Bryce Edwards
democracyproject.nz
Dr Bryce Edwards is Political Analyst in Residence at Victoria University of Wellington. He is the director of the Democracy Project.
The Government’s water reforms appear to be fatally flawed before legislation is even introduced to Parliament. The fact that the Minister of Local Government Nanaia Mahuta is now pushing through unpopular reforms in the face of mass opposition and concern from nearly all quarters shows just how much she has bungled the process. The sad reality is that the Government has failed to create what should be enduring and convincing reforms in a crucial environmental and infrastructural area.
The management of water is too important to be so recklessly reformed. New Zealand desperately needs waste, drinking, and storm water systems and infrastructure to be fixed and future-proofed, and this is the Government’s one-off opportunity to bring consensus and build the foundation for sustainable water usage. And yet it has arrived at a situation where hardly anyone is happy or convinced with the blueprint that is about to be imposed.
As the Green Party warned when it called for a pause to the reforms, the Government risks bringing about a “reverse Goldilocks situation” in which no one is satisfied – see Claire Trevett’s The Three Waters backlash: Greens call for a pause, ‘a blatant power grab’ says Winston Peters.
It isn’t entirely surprising the government has ended up in this position, given the poor process they have followed. It’s been entirely top-down and elite-driven, with Mahuta clearly pushing for her pre-determined “solution” from the outset. Authorities say that behind the scenes there were over 30 different models of water management that Mahuta had to choose from, and she insisted on only one option being debated.
The policymaking process has eschewed real consultation and any genuine scoping of alternative policies to reform water management. Coming up with a blueprint and basically saying “like it or lump it” is no way to persuade people and bring them with you.
So it’s no surprise that recent opinion polling by Curia shows Mahuta’s plans have the support of only 19 per cent, with 24 per cent being unsure, and a majority of 56 per cent being opposed.
Mahuta and the Government just didn’t want public input into designing a better system. Many knowledgeable individuals and institutions have tried to raise different ways of managing water, but these have been dismissed as not fitting with the precise model that Mahuta has dogmatically pursued.
There is actually a lot about her broad blueprint that many will agree with, but it’s the set-in-stone details that make the whole package a problem. For example, some sort of amalgamation of water systems is a good idea, creating economies of scale. After all, the Auckland Supercity now has Watercare amalgamating what used to be multiple different water catchments. Lessons from such models could be used more widely in New Zealand. In fact, a case could have been made to pass water management to the current regional councils.
But if entirely new entities are necessary, with new dividing lines across the country, then why haven’t different options for this been put forward? Few people seem convinced that the Government have got the model right in terms of having exactly four entities. And the very strange divisions of the country into those four groups, with some seemingly arbitrary lines, needs much more debate and options.
Could the transfer of water assets from local authorities be done by purchase instead of confiscation? This is the one of the key objections to the current scheme, with some local authorities having invested much more in infrastructure than others, creating an iniquitous outcome under Mahuta’s solution. Some economists have therefore argued it would be preferrable for the transfer of assets be done by sale – for more on this see my previous column on this subject, The Democratic and equity deficits in the Three Waters reforms.
Local government losing control
Perhaps the biggest complaint from local communities and politicians is that they are losing control over their own assets. Of course, the Government says local communities will continue to own their assets. Mahuta said yesterday:
“Councils will continue to own water assets alongside other councils within an entity… For those councils who are still perpetuating that myth, it is deliberate, and it is misinformation.”
Few are convinced by this. For example, National-aligned blogger David Farrar explained it like this yesterday:
“The Government claims that it is not theft, as the Councils will still own the assets – just not manage them. This is farcical as ownership without control is not ownership. Imagine if you own your house and the Government announces that you will still own your house, but you have to move out and any decisions about who lives in it will be made by some committee, Would you regard that as satisfactory?”
– see: The great water theft is on.
Reducing local government control is about satisfying credit agencies
The reduced control of local government has clearly been deliberately designed to make local communities and politicians less powerful in managing water.
One vital reason for taking control away from locals is to satisfy credit rating agencies. By making the new entities independent of local government, the Government believes that they will more easily borrow billions of dollars to build the necessary water infrastructure – and won’t require central government to pay. This was explained yesterday by Thomas Coughlan in his column, Three Waters: Councils will never have control over water entities (paywalled).
Here’s Coughlan’s main point:
“the Government invited one of the ratings agencies, Standard & Poor’s to give its advice on how both councils and the water entities could borrow money independently of one another. What the debt market wants is those three words – ‘balance sheet separation’ – and what this translates to is a design that ensures that councils have almost no control over the water entities. Any system that proposes more control ceded to councils will compromise that balance sheet separation and will, by extension, undermine the whole reason for upending water in the first place: being able to borrow and invest in new water pipes.”
Reducing local government control is about fixing Treaty claims
Of course, local authorities will continue to have some indirect control of the water entities by appointing half of the board that selects the directors of each entity. But the crucial factor is that although the local authorities will technically have 100% ownership of these assets, half of those boards will be appointed by mana whenua.
This is the elephant in the room for many, and there’s been hardly any debate or explanation of the need for this radical reform. Essentially this is the Government using the reforms to address iwi Treaty claims to the ownership of water. This is a long running problem, and Labour hopes that by yielding some control over the assets to local iwi, they will get off the hook.
But will Labour receive a racially-charged backlash for this? Broadcaster Heather du Plessis Allan thinks so, saying “Let’s not beat around the bush here; that is going to raise the hackles of a lot of people who see this as giving power to unelected iwi who haven’t funded the assets, and that’s a potential problem for Labour because they are seen to be pushing too hard on Maori issues” – see: Three Waters fiasco has potential to go badly for Labour.
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