The Equity Deficits in the Three Waters Reforms

Dr Bryce Edwards is Political Analyst in Residence at Victoria University of Wellington. He is the director of the Democracy Project.

The Government has begun a $3.5m advertising campaign to convince New Zealanders of the need for radical reform of our drinking, storm and wastewater. A consensus appears to be building on the need for change, but there are arguments against the Government’s “Three Waters” reforms. Have they come up with the right answer, or will the reforms make matters worse?

Equity Problems in the Government Proposals

There is an equity issue at the heart of the criticisms of the Three Waters proposal. This is because the reforms would effectively strip local government of their drinking, storm and wastewater roles and assets, transferring these to four regional mega-entities. The 67 local councils currently have very different levels of assets and debts that they are being asked to hand over.

To some, this appears incredibly unfair. Many communities that have diligently invested millions or billions of dollars over time, and paid off their debts, will be disadvantaged, while councils that have prioritised lower rates and expenditure on vanity projects instead will benefit from everyone’s water infrastructure being thrown into the melting pot. So debt-laden councils will be relieved to lose their debts, and asset-rich communities are being punished for their forward-thinking and sacrifice.

Environmental economist Julia Talbot-Jones of Victoria University of Wellington put it like this on the Newsroom website this week:

“The problem is the degree of system collapse is not uniformly distributed across the country. While some cities, like Wellington, have failed to upgrade their infrastructure, others, like Auckland and the Kapiti Coast, have spent billions proactively upgrading their services” –

see: Govt must pay to ‘buy back’ water networks from locals.

She argues that central government should actually be buying the current water assets off local government:

“If the Government wishes to create an equitable playing field, it should compensate councils for their water infrastructure investment – essentially ‘buy back’ the infrastructure and services from local authorities. This approach would have precedent under the Public Works Act 1981, which gives the Crown the power to acquire land for public works with due compensation given to affected private landowners. For councils, compensation payments under the three waters reforms could reflect the level of recent investment in water infrastructure upgrades.”

The likely uneven results of the proposals for councils are explored by Jonathan Milne in his article: Rates of change: Charting NZ’s winners and losers in Three Waters reforms. According to this analysis, the councils with the most to gain are those with the biggest debts: Auckland ($3.2b), Christchurch (nearly $1b), Tauranga ($473m), Hamilton ($370m) and Hastings ($140m). In contrast, there are nine debt-free councils who would appear to be the losers – such as Whangarei and Kawerau.

Newspaper editorials have also emphasised this problem with the reforms. The NZ Herald wrote this week that these concerns are “more than parochialism at play”, pointing out that each council “has individual circumstances of assets built by locals through targeted rates, major projects in the pipeline, and even surpluses of funds stockpiled for specific purposes” – see: Undercurrents of concern with Three Waters reforms (paywalled).

The newspaper quotes National’s Simon Bridges: “Ratepayers face losing local control of the assets they’ve paid for over generations, while being asked to foot the bill for poorer-performing neighbours.” And it gives the case study of Whangarei, in which “the council is concerned about what it would mean for the local assets ratepayers had paid for, and the risk Northland would come second to Auckland.”

For more on this, see Mayor Sheryl Mai’s argument: Why Whangarei opted out of government’s Three Waters Reform.

Unsurprisingly, given that there will be big winners and losers, the reforms are starting to pit council against council, with local politicians speaking out against other districts for their stances – see, for example, Felix Desmarais’ Three Waters reform: Some councils have ‘head in the sand’ – Rotorua councillor.

In this article, the mayor of Kapiti District Council, K Gurunathan is reported as believing the reform is aiming for outcomes his council has “already achieved”, and “he believed the changes would result in some councils ‘subsidising’ others with poorer assets.”

This is explored in further detail by Georgina Campbell, who reports Gurunathan’s view:

“He doesn’t want his constituents being deprioritised and paying for the likes of Wellington City’s crumbling water infrastructure just because Kapiti has proactively invested in its water services”

– see: ‘Three waters’ battle between council and Government explained (paywalled).

In contrast, Campbell paints a picture of councils like Wellington having neglected basic infrastructure in favour of fashionable and vanity projects:

“Cycleways, new stadiums, and rainbow crossings could be seen as far better ribbon-cutting ceremonies than a new wastewater pipe.”

This article can be republished under a Creative Commons CC BY-ND 4.0  license. Attributions should include a link to the Democracy Project.  

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