This week National has passed legislation through Parliament dismantling Three Waters.
I have always struggled to understand its opposition. The country’s water systems are in very poor shape. Far too many people have been poisoned. The infrastructure is crumbling before our eyes. In our major cities water and sewerage pipes that should have been replaced years ago have succumbed to old age and are collapsing at a remarkable rate. And there is currently not the faintest hope that the various water systems will be improved to make them resilient to climate change.
But somehow National and its partners persuaded many Kiwis that dealing with these existential threats was a bad thing.
The biggest source of angst and the driver of the anti 3 waters campaign was the possibility that Māori would be given too many rights over water.
Which ignores the fact that Māori has a significant interest in water.
After all article two of the Treaty of Waitangi preserved to Māori rangatiratanga over their their lands, forests, and fisheries and other taonga. And what greater taonga could there be than water?
Even National acknowledges Iwi rights to and interests in water.
But the dogwhistle possibly Atlas funded campaigns against Three Waters worked. It was assisted by some rather expensive litigation by the Water Users Group which was fronted by Stephen Franks and Brigitte Moreton. I still cannot understand why she was permitted as the lawyer involved to comment repeatedly on the issue on state owned Radio New Zealand. Ultimately the litigation failed but politically the damage was done.
I checked out the Water User Group’s records to see how much it paid in legal fees during this year. The Group is meant to upload this information but for some reason chose to file its tax return instead.
The Government’s reversal of three waters is the latest example of its activity in cancelling something but having nothing to replace it with.
Simeon Brown’s and National’s alternative proposal is to let Councils sort it out themselves. Essentially sink or swim and some of the smaller local authorities may be doing more sinking than swimming.
From Giles Dexter at Radio New Zealand:
Brown confirmed the government would not underwrite the organisations, and it was now up to councils to set up the CCOs and achieve the balance sheet separation required to borrow more money.
He said while the government would give councils the tools and policy settings, water was a local government responsibility.
“If they set themselves up in the right way, with multiple councils being part of it, they will be able to be balance sheet separated to have that long-term funding and finance arrangements in place. There’s a range of options around how they do that, this is about setting the policies, and then they take responsibility for that investment in the long term.
But this ignores the fact that some of the smallest Councils that have the most problems will not be able to enter into arrangements with better resourced neighbours. Which Council in its right mind would enter into an arrangement with a neighbouring council with a small population but a big potential liability?
This very scenario was put to Brown who chose to respond by not addressing the issue.
From Craig McCulloch at Radio New Zealand:
Some mayors like Manawatū’s Helen Worboys are confident they will get by, but others fear being left out in the cold – like Buller District’s Jamie Cleine, who suspects the West Coast will need to combine with Canterbury.
“Under the current Local Government Act settings, it’s pretty hard for a mayor to do anything that’s a negative impact on his own ratepayers, so it’s hard to imagine why they would voluntarily want to do that,” he said.
Morning Report host Corin Dann pushed the minister on this point, but Brown said those were “conversations that we expect councils to be having as they put forward their plans for financial sustainability … those conversations will be led by councils in the first instance”. After repeated questioning, Brown said it was only “hypothetical at this stage” and pointed again to those regulatory backstops.
National has the expectation that there will be a magic money tree that will produce the necessary resources. And saying that clearly emerging fiscal problems are “hypothetical” at this stage is ludicrous.
And I have a growing fear that privatisation will be one of the options the Government will consider. After all running down the quality of of public assets and then selling them off cheaply is straight out of the Atlas playbook.
The evidence of what is planned is not hard to find.
How about this statement taken from National’s water policy document:
“[T]he requirement to ensure water infrastructure is not holding up the development of new housing means councils may need to gain access to new forms of infrastructure funding and financing. National is fully committed to facilitating this and will work with councils to achieve it.”
Or that National is promising to local councils only “limited one-off funding to bridge the gap”.
And what about this statement?
“If councils can demonstrate an alternative [to regional CCOs or any other model] that complies with regulations for both water quality and water infrastructure, and is financially sustainable, National will approve it.”
Get the feeling that some sort of fancy arrangement which involves some form of privatisation may be on the drawing board?
And how about this?
Castalia is the firm that infamously analysed National’s tax policies and thought they were fine. It also worked for the anti three waters councils and produced this report where it said this about Papakura District Council’s earlier attempt to privatise its services.
Delegation of services to a specialist provider in Papakura delivered continuous high drinking water outcomes and low bills with high levels of customer satisfaction. The council avoided costs of water provision and gained access to a highly specialised global firm. The financing of new local network infrastructure is fully provided by developers, rather than partially by councils as is the case in some areas of New Zealand.
I don’t know which Papakura it was talking about because in 2002 the Papakura District Council resolved to review the contract after the local water quality was downgraded from a B to a D.
And here is where things start to get really worrying, Castalia’s Managing Director Andreas Heuser has been appointed the chair of the Technical Advisory Group recently appointed by Brown to guide the Government on its implementation of the replacement for Three Waters.
There is of course an overseas example which provides exquisite evidence showing the shortfalls of privatisation.
In England water was privatised in 1989. Scotland retained public ownership of its water systems and instead created Scottish Water, a model which the Labour Government based three waters on.
In this paper by Steve Finnemore and Nicky Smallberger published on Water NZ’s website the authors reviewed the relative performance of the water sector in England and in Wales. They state:
Scotland took a very different approach to water reform than England and Wales, which may have been due to the political environment of the time and jurisdiction. The England and Wales water sector was privatised during the third term of the Conservative Thatcher Government. Water reform in Scotland was at the end of the first term of the Labour Blair Government and was following the levy of a Windfall Tax on privatized companies.
In 2002, a single publically owned water corporation was formed through the merger of the West, East and North Scotland Water Authorities. This statutory authority was named Scottish Water and is 100% owned by the Scottish Government.
Scottish Water operates in close consultation with the Scottish Government. National policy and guidance to the industry is provided by the Scottish Government through the “Quality and Standards” planning process. This process provides targets for improvements in the industry expressed as “Ministers’ Objectives”.
Funding for achieving the targets is provided through water rates and long term loans from the Scottish
Government. Economic regulation is provided by The Water Industry Commission for Scotland (WICS) who establish the “lowest overall reasonable cost”, benchmarked against the private water companies in England and Wales. The Drinking Water Quality Regulator for Scotland and the Scottish Environmental Protection Agency (SEPA) provide drinking water quality and environmental regulation.Scottish Water has achieved similar drinking water quality and environmental performance gains as England and Wales as well as lifting customer service levels and at a lower cost to the consumer.
And about the English performance the authors state:
It soon became evident that the price reviews negotiated between [the Water Services Regulation Authority] and the individual water companies had been excessive, and enabled the companies not only to invest to meet the European Directives, but also gave them the financial strength to diversify into other activities (such as solid waste management) and other jurisdictions.
We are now in a situation where we have a future looking water policy that has been wrecked for political reasons, a Government that is insisting that Local Government sorts out a problem that is too big for many TLAs, and an inclination to look to the private sector for solutions that will clearly come at a price.
And in the meantime Local Government is facing the prospect of severe rates increases to pay to fix up our pipes and make sure we do not keep poisoning locals.
Hang on, this is going to get rough.
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