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Three Waters Reform Dividing New Zealand

by Bruce Smith

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On the 3rd of March, I published my journey to date with the Three Waters Reforms being proposed by Government. You can see this summary on YouTube.

Now, with the 2021 Local Government Conference behind us – the conference where we listened to the Prime Minister and Minister Mahuta and had discussions with a number of Mayors and Chief Executives – it’s time for a further update.

At the Conference, a 2.5-billion-dollar “incentive” was offered by the Prime Minister to encourage councils to opt in to the government Three Water proposals. Some called it a bribe; I prefer the word incentive. My Westland District Council was to receive 11 million dollars, which we were advised could be used on any project that would assist the District (not restricted to Three Waters). Its stated purpose was to ensure Councils were no worse off after their Three Waters functions and assets were removed. Nothing was mentioned about the strings attached by the Prime Minister in her speech.

On the second day of the conference, we were informed the money would become available in July of 2024. It could be spent on projects that would have to be consulted and approved by iwi, and was not confined to Three Waters investment. It was subject to councils joining the Government “master plan” for Three Waters reform. This includes the transfer of Councils’ assets to one of four companies to be established to control the allocation of water, the assets transferred by Councils, and the funding of the current and future water supplies.

It was clarified that Maori would be granted membership and voting rights of 50% of the governance groups that control the Three Water activities and future strategic direction of each of the four entities. The voting would be 50% Maori and 50% Councils, who had transferred 100% of the assets to the operating companies. At June 2020, Maori make up 10.4% of the West Coast population, and 16.7% of the New Zealand population, according to Statistics NZ. In commercial terms, the Government proposal gives Maori the right of veto in perpetuity from Government. This is an unorthodox proposal, where 100% of the population have paid for the existing assets, and will be paying 100% of all future water costs.

Amongst the conversations, it was observed how undemocratic this proposal was. It was noted that the proposal would create a real backlash in our communities. An “unintended consequence”, for sure. It seems to fit in with the He Puapua plan more than anything else.

(You can read this report here).

The proposed governance structure sits over the operating companies, which have no ownership structure as defined in the Companies Act, no shareholding, and what appears to be an ad hoc distribution of voting rights. The Mayors were informed by Minister Mahuta that Councils have until the end of September 2021 to advise Government if they are “in or out” of the proposed Three Waters Reform structure.

At the same time, Mayors were also advised that information which has not been received at present would be supplied by the Government via DIA, and sent to Councils for consideration during August and September.

Note that Councils are required by the Local Government Act to consult with its ratepayers when strategic asset purchases or disposals are being considered. I can't speak for other Councils, but Westland will need at least three months upon the receipt of the information to engage experts and to receive their advice on the merits and risks of the transfer of assets as proposed by Government. This will then go to ratepayers for consultation and seeking of submissions.

My view is that because of the implications of transferring over a quarter of the Council’s total assets – at below valuation – there is only one safe road to take. I will be advocating for a binding referendum to go out to the people of Westland, seeking direction on in or out. It’s called democracy.

It's hard to imagine how any council in New Zealand will be able to make a decision without the clear direction a referendum will bring.

Discussion occurred about what information ratepayers would require to make a decision. At present, they are 100% in the dark, and will only know what has been read in the media, much of which is spin-doctor sourced.

The first information required from any ratepayer which has not been in the papers:

  • What do I pay now?
  • What will I pay if this proposal is mandated?

I can only talk about Westland. At present, a household pays $527.40 pa water rates. A commercial business pays $927.12 pa water rates.

If the proposal is mandated, households will pay $1,640.00 to the water supplier for their water. We have not been told what a commercial user will be charged by the water supplier.

Households need to know if the $1,640 excludes GST, or is inclusive of GST, as 99% are not registered. Another question that ratepayers need answering is, will the $1,640.00 dollar bill they receive from the water supplier come off my current rates bill? The answer is a firm NO.

If your WDC household rates are, say, $3000 at present, the $527.40 for water you pay at present comes off your rates from Council. Your rates will drop to $2,472.60, and at the same time, you will receive an account from the water supplier for $1,640.

Your cost today is $3,000 which includes water. Your total cost if the proposal is mandated will be $4,112.60, and that's an increase of 37%.

The mayors talked a lot about democracy and the loss of localism which needs to be considered.

Perhaps we should consider how much influence Coasters have with, say, NZTA. All Councils have had the NZTA roading contribution this year reduced by a minimum of 10% due to a Government directive to put road user charges into rail networks and cycleways.

Health services on the coast now have no direct local input. It’s Government controlled.

The Tai Poutini Polytechnic now has no direct local input. It’s Government controlled.

Education is 100% completely controlled from Wellington. It’s Government controlled.

Social housing is 100% controlled out of Wellington. It’s Government controlled.

The Coast has a serious shortage of social housing and no sign of this being rectified. Now the proposal is to take all three water assets from the people of Westland, to have them transferred to one of four water supply companies. There will be no tangible compensation. Households will pay much more for water with no control of future costs.

The Government keeps repeating the PR team’s key message: “we have proven the case for change”. Government keeps referring to the one event where a failure that occurred in Hastings, which had never occurred before or after in New Zealand, and is nowhere near a justification for change.

There is discussion going on around New Zealand about the removal of control and assets for Three Waters from Councils. Assets which generations of families have paid for with hard earned cash.

What’s proposed seems to fly in the face of our New Zealand democracy and way of life.

I will try and summarise as at 24th of July my journey to date.

The case for change has not been proven.

The water quality bar has been set at a level unaffordable to New Zealanders. This is evidenced by the increased cost they will be invoiced by the water regulator to every household.

One size does not fit all.

The loss of local control and influence feels like a step too far.

Confiscation of assets paid for and built up over generations with no compensation will struggle to gain public support.

Some say the proposal to give a right of veto to Maori, who make up 16.7% of the population, is undemocratic and will find little support. It follows closely the objectives set out in the He Puapua report.

The borrowing of up to 160 billion dollars by the new proposed entities, using the assets transferred from our Councils and paid for by generations of New Zealanders as security, feels reckless. If it’s aimed at increasing borrowing in New Zealand, away from the Government’s balance sheet, it is going to struggle to get support.

The time frames being urgently pursued by Government suggest this is not about Three Waters. If it is, why the urgency?

What other councils do around New Zealand is up to them, however a public referendum in every district would allow our residents and ratepayers to have a voice. It is them who have along with their families over generations paid for these Three Water assets. On that basis, the decision to opt in or out must come directly from them.

My view is that because of the implications of transferring over a quarter of the Council’s total assets – at below valuation – there is only one safe road to take. I will be advocating for a binding referendum to go out to the people of Westland, seeking direction on in or out. It’s called democracy.

Bruce Smith is the current mayor of the Westland district, and the Chairman of West Coast Civil Defence.

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elocal Digital Edition – August 2021 (#245)

elocal Digital Edition
August 2021 (#245)

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