More troubled waters

Photo: Getty Images
Photo: Getty Images
The Three Waters endeavour ends this year with momentum and yet more questions and issues.

Labour has spent a slice of its political capital to push ahead. Damn the torpedoes.

Discussion on the topic needs to begin by recognising that, as most know, something had to change. The state of storm, waste and drinking water infrastructure is such that many tens of billions of dollars of investments are required.

Most councils have fallen on the job. Elected councillors were loath to put up rates for underseen, underground assets. They also lack the borrowing horsepower to drive anything like the financing required.

It should also be acknowledged that any "solution" to such a difficult problem would prompt resistance and angst. Changing the status quo almost always does this.

However, even if Labour’s plan is that solution, the execution has been a master class in mismanagement. The figures justifying the change were shonky, the advertising campaign puerile and insulting, councils were falsely promised an option to opt out and then council assets are in effect being taken.

They retain nominal ownership, but real ownership requires the ability to control. While tweaks have been added to restore some accountability, the diluted input from councils will be minimal.

In part, this watering down is because 50% of a crucial appointment committee is reserved for iwi. The four entities are on tribal lines, and questions have also arisen about the power of water statements that can be made by Māori.

Whatever the rights or wrongs of this involvement, the view that "co-governance" has been introduced without debate and consultation is widespread.

While the southern water entity aligns with Ngāi Tahu territory, there will be challenges in sorting iwi representation for the other three.

Local Government Minister Nanaia Mahuta has consistently been seen as obdurate. Her involvement in the last-minute attempt to "entrench" public ownership in Three Waters legislation adds to suspicions about her and the whole process. Trust, already fractured, was further broken.

Her family’s involvement as government consultants and in Three Waters has added to criticisms.

It is difficult to see how National and Act New Zealand, if they become the government next year, could untangle a process that would have already advanced at huge cost.

Supposedly, the four entities will be far more efficient through economies of scale, reduced duplication and pooling of expertise. The concern, though, is that bureaucracy will soon swallow potential productivity gains. Further, one size does not fit all because local circumstances differ.

Logically, and because localism has already been largely lost, it might have made sense to follow Labour’s health and polytechnic paths — combine the whole lot. Four entities, however, do allow for benchmarking and comparison of performance, a sort of pseudo-competition.

Sitting over the top of the entities is the regulator, Taumata Arowai. How its role plays out is another part of the puzzle.

Further issues arising in the later part of the year include the interaction with coastal and geothermal waters and their inclusion in the statements that Māori can make and the avalanche of regulations that have become apparent. There is also a worldwide shortage of water engineers.

Add in inflating construction costs and rapidly increasing interest rates and both the funding and carrying out of what is needed become even more difficult.

It is envisaged the water entities will have the ability to borrow large amounts. That borrowing would be against the promise of revenue from water and sewage users.

This was given as one of the foundations for a system removed from the councils, both their balance sheets and their reluctance to increase rates. But doubts are being raised about the capacity of the water entities being able to borrow the vast sums needed at reasonable rates. It is argued, that when push comes to shove, they will be backed by the Government and taxpayers after all.

However Three Waters shakes down, one thing is certain. Householders are going to face steadily increasing and much larger bills for water and sewerage.