Below is a very detailed analysis on the funding package of 3 Waters. It has been undertaken by a corporate lawyer, working under a non-de-plume, who for years worked internationally putting together public/private funding packages.
I am informed that he has retired back to NZ, and he has undertaken a detailed analysis (using the OIA) of the papers substantiating the government’s proposed 3 Waters reforms. I have not attempted to edit this paper as it is very detailed and its conclusions extremely concerning.
Our water infrastructure is being stolen from local democracy. It is proposed to be managed by a structure which is virtually unaccountable to us locally. That’s bad enough but if this analysis is half right then, if Thomas Cranmer is correct, the funding package behind it is terrifying. It demonstrates an example of dogma driven politicians deluding themselves which has led to a potential future risky financial disaster.
Pour yourself a cup of tea and read this…
According to the government’s own projections the Three Waters debt will only grow over time. We will never escape it and eventually it will tear the country apart.
The financing of Three Waters has been almost entirely overlooked by financial analysts and media commentators despite the fact that the massive debt required to fund the planned shakeup of our water infrastructure could be as risky for the nation’s finances as Muldoon’s Think Big projects of the 1970s-80s.
Research provided to the government has calculated that between $120bn to $185bn in investment is needed to maintain and improve New Zealand’s water infrastructure. What has been left mostly unsaid is exactly how much of this will be funded by debt and how will it be repaid.
The information we do have, however, is hardly reassuring. Government documents show the debt will keep growing and there are no plans for it to be repaid in the foreseeable future. It is effectively perpetual debt on a massive scale.
What makes it even more alarming is that this will be an interest-only financing, in part because there is not enough free cashflow in the system to allow for repayment of capital. It’s just like getting a credit card and immediately maxing it out. Next year when you get a pay rise and your credit limit increases you immediately max the credit card out again. You only ever pay the interest on the card and you have no plan to ever pay it off.
As far as I can see, at the moment, the nation’s ratepayers, and only the ratepayers, pay for the water structures. Personally I think that is dopey. The nation should be responsible for it and not just the ratepayers. To say the debt could bankrupt the nation like Muldoon did, is just stupid. Since those days our currency is not tied to anything. When NZ$ are required we do not need to borrow from anybody. We are a sovereign nation, our currency is not tied to anything, and we can issue our own money. A different issue is that currently the Councils own the water structures or have debt that built those structures. (Councils cannot issue money.) How that can be transferred to the Government is something that can be discussed but not the transfer itself.