation, Ardern!

Recent comments in various media throughout New Zealand regarding Three Waters demonstrate the utter stupidity and gross political interference in local affairs by the neo-Marxist Ardern government in its planned seizure of all of New Zealand’s water resources. 

The Three Waters Reforms forcibly removes from District and City Councils, billions of dollars' worth of assets which comprise all of New Zealand’s drinking, waste, and storm water systems. 

Most Councils use these assets to borrow against to fund other high-cost projects such as roading, waste disposal and other public services. These assets do not belong to central government, having literally been paid for by generations of New Zealand ratepayers.

So why is the neo-Marxist Ardern government acting in such a belligerent, non-democratic and illegal manner and what are the implications for ordinary New Zealanders?

To answer this question, it is necessary to look at a number of factors which, when taken together, expose Ardern’s reasons and just what the downstream implications will be. This article tries to “dig a little bit deeper” into the reasons behind the confiscations:

- Claimed efficiency of delivery and resulting quality outcomes

- Cost-benefit issues and subsequent costs to ratepayers-the financial case

- Balance Sheet implications for Councils

- Governance, Representation and Management issues

- Role(s) of iwi/ Maori in Three Waters confiscation

- Owning and controlling the water versus owning and maintaining the assets

- Political and constitutional issues

Let us consider some of the views expressed by various parties so far, in a little more detail:

1.Efficiency and resultant quality

The argument put forward by government in taking this totally undemocratic approach is that some years ago, the town of Havelock North experienced a contaminated water supply which affected many people. They claim that small authorities are struggling to fund, maintain and upgrade their individual, localised systems, with some larger places like Wellington experiencing significant problems due to old piping.

Government believes a totally centralised approach under four mega “Entities” covering all of New Zealand, is better able to deliver quality outcomes than the 61 individual District and City Councils doing their own thing. But little concrete evidence regarding improvements in efficiency and/or  quality resulting from the confiscations  has so far been provided by government which would justify the seizure of billions of dollars' worth of Councils’ assets.

 Indeed, in some cases where Councils have previously outsourced their water services and control to outside contractors, such as the South Wairarapa District Council some years ago, the outcomes were disastrous.

In spite of almost half of all Councils now openly opposing the Three Waters confiscation, the government is brazenly proceeding with its plans to confiscate and control all water services assets in New Zealand.

2.Cost-Benefit analysis and end costs to ratepayers-the financial case

It is surprising to see that the Ardern government is not emphasising the claim that the Three Waters Reforms will result in significant reductions in the cost of delivering the three water services to ratepayers. If the end result of the Three Waters Reforms was, convincingly, a substantial reduction in our rates, would we not all be trumpeting the good news and saying “bring it on, Trev”?

Will the proposed reforms deliver much lower water services costs to ratepayers or not? The answer to that question is - it depends upon how confident you/we/the government is that the 30-year projections based on overseas (not local) experiences are both valid and reliable. The government’s financial case for the reforms is totally based upon projections provided by accounting firm Deloittes, which in turn, uses data from the Water Industry Commission for Scotland (yes, Scotland!) in its highly questionable projections for what might occur in New Zealand over the next 30 (yes, 30) years or so. Deloittes uses Net Present Value (NPV) to project the costs and benefits of “reformed” water services in 30 years’ time.  Such methodologies are notoriously speculative in the extreme and cannot possibly control for a range of variables in such a long time period, such as variations in interest rates and the discount rate (cost of capital) which can negate such projections. NPV has several drawbacks. Changes in the discount rate over time (in this case 30 years) can significantly affect projected cash flows. And it is not possible to compare different sizes of projects, such as Auckland’s water services with those of, say, Manawatu, using NPV. One would need to calculate the NPV for each individual Council to obtain a clearer picture - in other words, one size does not fit all in this case.

The official Department of Internal Affairs (DIA) website also contains a disclaimer: “Current (household) costs are not necessarily a good reflection of what funding is required to meet the full costs of economic depreciation (that is, to provide resources for asset maintenance and renewal). The website also projects NPV increases in taxes of between NZ$4 billion and NZ$6 billion. I wonder where these taxes will come from? Helicopters?

If there is an overwhelmingly convincing case that individual households are guaranteed lower water services costs from the government “reforms” over the next thirty years, there would be singing and shouting from the rooftops, would there not?  Smoke and Mirrors here.

3.Balance Sheet Implications

Water services assets comprise a substantial percentage of any Council’s total assets. They exist, have real value, and comprise the fiscal security required for Councils to borrow significant sums against, to fund other community projects like roading, waste disposal and public amenities.

Not having these assets as security will have a disastrous financial impact where Councils will find it very difficult to raise capital. This is so basic as to be unbelievably stupid, as anyone with an ounce of business understanding would see.

The Three Waters confiscation does not have a sound financial basis for proceeding - if it did, there would be no pushback from Councils and the public, would there?

And finally, with this huge amount of money being available to “buy” the water services assets, why not make this huge amount of money available to Councils by way of interest-free loans or direct grants, to upgrade and maintain their services? Because the Three Waters Reforms have nothing to do with cost reduction, as we shall see.

4. Governance, Representation and Management

This is where the real reasons for the Three Waters Reforms become crystal clear. The water services assets of all 61 District and City Councils in New Zealand are to be owned and controlled by four (4) “mega” entities or corporate-type structures: Auckland and Northland “Entity A”; the Western North Island “Entity B”; the Eastern North Island and part of the Upper South Island “Entity C”; and the remainder of the South Island, “Entity D”.

According to the official DIA website governance and management diagram, there will be at least four levels of governance, involving 61 separate Councils, in establishing the boards of directors, who  in turn will govern the four entities which will in turn employ the management  groups. This has to be one of the most ridiculous governance and management structures imaginable, so much so that  following the recommendations of a government “Working Party”, an additional level of governance will now be added - Sub-Regional representative groups reporting to the Regional Representative boards! Imagine representatives of the 61 councils and an equal number of iwi/Maori representatives all sitting at the same table! (Over 100 at once?)  Unbelievable!

It is interesting to note that our University Business Schools and the Institute of Directors in New Zealand, have made no public comment on the proposed governance structures. Are they so politicised that to criticise such an unbelievably stupid governance arrangement might reflect adversely upon them? Overarching these convoluted and absolutely unworkable structures is the use of “co-governance” boards of the four entities comprising equal numbers of iwi/Maori and us “others” representing each of the councils in their area. In turn, these four regional groups will be responsible for ensuring the Boards of directors they appoint to run the operations are “adequately competent both as a Treaty partner, and with expertise in accessing matauranga Maori, tikanga Maori and Te Ao Maori knowledge to inform the water entities activities.”

In addition to all of this governance nonsense, there is the government’s statement of objectives of the Crown/Maori relationship, set out in the official DIA website, Item 4. In other words, the government’s  primary list of reasons for confiscating Councils’ water assets:

“Purpose - Enabling greater strategic influence to exercise Rangitiratanga (ie chiefly/ tribal rule) over water services delivery  by:

A. Integration of iwi/Maori rights and interests within a wider system

B. Reflection of a (sic) holistic te ao Maori perspective for the relationship  with the Treaty partner

C. Supporting clear account and ensure roles, responsibilities and accountability

D. Improving outcomes at a local level to enable a step change improvement in delivery of water services for iwi/Maori (only Maori?)

These reasons lie at the root of the Three Waters Reforms, as has been emphasised time and time  again by various commentators, including many prominent New Zealanders, and on NZCPR. See especially, recent posts by Dr Muriel Newman and others.

 But is the New Zealand public totally in favour of “co-governance” when we are all supposed to be one nation? Are we ready to accept te ao Maori views including spirituality, the “mauri” life force within water; according human identity  to bodies of water such as the gender-neutral(?) Whanganui River; embracing Tapu, Mana, Makutu and Rahui in our water systems? And above all, accepting that the Treaty of Waitangi constituted an equal “partnership” between the Crown and iwi/Maori when in fact it  simply accorded equal rights (not representation) to iwi/Maori as British subjects? Is the New Zealand public willing to accept a situation where local communities ostensibly “own” their water services assets but the control of which lies with appointed, unelected, and unaccountable co-governance tribal boards based upon ethnicity?

Given the opportunity, the New Zealand public will flatly reject what is in fact an undemocratic, race-based and disingenuous concept. But will we be given the opportunity?

5.Ownership or control?

Threading its way through this nonsense are two underlying principles which are getting lost in the “Smoke and Mirrors” approach by Mahuta and Ardern. Are we talking about ownership or  control of both the water itself and/or the assets and services by which water is provided and disposed of?

Government illegal ownership of the assets has been disputed and rejected by almost half the 61 Councils on the basis that local communities have paid for them over generations so they are the property of local communities. Yes! QED! Government control of the assets is equally stupid and unworkable under the “four entities” structure proposed, as set out above in item 3. But these aspects are not what Three Waters Reform is really about. Iwi/Maori have made it abundantly clear they do NOT seek to own or co-own the assets - they are not that stupid. Who, apart from the true owners, the ratepayer, would want to be saddled with huge and costly assets which will always require maintenance and upgrading? Certainly not 50% of iwi/Maori!

No, iwi/Maori are seeking ownership of the water itself, not the reticulation systems. Control is another thing. If you own the water itself and have at least half the control of who gets it, how, when, at what cost, isn’t that a far more attractive position than having to fork out for maintenance and upgrades? Absolutely, as Ardern and Mahuta would say! And, the unthinkable suddenly becomes a real possibility - that New Zealanders could well end up paying iwi/Maori a royalty for using “their” water which they “own”. Such is the incredibly bizarre situation in which we find ourselves today.

6.Political and Constitutional issues

It is abundantly clear now that the motivation behind Three Waters Reform is NOT at all to do with efficiency and quality. The motivation is entirely political. Note the side-bar reasons on the DIA website, mentioned above. The REAL reason for Three Waters, along with other intentions to centralise essential public services such as health, education (Polytechs) and Welfare (Oranga Tamariki, etc) is to give effect to the not-so-secret reports (He Puapua and Matariki Mai Aotearoa) proposing New Zealand being equally co-governed by iwi/Maori (16% of the population) and the other 84% who are not Maori. The rationale of this bizarre goal is a modern, presentist, re-interpretation of the Treaty of Waitang, claiming an equal “partnership” between the Crown (which includes all Maori) and the various iwi and hapu comprising the Maori population. This raises enormous constitutional questions as it would be a complete rejection of democracy as we know it. Yet, regrettably, the Ardern government will NOT discuss or debate this with the public, only with Maori.

But as the sage TV personality Blackadder would say, “I have a cunning plan”.

There IS a simple solution to the overall intention to improve New Zealand’s future approach to Three Waters:

- Empower Taumata Arowai, with its government-appointed, co-governed, PC  board, which is currently appointed to oversee and regulate the quality of New Zealand’s drinking water, to also oversee, in conjunction with Regional and Local Councils, catchments and storm water issues as well. Regional Councils already oversee catchments and rivers plus other environment-related water issues.

- Empower the 16 Regional Councils to oversee, in conjunction with Taumata Arowai, the water services needs of the Councils within their region- quality of drinking water (in conjunction with Taumata Arowai), and storm water, in which they already have a role with rivers and catchments.

- Continue to enable Councils either individually or in conjunction with other nearby Councils, the responsibility for their own unique wastewater requirements, but overseen by Regional Councils to enhance inter-Council projects, with quality regulation by Taumata  Arowai.

- Empower Taumata Arowai to distribute, through the 16 Regional Councils, low interest loans or outright grants to those Councils which currently need urgent assistance, using the vast sums of taxpayer/ratepayer money already set aside by the Ardern government to purchase(confiscate) Council assets.


- No need for four “mega-entities”, plus regional and sub-regional representative groups, or the huge bureaucratic costs to set them up and keep them going - we already have them, they are called Regional Councils.

- Communities should retain ownership and control of their own assets

- Representatives on Regional and Local Councils are elected and are accountable to ratepayers and are not there because of their ethnicity

- Government can do it’s benevolent politicising bribery, by making the current funds for Three Waters available as low-interest loans or grants to those Councils in need. There is no logical reason why government needs to “own” Three Waters.

- Nobody can “own” water, which falls freely from the skies, can they?

It’s democratic, for God’s sake!

Henry Armstrong is retired, follows politics, and writes. 


Geoffrey said...

Thank you.

Unknown said...

You are right Henry. This is a political agenda. If this nonsense doesn't stop NZ is heading down a very dangerous path. This must be the most incompetent government we have ever had