Garry Writes 15 March 2022

How are those challenging the government’s proposed 3 Waters reforms being treated?

It’s sad that an essential public policy discourse is becoming more and more debated as” right” and “wrong”. It’s literally the litany of the deaf. Labels like “racist” are being chanted to those who are challenging the proposals when they are stating clearly that they support the participation of mana whenua in the governance of 3 waters. It has become “agree with everything in this package, or you are racist”.

As the debate about 3 Waters proposed legislation has intensified, so has the name calling, especially by those who support the reforms. When the Mayor of Westland, Bruce Smith, commented that 11% of the population would own 50% of the water resources, he meant “controlled”. He used the wrong word and was instantly labelled a racist.

A couple of weeks ago when Dunedin decided to join the group challenging the reforms, I listened to the Mayor of Dunedin labelling the argument of those who were supporting a regional model than the 3 Waters proposed model within his council, as “racist”.

By slapping that label on them it means he does not need to listen to the arguments because he considers himself not a racist. That’s proved because he supports “mana whenua”. Well so do I. However, I consider that Ngai Tahu aren’t correct in their unqualified support for the government model.

How did those who are challenging the proposed 3 Waters model end up being called a racist?

I ask you all to consider what is racist about:

1. Questioning a business model being promoted by the government the governance structure of which was largely designed by an international credit rating agency, Standard and Poors?
2. Questioning a business model designed by two organisations which exist to promote private sector interests, InfrastructureNZ and Water NZ?
3. Questioning the copy of a design of a 3 Waters system from Scotland when there were other better types of system appropriate to New Zealand in other parts of the world, like the water systems of the Netherlands which have been democratically operated since around 1650.
4. Questioning the tactics of the Department of Internal Affairs which travelled to Scotland with InfrastructureNZ and then recommended this solution firstly on the National Party and then the Labour Party.
5. Questioning the organisation, Local Government New Zealand, which caved into the government when it is supposed to represent the interests of councils from North Cape to Bluff and didn’t even conduct wide consultation with its members.
6. Questioning the danger of the government removing the current protection against privatisation of water existing in the Local Government Act 2002 and replacing it with a corporate structure which could be privatised sometime in the future because of the precedence created by removing the existing legislative protection.
7. Questioning the large-scale theft of local council resources and handing them over to a corporate entity over which those who have paid for these resources have little, if any, say over into the future.
8. Questioning the fact that the interim board to establish the 4 new entities has 6 members on it, 4 of whom are commercial. One is from local government. One is from the unions.
9. Proposing an alternative that retains local ownership.
10. Proposes something which will be regionally controlled and managed, much more consistent with natural local water systems, and hapu structures.
11. Proposes a genuine partnership between local mana whenua in the area where the water flows than the corporate model which is based on “charges” and “efficiency”.

These questions surely reflect the hopes and expectations of decent thoughtful New Zealanders.

In a presentation to the Dunedin City Council Gabrielle Huria, on behalf of Ngai Tahu, said that Bruce Smith, mayor of Westland District Council, had no knowledge of his own history with his tangata whenua. She and the mayor of Dunedin both labelled him a “racist”. So, I asked Bruce about his relationship with mana whenua in his district. Here’s a few examples of Bruce’s leadership:

1. The two chairs of the Runanga which are in his district sit in on all Westland council meetings and, although the crown will not give them voting rights, they have the power of moral persuasion at the council table. All committees have a rep from each Runanga on them with full voting rights. There is signed agreement between the two Runanga and the Council which is 4 years old.
2. The council proposed to enter a new agreement with the Westland Dairy Company for an outfall for the wastewater plant which was coming to the end of its life. This was to cost $3m. The Runanga reps objected to the outfall at a council meeting and the council backed off the proposal. A joint committee is involved in finding a solution (I’m not sure where this is at) consisting of 2 reps from each Runanga and 4 Councillors. I think the current solution will cost $15m.
3. There are other joint initiatives in the offing, currently under discussion.
4. The mayor has written several times to Minister Mahuta seeking the opportunity to ratify formally the wonderful arrangements they currently have of sharing power with Iwi. This has been declined by the very department which is working flat out to steel council resources in the form of 3 Waters infrastructure.

Bruce Smith and his council are visionaries. Bruce isn’t a racist. He has led his council to be closer to local Rununga  than any other council I know. I’m sure there are others around NZ but I don’t think it will be matched anywhere else in the Ngai Tahu takiwa.

Report back by the Government Working Party on 3 Waters proposed reforms:

Later last year the government appointed a working party, made up largely of people who agreed with the reforms, to reconsider the “governance” aspects of the proposed 3 Water reforms. It was really a rearrange-the-deckchairs-on-the-Titanic committee. The government made the Terms of Reference so tight nothing outside what the government wanted to hear was allowed.

It was instructive that two members, the Mayor of Kaipara, Jason Smith, and the Mayor of Auckland, Phil Goff, have both broken ranks and come out with all guns blazing criticising the report, and the proposed reforms. There are now 32 Councils which have joined the Communities 4 Local Democracy group. They now have Auckland City agreeing with their criticism.  

It was not immediately obvious in the report of the working party three waters reform programme working groups – dia.govt.nz that there was any dissent. Under the label “appendix” on page 68 of the report was the dissenting opinion by Phil Goff. This was a very hard-hitting minority opinion and included these quotes:

Our concerns relate to the proposed governance and accountability arrangements which Auckland considers are too far removed from the community and democratic accountability.

With ownership comes rights, responsibilities, and obligations. Ownership needs to be reflected in democratic accountability and this proposal would lead to the loss of direct accountability and control the people of Auckland over water service entities through their elected representatives.

Democratic accountability, through elected representatives, to people who funded the water infrastructure in Auckland valued at many billions of dollars, and who continue to pay for its operation, is critical. It is not appropriate to cede control over this infrastructure to other councils and mana whenua and to remove existing accountability to Aucklanders through elected representatives.

We are committed to work in partnership with mana whenua which we have done through the development of our Water Strategy, and to consider alternative ways of strengthening this partnership.

Auckland has demonstrated that it is willing to share its learnings and capabilities through Watercare’s current contracting to deliver services to the Waikato District Council. We are willing to consider applying this model to those councils in Northland should they wish to do so.

Investment and balance sheet separation:

There is insufficient evidence that establishing these four water entities will deliver the efficiency gains the Government is expecting. Indeed, they may not be able to borrow significantly more to invest in infrastructure. This is because the additional costs these entities will face due to increasing bureaucracy and compliance are likely to be considerable.

1. S&Ps original assessment of the proposed entities indicated they required the support of the Government to raise the Issuer Credit Rating. We have serious concerns about the cost of the debt envisaged by the Government and whether the proposed WSE boards will have the ability to, or be comfortable with, borrowing significantly more to invest in infrastructure. The Government has not shown what benefit there would be to Auckland in terms of the ability to invest more in infrastructure. Auckland Council will not benefit from any increased debt headroom. One of our credit rating agencies, Moody’s, already excludes Watercare debt from its considerations. While Watercare’s debt would be removed from our books, so too would its direct revenue stream, cancelling most of the benefits from a debt to revenue perspective. We will therefore not be able to accelerate our investment in other infrastructure as a result of these reforms.
2. The consequence of fragmented planning and infrastructure delivery environment may well lead to more expensive infrastructure provision and greater inefficiencies. This is an issue that needs to be dealt with in a holistic manner, not in an ad hoc piecemeal way.
3. We are also concerned at the viewpoint expressed by Standard and Poors that accountability to consumers and funders of Water Services Entities through elected representatives is regarded as “undue influence”. We believe that the role of the regulators, the Government’s ability to set policy through National Policy Statements, a requirement that Councils not set water prices or bail out a Water Services Entity in financial difficulty, and the Crown providing a liquidity facility or guarantee would all allow accountability as well as allow a separation of books to facilitate access to additional investment capital.

The mayor of Kaipara Jason Smith wrote in a document which was distributed this week:

• Gaining new insights into the proposed Three Waters Reforms was helpful to me, as Kaipara District Council had and still has many questions about the proposed reforms. The other two District Councils of the North had opted-out of the reforms last year, Auckland Council is also out. I was seeking greater understanding, in the hope that I would be able to then share that with others. Being on the Working Group I got many new understandings, but regrettably they sit uncomfortably with me. I now join my fellow Mayors of northern New Zealand in not supporting these reforms.
• Public engagement and everyone being allowed to participate equally in the creation of plans or ideas is simply good governance. If this is done with transparency and integrity then the ideas belong to all the people. And, later on, those people can hold the leaders to account to follow through with those ideas. In these recommendations, with not everyone / only some people participating in the creation of Te Mana O Te Wai Statements as recommended there can be no accountability in this system, as public accountability is about everyone together not only some people, as a core principle of democracy. The recommendations in the report relating to this are not constructive for our democratic institutions.
• I participated in the Working Group in good faith. There is much that’s good in this journey but at the end it’s become clear to me that while there is a need for some kind of water system reform, this one fails to address the fundamental issue of funding investment in our infrastructure and seeks to adjust governance in a way that limits the ability of all people and communities to engage. In light of this I don’t support the direction of the reforms and believe these Three Waters Reforms are the wrong answer to the right question. At the end of all this journey I’m sad to say these Three Waters Reforms get a “yeah, nah” from me and on behalf of the people I represent I reject these proposed reforms.

The media has responded to this report in a very lukewarm manner. In his “democracyproject.nz” summary of this report  https://democracyproject.nz/2022/03/10/bryce-edwards-political-roundup-can-three-waters-be-salvaged-or-will-nanaia-mahuta-have-to-go/. Bryce Edwards wrote:

The Government’s Three Waters reform programme is still in crisis, despite the supposed fix coming in yesterday with the release of yet another report with recommendations for improvements.
 
The Government seems determined to push through a deeply unpopular set of reforms for drinking, waste, and storm water, taking assets and responsibilities off local government and handing over control to four big entities that will operate under a Treaty-based co-governance model.
 
None of the report’s 47 recommendations are very significant. This is unsurprising as the working group was stacked, and given very tight terms of reference, meaning it was always more an exercise in public manipulation than good public policymaking.
 
In particular, the working group were not allowed to examine the core of Nanaia Mahuta’s Three Waters model – setting up the new entities under a co-governance model in which significant power is shifted to iwi, who would have half the control over the four new entities. That remains the elephant in the room, which Mahuta and her Government are extremely reluctant to discuss. The suspicion is that by avoiding talking about the shift to co-governance, the Government is hoping major constitutional change can simply be achieved without public debate.
 
Of course, there could be very good reasons for introducing a co-governance model. The problem is the Government has yet to make the case. Accordingly, surveys continue to show the public is deeply unconvinced by the concept. And it probably doesn’t help that whenever questions are raised about it, they are met with allegations of “racism” or “scaremongering”.
 
The other line often used by the Government is that anyone opposed to the Three Waters model is “opposed to change”. This is unfair as all critics have argued that significant change to water management is required. Opponents have actually put forward alternative models, which the Government has so far refused to consider or debate.
  
The latest working group’s recommendations, range from ideas that will make no real difference, to some that will make the reforms even worse. The highest profile recommendation of giving Claytons “shares” to local government, gives the appearance of ownership but means absolutely nothing in practice.

What is worth considering is that this might be the largest asset grab from a local community since colonisation. What is effectively being stolen from Christchurch City Council with $5.9b net worth of assets being swapped for $122m and the opportunity to stand in line with 21 other authorities to get a place on a board dominated by private sector Institute-of-Director types with little if any knowledge of democratic accountability over public assets.

Those who have joined Communities 4 local democracy  have key issues they support:

• Improving the standard for water for all.
• Accepting co-governance with Mana Whenua over water.

To this date in our history Local Government has protected the ownership of the water ensuring that it remain in public ownership. The LGNZ executive in 2000 worked hard to ensure that the Local Government Act 2002 protected water ownership. This is S130 and S 131 of the Local Government Act 2002. The Business Roundtable were really interested in getting control of anything like water from which they could extract super-profits.  To pass these proposed reforms this existing legislative protection in the Local Government Act will have to be removed.

It is without doubt that Labour has no intention of ever privatizing water. However, by removing the current protection they will create the precedent for future governments to feel vindicated in promoting “competition” between water authorities (which will be easy as there will be only 4 authorities) and sooner or later we will have multi-national corporations owning our water. Labour is creating the precedent for meddling with the hard fought for protection of water which the Clark government supported.

It’s time for a total rethink of how we can find sensible regional solutions which improve standards and achieve better economic efficiency, whilst retaining local government ownership and democratic structures. It’s not too late to pull back and work on a long-term solution acceptable to parties of all political persuasion.