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 19th 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?

8 thoughts on “Three Waters – a totally unnecessary battle

    1. Ernie. Thanks. Follow your role with supermarkets. About 12 years ago I was engaged by a big food company to get the ComCom interested in them be rorted. Worked with a lawyer who subsequently became the chair. Did not get far enough.

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  1. The expression “three waters” is deceiving. It makes it sound as all water activities are the same, and it is not true. Potable water technology is based on collection, filtration and treatment, and delivery through a closed pressurised pipe network with a few reservoirs. Waste water systems collect “used” water through an unpressurised network and deliver it to a treatment plant (a quite sophisticated piece of biochemistry), generally then discharging the treated water – acceptably clean but not pure – to a river or the ocean. Stormwater is also collected by a seperate network of unpressurised sewers, and discharged without filtration or treatment (in New Zealand) into the nearest stream, river, lake, or ocean.

    Very little pollution is caused by our potable water systems, although a small amount of illness apparently occurs in some rural areas where there is little or no treatment or good monitoring. The Havelock North outbreak was aberrational, and does not justify drastic action – other than enforcement of existing stands and codes of practice.

    Our worst pollution problems – in urban streams, rural lakes, and parts of our coasts – come from waste and stormwater systems. Sometimes they co-mingle because of old leaky sewers. Sometime local authorities (urged by voters to keep rates low) fail to provide adequate treatment plants, and fail to keep the sewerage networks in good or even adequate condition. Wellington City is slowly learning this! Our failure throughout the country to get to grips with stormwater – the nice pure rain flowing naturally under gravity to wherever – is a national disgrace. Urban pollutants from roads, roofs, the yards of industrial plants, etc etc are a toxic mix of chemicals and general rubbish and detritus. Rural stormwater contains fertiliser runoff, animal excreta, and occasional discharges from rural industry. By no means are dairy farmer responsible for all our rural pollution. There are many other sources.

    Does the above warrant a wholesale takeover by the government? I do not think so. Here are some other possibilities:

    1. Government reviews all current standards, codes, and regulations, and amends them to achieve – over time – the outcomes that it wants. Of course it is logical that iwi are involved.

    2. Government establishes a national auditing framework that publishes reports on the progress of local authorities at set intervals.

    3. Where local authorities are failing, government either reforms them by amalgamation and abolition, or appoints Commissioners for a period. There will be cases where the ability of a local authority to cope with major projects will be overwhelmed, and special government funding may be necessary.

    4. LIMs (Land Information Memoranda) must be required to include information about storm and wastewater sewers on the property.

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  2. A great opinion. Couldn’t agree more about the media. Here’s more comment – a letter to the editor, Northen Advocate, sent this morning.

    Vaughn Gunson’s column supporting the government’s Three Waters reform missed out two vital ingredients in its criticism of the Whangarei District Council and mayor Sheryl Mai.

    While doubtless no one would disagree that clean safe drinking water is vital and wastewater discharge into our rivers and oceans needs substantial upgrading, the regulations setting out the standards required are being put in place by the new regulatory authority, Taumata Arowai, which took over as the drinking water regulator on 15 November 2021, and also has the responsibility to police those standards and ensure they are complied with.

    The four new water entities the government is proposing to establish will be required to meet those standards in exactly the same way as councils will be. No advantage in the removal of water provision for councils there then.

    Gunson is right, that the goal is for all New Zealanders to experience similar water standards. But that same thinking could be applied to many things.

    If taking councils out of the picture in order to achieve it is the right move, then surely all New Zealanders should experience similar standards in provision of libraries, parks and reserves, local roads, building permit regulations, liqour licencing, rubbish disposal etc. Why not do away with councils and the differing views of local communities altogether in that case.

    The appalling state of Northland’s main highways is a wonderful example of why a large centralised service provider is a very bad idea.

    Allowing for differences in terrain and soil conditions, building and maintaining a road is a relatively simple exercise in comparison to the significant local differences in providing water collection, piping, and water treatment and discharge. The variables in that exercise are enormous and are better dealt with by local people who have local knowledge.

    The real problem with under-investment in water infrastructure is financing it, hence the difficulties councils in rural areas with small populations face.

    Gunson lauds the reforms by surmising that less of our money will be going to international bankers if there’s greater centralisation.

    What he fails to understand is that those international bankers create, out of thin air, the money they lend, like fairy dust. As the Reserve Bank states “by far the largest share of money – 80 percent or more – is created by private sector institutions (banks)”.

    The Reserve Bank itself has created around $53 billion dollars in the last 2 years, some of it to buy local body bonds.

    There’s no reason why that credit creation capacity could not be used to fund the necessary infrastructure upgrades that are needed.

    Given that the Reserve Bank is owned by the government on behalf of all the New Zealanders there need not be interest paid on that finance and in certain circumstances it could be made debt-free as well.

    Instead of the massive upheaval and loss of local knowledge and local democracy that will take place with the government’s reforms, simply giving councils access to the appropriate Reserve Bank funding would enable all the water infrastructure upgrading necessary to meet our aspirations – without putting more profits in the pockets of international bankers.

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