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| Three Wise Men: Who should pay for upgrading New Zealand's waste, storm and drinking water services? That is the $64 billion (at the very least!) question. The most obvious answer: and the one Mayor Wayne Brown in Auckland, Mayor Phil Mauger in Christchurch, and the Mayor of the Waimakariri District, Dan Gordon, reached for with plain, old-fashioned, common-sense, was that the state should pay. |
THE THREE MAYOR’S proposed revision of Three Waters is timely, sensible, and ought to be accepted by the Labour Government. If Jacinda Ardern and her colleagues press on regardless, then the electorate will know just how little Three Waters has to do with securing an affordable upgrade of New Zealand’s water infrastructure, and how much the controversial scheme is now about mandating the co-governance of water.
Not that the Prime Minister will admit that co-governance is the driver of the proposed reforms. To do so would be to lay upon the table, for free and frank debate, the fraught issues of radical constitutional change, and the future of our democracy. Ms Ardern is, almost certainly, in possession of poll data indicating that any such debate would be lost by her Government – decisively.
No, the Prime Minister’s explanation for why the Three Waters project must proceed is already being aimed, unwaveringly, at the voter’s back-pocket. If Three Waters isn’t implemented, she is warning the electorate, council rates are going to go through the roof.
Caught in the grip of a serious cost-of-living crisis, citizens desperate to get their household budget under control will receive the PM’s message with relief. If Three Waters can prevent the average household’s rates bill from skyrocketing, then the average household will more than likely give “Jacinda” the big thumbs-up.
What the average household almost certainly doesn’t realise is that the Prime Minister is spinning them a yarn. Providing the nation with clean drinking water, dealing with its stormwater, and getting rid of its waste water, is already costly, and cannot help getting costlier. Three Waters, or no Three Waters, there’s a mighty big bill coming New Zealand’s way – and, for better or for worse, New Zealanders will have to pay it.
But, how will they pay it? That is the $64 billion (at the very least!) question. The most obvious answer: and the one Mayor Wayne Brown in Auckland, Mayor Phil Mauger in Christchurch, and the Mayor of the Waimakariri District, Dan Gordon, reached for with plain, old-fashioned, common-sense, was that the state should pay.
Nothing can borrow money more cheaply than a solvent, sovereign state. Why? Because states, unlike people, corporations, and even banks, are immortal. There was a time when investors thought of municipalities in the much the same way. If nation states weren’t going anywhere, then neither were their cities and towns. But then New York City went bust, and international investors had to think again.
States, too, thought it advisable to impose strict limits on their borrowing. That’s why, for the last 40 years, successive Finance Ministers have forced local government to borrow the money it needed on the open market. The problem with this “solution” is that a city’s credit-card is maxed-out a lot faster than a state’s. Ditto, its rate-payers’ willingness to pay more and more and more. The present government has heaped scorn and derision on local authorities for their failure to adequately manage municipal infrastructure. Unfair. Those responsible for starving a person, are not really entitled to then complain about their victim’s weakness!
The Three Waters project, with its four “entities” and their hideously complex financial and governance structures, was the Government’s answer to local government’s maxed-out credit cards. The water entities could borrow the money that New Zealand’s cities, towns and districts could no longer access.
There was, however, a catch. According to the international credit-rating agencies, the four entities had to be protected from politics. International investors do not like politics – it’s messy and destabilising. If the cost of drinking, storm and wastewater management rose sharply, said the credit-raters, then the entities responsible had to be protected from every kind of consumer backlash. Whatever else these big beasts might be – they won’t be in any way democratically accountable.
Small wonder, then, that iwi authorities, and the co-governance faction of the Labour Government, were so keen to hitch a ride on the Three Waters bus!
Labour’s big mistake was letting them climb on board. Because, by doing so, it turned the Three Waters project into the hottest of political hot potatoes. And what don’t international investors like? That’s right: putting their money into political hot potatoes.
If this government has a lick of sense, it will greet the Three Mayor’s solution to Three Waters with three cheers.
This essay was originally published in The Otago Daily Times and The Greymouth Star of Friday, 4 November 2022.
"If Three Waters isn’t implemented, she is warning the electorate, council rates are going to go through the roof."
ReplyDeleteThis is quite possibly true. Anyone who lives anywhere near Wellington knows that our water pipes need millions – probably hundreds of millions of dollars, (possibly even billions countrywide) to fix. Local councils haven't done a great deal so far because they don't want to put rates up, because the middle-class get upset.
I've never heard a coherent argument yet taking New Zealand's national water supply out of the hands of councils. Just a whole lot of mumblings about democracy, which seems to me to be not only incoherent but couched around keeping the power and influence where it "belongs".
And I for one don't care about co-governance given that Maori have a much less commercial attitude towards water, and may well be much more amenable to spending money to keep it clean. Of course any mention of Maori being in positions of "undeserved" power is pretty much a guarantee that it won't go through, or will be reversed by the next national/act government if it does.
Crumbling water infrastructure has effects beyond the inconvenience of closing streets for weeks to dig up the burst pipes. Just ask the people of Hawke's Bay.
The government's proposal has been exposed as a con by the Auditor-General for its lack of accountability either to the public or to Parliament. There is no way such a cumbersome, unaccountable and unstable structure could serve as a vehicle for raising the necessary funding in the form of the $100 billion plus of debt required for the 3 Waters overhaul. It won't work, but the government clings to it because the Maori Caucus likely has made it clear co-governance is a bottom line for their continued support for Ardern. 3 Waters has become a trap of Ardern's own making.
ReplyDeleteThe Mayor of the Waimakariri District Council is Dan Gordon, not Ben Gordon.
ReplyDelete“If this Government has a lick of sense” is a bridge too far. This Government has demonstrated time and time again that it is desperately short of that commodity.
ReplyDeleteThe issue in HB was identified as caused by lack of auditing of consent conditions. The problem was fixed relatively cheaply and easily. The same thing could happen anywhere under the same circumstances.
ReplyDeleteTo keep repeating that the HB incident is the reason we need 3 Waters is lazy and doesn't address the other issues of unnecessarily complex governance structure, unsuitable entity boundaries, long term debt on interest only financial proposals and co-governance with
the final say over every puddle of water and power of veto by 15% of the majority population.
MC
Guerilla Surgeon: for many years Wellingtonians have paid millions through their rates for the continual renewal of their 3 waters system but the money has been diverted by the WCC for vanity projects like convention centres, particularly over the last decade or so under Labour-Greens majorities. Your suggestion that Maori have "a much less commercial attitude towards water" is a racial stereotype. You can be confident "Mana Whenua" representation would be dominated by the iwi corporates whose objective would be maximizing profits, including very likely by the imposition of tribal royalties on water to be paid by consumers.
ReplyDelete"Not that the Prime Minister will admit that co-governance is the driver of the proposed reforms."
ReplyDeleteSurely the motivation is the crisis many communities are facing meting the basic human right of clean water free from contamination and for the environmental disposal of waste. The uneven distribution of quality water services moves away from water as a human right to that of post-code quality. The larger and more affluent councils are always going to be in a better position from the rural poor. When this is analyzed we find the councils with numbers of rural or small town poor are those with concentration of Maori. Human rights unevenly distributed because of class and ethnicity is something this government has addressed elsewhere.
The co-governance of the reforms comes from a simple formula. Maori have an interest in water that has never been extinguished. If you are reforming water, it is the right time to factor this in for long-term and sustainable change.
Suggesting that co-governance has been given primacy in the delivery of water services is mischievous. Maori interest in water is something that needs to be addressed and it would be remiss not to address it in the Three Waters proposal.
Dear God. At the moment the ratepayers pay for each and every areas water structure. And you can see the mess that is in. Our country does not need to borrow any money to provide the three waters structure. We are a sovereign country that can issue its own money. Co governance sounds alright by me. Maori are New Zealanders too. In case all you pakehas have forgotten.
ReplyDelete"You can be confident "Mana Whenua" representation would be dominated by the iwi corporates whose objective would be maximizing profits, including very likely by the imposition of tribal royalties on water to be paid by consumers."
ReplyDeleteThat's equally stereotypical of course. But stereotypes do tend to have caller of truth however tiny. I suspect yours is tinier than mine.:)
Call me a skeptic but is there really a problem with our cities water infrastructure? I live in Wellington and we have had perhaps two failures (Willis St and Jervois Quay) that I can recall that affected traffic etc. We are constantly told its all "creaking" and NZ needs $64 Billion to fix it. But really?
ReplyDeleteMy experience are that there are pipes in the ground than don't really deteriorate - and as they fail cant be replaced with little interference with daily life. Compare the disruption of that is caused for about 4 hours every single day in Wellington by the refusal to increase the capacity of the roads and tunnels here. In the recent council elections I don't think I heard one candidate who wanted better roads for cars - yet every single one said they were very concerned about the pipes and promised that they would be the ones to fix them.
Sure obviously the pipes have not been sized to cope with the every increasing housing density being forced on cities by anti-sprawl zealots in the Govt and councils - but this should be identified as such and the blame put where it belongs - as opposed to some supposed time bomb that's coming from what has worked pretty reliably up to now.
If the problem has been greatly overstated like it appears - what is the real reason for wanting to change the ownership structure? I think every single media commentator and local body politician has been sucked in by this whole thing.