Labour’s new water infrastructure policy

Written By: - Date published: 3:36 pm, April 13th, 2023 - 42 comments
Categories: labour, water - Tags:

Press release

Major shakeup will see affordable water reforms led and delivered regionally

Hon Kieran McAnulty - 2022 headshot
HON KIERAN MCANULTY
Local Government
  • 10 new regionally owned and led public water entities to be established
  • New approach avoids a rates blow out and delivers savings to households between $2,770-$5,400 per year by 2054
  • Entities will be owned by local councils on behalf of the public, and entity borders to be based on existing regional areas
  • Each entity to be run by a professional board, with members appointed on competency and skill
  • Strategic oversight and direction to be provided by local representative groups with every local council in the country, as well as mana whenua, getting a seat at the table

The Government has listened to feedback from local government and is announcing major changes to New Zealand’s affordable water reforms by agreeing to establish 10 new regionally led entities, which will still deliver big cost savings to New Zealand households says Local Government Minister Kieran McAnulty.

“These reforms are absolutely essential. Leaving things as they are will mean unaffordable rate bills,” Kieran McAnulty said.

“Over the last few months I’ve been working closely with Local Government leaders and relevant stakeholders on how to progress New Zealand’s long overdue water infrastructure reforms.

“The feedback has been overwhelmingly clear that our water infrastructure deficit needs to be addressed now if we’re to save households from ballooning bills that will make water unaffordable. But also that the reform programme must be led at a regional level – we have listened closely and absolutely agree.

“The cost of meeting the upgrades needed for our water systems is projected to be up to $185 billion over the next 30 years. Local councils cannot afford this on their own, and households in some areas could see rates rise up to $9,730 per year by 2054 if we do nothing.

“The projected costs have been peer reviewed by both Farrierswier Consulting (an expert Australian regulatory economic specialists) and Beca (a leading international engineering firm) and make for pretty grim reading. Leaving councils to deal with this themselves will lead to unaffordable rate rises. It would be setting councils up to fail and I can’t in good conscience do that.

“Under our proposal to establish 10 entities New Zealand households will still make big savings, projected at $2,770 – $5,400 a year by 2054 on average within each region.

“By extending the number of publicly owned water entities to 10, every district council in the country will have a say and representation over their local water services entities through regional representative groups, forming a partnership between council representatives and iwi/Māori that will provide strategic oversight and direction to the entities.

“These groups will continue to sit below the governance board, in which each member will be appointed on merit and qualification, but by increasing the number of entities we will be able to ensure the needs of every community, especially small rural towns, are heard and met.

“Our reform proposals will respond to long-running problems that have resulted in rapidly rising rates, poor health and environmental outcomes for many communities, deteriorating infrastructure due to sustained underinvestment, and wide variation in service quality.

“The need for investment is only getting greater. The recent flooding and cyclone is a taste of the extreme weather events to come, and our water infrastructure needs to be ready.

“I have seen first-hand the impact of the devastating floods and extreme weather events. These events have highlighted the criticality of waters services, especially stormwater, for community adaptation and resilience. They have also shown the fragility of critical water infrastructure in some areas,” Kieran McAnulty said.

The water services entities will start delivering water services from 1 July 2026 at the latest. Entities are able to proceed before this if ready.

“These are once in a generation reforms, and it’s important that we get it right, we landed on this by working with councils and will continue to do so to ensure a smooth transition,” Kieran McAnulty said.

______________________________________________

42 comments on “Labour’s new water infrastructure policy ”

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  1. weka 1
    13 April 2023 at 3:45 pm

    smart move by Labour. A big part of the opposition to 3 waters in some places was taking control away from local communities.

  2. ianmac 2
    13 April 2023 at 4:42 pm

    All will be well (Ha ha!) because Luxon has declared that National will repeal the new look Waters plan. (Note that the Herald publishes Luxon's denial on video before the plan explained.)

    I watched the PM and Kieran delivery and it seemed to be a reasonable solution to a problem that most know needs fixing. The Government is waiting for the costing for the National plan to be explained before the Election.

  3. Tiger Mountain 3
    13 April 2023 at 4:46 pm

    Worth a crack from the Govt. to change the framing. To do nothing is still not an option for those that have cognitive ability and experienced the recent storms. Beyond increasing Climate Disaster events, there is still crumbling infrastructure and people making do with questionable water quality.

    There are a number of people in the Far North that have “Stop Three Waters!” signage on rural land, who have rain water tanks, septic tanks/composting toilets, damns, streams and have arranged their own drainage for storms and other purposes. N.B. this means they will not be sodding well affected by 3 Waters Reform. So it has become highly political due to the right grabbing the narrative on this.

  4. Patricia Bremner 4
    13 April 2023 at 4:52 pm

    The borrowing for infrastructure will be at arms length and ring fenced for purpose.

    Councils rabbiting about "our assets" are wind bags. Their key objection is loss of power over water, and a narrow view of co-governance.

    "The old boys club' has been put on notice.

    Those who wish to continue wasteful use with no accountability, are 'Spraying'

    The rest of us homeowners feel some relief. Clean tap water tick, clean rivers and lakes tick and waste dealt to and cleaned tick. Infrastructure planned and done well tick. Contingency plans tick. Insurance tick.

    The upshot. All water should be clean. That simple.

  5. pat 5
    13 April 2023 at 5:12 pm

    Early indications are they are making the same mistakes again.

    The devil will be in the detail and the announcement lacks detail enabling opposition to provide their own.

    One wonders (again) whether it is because they don't have it or because they don't trust the public with it….either way it doesn't instil any confidence.

    • Hunter Thompson II 5.1
      13 April 2023 at 5:51 pm

      The litmus test will be what the relevant legislation actually says about the water administration structures and where the real power over New Zealand's water is going to lie.

      I suspect Labour will try to alter the Water Services Entities Act 2022 rather than scrap the whole thing and rewrite the law from scratch. After all, they’ve blown all that taxpayer money on consultants.

  6. pdm 6
    13 April 2023 at 5:25 pm

    3/5/all Waters remains a rort after these Clayton's changes. It is still privatization of Water Infrastructure Assets to Iwi.

    • SPC 6.1
      14 April 2023 at 6:57 am

      Total nonsense.

      It simply requires at least 3 councils to realise balance sheet separation – this prevents any one council having a majority vote.

      Balance sheet separation is what gives confidence to lenders to provide finance at a lower cost. A council having voting control is a restraint on business independence.

      Having independent of council reps involved, such as iwi (ensures a semblance of co-governance required for water after the the sale of power companies – see Waitangi Tribunal) or external exertise also reassures the foreign lenders, that local politics will not interfere with business management.

  7. Liberty Belle 7
    13 April 2023 at 5:35 pm

    A dog with a new name is still a dog.

    • Barfly 7.1
      13 April 2023 at 5:49 pm

      A RWNJ with a new slogan is still a RWNJ

      • Liberty Belle 7.1.1
        13 April 2023 at 6:05 pm

        Maybe, but then it's the government whose trying to sell a pup.smiley

        • Tricledrown 7.1.1.1
          13 April 2023 at 10:14 pm

          Puppies are nice National are like dogs barking at the hub caps.while pushing an very similar policy .National are dead in the water 3 months out from the elections .The recent floods have made people realize you can,t do nothing.

    • ianmac 7.2
      13 April 2023 at 10:18 pm

      Liberty and Barfly Did you watch the summary put up by Weka?

      No 12 below.

      • Liberty Belle 7.2.1
        14 April 2023 at 8:51 am

        Yes, thanks for the link.

        In the first part he is quite right – ongoing investment is required, and Council's under current funding restrictions can't fund it.

        In the second part, he is justifying a separate set of entities on the basis that they will be able to borrow and fund the investment. But that is (along with all the newly minted accountants here discussing 'balance sheet separation') essentially smoke and mirrors. Ultimately this is all public debt, so the government could directly fund water infrastructure without the cumbersome intermediary organisations.

        In the parts the video didn't cover:

        1. There is a complex bureaucracy being established to run 3Waters. This is a cost imposition that has little proven value to consumers. TSimthfield makes this point well below.

        2. The Te Mana o te Wai edicts hand huge power to one group on the basis of race and race alone. As Graham Adams points out, these have an operational impact that go far beyond what the government wants to talk about.

        3. The alternatives to the government model have not been adequately considered for a project of this size. it is clear that from the outset the government had a pre-determined outcome, involving a degree of co-governance, and nothing else was seriously considered.

        There are many complexities to this debate, and the government has done a poor job at articulating its position (something Hipkins seems to have acknowledged). But the proposed model is not robust, is not cost effective, and is not democratic.

        • Hunter Thompson II 7.2.1.1
          14 April 2023 at 12:55 pm

          Point (2) in your comments explains why Labour's critics have called the water reforms a disguised treaty settlement.

          It's what Hipkins is not telling voters that is important.

  8. Ad 8
    13 April 2023 at 5:59 pm

    I saw Eugene Sage's statement largely opposing it, but nothing yet from the Maori Party.

    Maori Party need to figure what they stand for, not just against, with 7 months to election

    If they vote against it and National get in, water management goes straight to the private irrigators and power generators, as it did under National last time.

    Parlamentary neutrality fron Maori Party or Greens is a leftie gift to Labour.

  9. Mike the Lefty 9
    13 April 2023 at 6:32 pm

    Since the new boards correspond roughly with regional council boundaries couldn't Labour have put them into the existing RC structure and saved some money?

    • Ad 9.1
      13 April 2023 at 7:50 pm

      More likely it's a step to merging the regional councils.

      • Tricledrown 9.1.1
        13 April 2023 at 10:21 pm

        Remember Ecan Nationals answer takeaway democracy set up a dictatorship run National Party hacks .Up shoot all Canterbury river polluted with cow dung. Cryptosporidium unfettered dairy farms on free draining land and Nick Smiths brothers excused from prosecution for illegal pollution by his business.

    • Res Publica 9.2
      14 April 2023 at 7:53 am

      Nah because then you'd have exactly the same issues, just with regional as opposed to district/city councils.

      In fact RC's are probably in an even worse position vis a vis their balance sheets since they don't tend to own a lot of real assets to borrow against. No pipes. No roads. No parks. Not much land.

      I think we need to remember the problem here is that quite a few councils looked at the finances required to actually maintain their infrastructure, said "nah mate" and chose to trumpet their "fiscal responsibility" in keeping rates rises low. Eventually, someone has to pay the piper.

      TLDR: Councils had the chance to exercise local democracy over these assets for close to 100 years. A lot of them made shit choices in the name of political expediency. And when they came crying to central government for a bailout they were firmly told they couldn't be trusted to not repeat the same exercise again.

      All this palaver about asset theft and co-governance is just the extended temper tantum by a bunch of mainly old white guys who were used to running their communities for them and their mates who finally, for once, are being held to account.

  10. Psycho Milt 10
    13 April 2023 at 7:26 pm

    I'd appreciate it if media wouldn't publish any blather from NACT about Labour's proposals without a statement that they'd asked what alternative NACT were proposing and either here it is or "Reader, alternative proposal was there none."

  11. tsmithfield 11
    13 April 2023 at 7:28 pm

    Several other things that concern me about three waters, or whatever iteration of it, is that it should be tested against some competing models to assess whether there is a better way to deal with the problem.

    Secondly, the whole co-governance thing adds unnecessary complexity and churn into the system. Thus, it seems that the 3 waters/affodable waters or whatever, can't be the most efficient structure for managing water assets.

    • Ad 11.1
      13 April 2023 at 7:53 pm

      Most useful comparison is against the existing model, and the rejected model.

      Co-goverance has been established in our national parks and in water, for decades of precedent. I've posted on it before.

      • tsmithfield 11.1.1
        14 April 2023 at 6:38 am

        Most useful comparison is against the existing model, and the rejected model.

        But there are other models proposed as well. So, I guess that is what elections are for. But, it seems to me that the government has been very closed minded to alternatives that could be better.

        Co-goverance has been established in our national parks and in water, for decades of precedent. I've posted on it before.

        Sure, I understand that. But it isn't really the point. As I understand it, the reason for these reforms is to provide a much more efficient and economical way of managing water services and resources. But, it is almost a tautology that more complex management structures will make the system less efficient. And, if the structure results in competing objectives, then we are sort of getting back to the problems at the heart of the council management issues.

        All that, along with the fact that there will be reduced economies due to the multiplication of entities, then we may well end up with something that isn't significantly better to what we already have IMO.

        • SPC 11.1.1.1
          14 April 2023 at 7:24 am

          The intent is to realise a lower borrowing cost.

          That is achieved by having as many as three councils areas within the entity zone – that is enough to realise the balance sheet separation required to obtain the cheaper loans.

          This is not about amalgamation to realise bureaucracy cost savings …

          • Belladonna 11.1.1.1.1
            14 April 2023 at 10:05 am

            If the only intent is to realize a lower borrowing cost – then co-governance is an unnecessary complication. Partnership with Maori will have zero impact on the bottom line of borrowing. But will increase the complexity of governance very significantly.

            • SPC 11.1.1.1.1.1
              14 April 2023 at 10:17 am

              For the lenders the risk is local body politics as to interference in the business activity of the entity. Thus the separation would lower the borrowing cost.

              Yes co-governance has no impact on the cost of borrowing.

              • Belladonna …
                14 April 2023 at 11:28 am

                Does that then follow that the 'risk' of local body interference is greater with 10 entities, than it was with 4?

                I would have thought that the over-riding authority of any Te Mana o Wai statement issued by iwi – would have a very chilling effect on lenders. AFAICS – there are no limits on this power.

                Why do you think that lenders would be more concerned over democratically elected public bodies, than over appointed (and entirely unaccountable) iwi representatives?

  13. Anker 13
    14 April 2023 at 1:37 pm

    Look I don't know and havent had time to try and figure out what the changes mean.

    But what a hell of a u turn having passed the Three Waters legislation under urgency before xmas. Now they are making at least one fundamental change i.e. 10 boards rather than four. WTF? It makes them look bloody incompetent or disengenious or both.

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