Garry’s thoughts on water:

The Tuesday Club is continuing to draw together several Local Authorities together after our Public Three Waters Meeting. More and more are joining in On Friday night we had Councils from the top of the North Island to Invercargill, and many in between. Councils are realising that they are not on their own and are slowly becoming more determined to say “NO” to this proposal. Our conversation focused on regional models which are co-governed with local iwi.

Watch this space. Let’s get our water safe. Let’s support small Councils. Let’s find a model which will work.

Here’s a map of New Zealand showing all the natural water systems. If you look at them and look at the 3 Waters proposed “management” structure, there doesn’t appear to be a natural link between nature and structure.

The Government has been let down by poor work by the Department of Internal Affairs. The language used by the Government has also been dishonest. Our assets in Christchurch total $6.9b. These will be taken from CCC and handed to a body responsible for most of the South Island. Here’s part of what Newsroom wrote last week:

In a series of delightful rhetorical flourishes, the Government has shifted its description of who will ultimately own the assets. Last year, they were to be shifted to “Crown ownership” then, sensing danger, the language changed early this year to “public ownership”. At the Local Government NZ conference in Blenheim in July, the Prime Minister changed the language to “local ownership” to reflect the design laid out in a series of Cabinet papers. And finally, the language has now changed to “council ownership”.

But this is ownership only in the loosest possible sense. Each of the four new water authorities will be “owned” collectively by anywhere from four to 20 councils, which will not be able to collect a dividend, buy or sell their shares or even hands-on appoint the directors.

In the words of an Internal Affairs spokesperson: “The Three Waters assets will transfer from the councils to the new entities and would sit on the balance sheet of the entities. Councils will collectively own the Water Service Entity providing services for their district, on behalf of their communities.”

The numbers in the model being used by Government have been shown to be incorrect in both Islands. Here’s what Newsroom wrote last week:

On the basis of that enormous tranche of published data, Prime Minister Jacinda Ardern went all-in.  

“These are once-in-a-generation changes,” she told the Local Government NZ conference. “The modelling released two weeks ago confirmed that all communities in the country will be significantly better off under the reforms.

“It included council-specific information for all 67 councils in the form of a local dashboard. These showed the projected average costs of providing these services per household in 2051 with reform and without reform. In every case, all communities will be significantly better off under the reform proposals.”

The trouble was, much of the information she relied upon in the dashboard was bunkum. Even a casual observer couldn’t miss seeing it was riddled with errors. Like the fact that Horowhenua was reported to have 10 times more stormwater connections than it had residents. Or that there were no households in Wellington affected by unplanned water outages in the past year (apparently the data wasn’t reported because of the low confidence rating!)

Just this week, Internal Affairs admits that four councils listed as debt-free in the June dashboard – Waikato, Waitomo, Ōpōtiki and Westland – will in fact carry debt into the 2024 transition.

“The model shows that all four councils have debt relating to three waters assets transferring across,” the spokesperson acknowledges. “The actual reason for the difference is that these councils had inconsistencies in their Request For Information submissions and the local dashboard was pulling the line that has zero values. This was corrected for the financial impact tool which results in the inconsistency.”

https://www.newsroom.co.nz/big-winners-in-three-waters-compo-package

As part of the Tuesday Club effort on lobbying the Government to demonstrate how bad these reforms are I wrote to Duncan Webb, MP for Christchurch Central. Here is part of the letter:

If these supposed reforms are shoved through within your lifetime you will witness that Labour created the privatisation of water. How did I arrive at this conclusion? Here are a few thoughts:

1.       Under the Local Government Act 2002 (which CCC played a major part in writing, we seconded our CEO there to DIA for nearly a year) we felt it was so important to protect water that a special section was written in for this purpose. We were very aware of the Business Roundtable and the desire to privatise everything and so it was written into legislation.

2.       If your government wishes to by-pass consultation with the public it will have to pass a law to remove this clause from the Local Government Act. The very clause ensuring that we, the public, have a say on our water infrastructure.

3.       If number 2 above occurs then your government has created the pathway for a future right-wing Government, committed to “efficiencies” (remember Roger Douglas et al), to bypass all the well-intentioned protection against privatisation in your proposed legislation and remove those clauses in the upcoming legislation.

4.       Then, in your old age, you will pay for your water to whichever finance company “owns” the water.

Duncan, as a former Professor of Law, what is happening with the proposed Water Reforms is a removal of what was carefully planned in 2001 and 2002 to ensure democratic protection of our water. How could you as a well educated legal professional go along with this. There is little, if any, potential for local input to water planning in what is being proposed by the Government, of which you are a whip. The Labour Party is continuing down the path established by Roger Douglas and the neo liberal economic disciples who still reside all over the place.

It’s time to stop. It’s time to pause and seek alternative solutions. There is no debate about what your government is attempting to achieve regarding high standards for water. However, if these proposed reforms are forced through the next local government elections will be fought on one topic. Water.

I would be very happy to arrange for you, and any colleagues from your caucus who you wish to invite, to attend a zoom session with several sensible elected reps from Te Wai Pounamu to go into more depth about solutions which would be better than what is currently being proposed.

Following this email, a small group of Councillors from several Cities met by zoom with Duncan Webb, MP for Christchurch Central. The unsatisfactory meeting ended in continuing frustration on the part of local authority reps. Conversations with anyone from Government seems to be the litany of the deaf. The sign language from Government only seems to involve two fingers.

Here is a portion of the email I sent to Duncan after our meeting:

Duncan wrote in a text to me after the meeting….  I think the relationship reset is the biggest takeaway that you raised earlier. Along with some genuine co design. 

My response was:

Those present wanted to present practical stuff. Before you arrived, some said, “they just dismiss us”. And you did. You kept saying “yes, yes I’ve heard all that before”. That was a level of arrogance which didn’t do you any favours. If you’ve heard all that before, what have you done about it? Zero I suspect.

Pauline Cotter and Andrew Turner both said they have been saying all these things to the local Labour MP’s for at least 12 months and had received the same response that you gave us all last night. They were ignored or dismissed as “not understanding the national picture”.

This is way more than a “relationship reset”.

1. That there is no dispute about setting high standards for water.
2. That there is no dispute about involving Mana Whenua.
3. That the 4 water structures proposed are cumbersome and unworkable and not democratic.
4. That “local” will be taken from water management and replaced by “corporate”, a continuation of Rogernomics and Ruthanomics.
5. That the financial model is deeply flawed.
6. The deadline for submissions by local government on the proposed reforms have been shifted forward by 3 months.
7. That economies of scale could be achieved with smaller local collaboration, larger than current configurations.
8. That smaller Councils are where the challenge is.
9. That large councils will be funding the smaller council’s infrastructure. The City you represent will be funding the smaller councils throughout the South Island. This is theft on a grand scale and will present an interesting topic to be debated in the next election campaign.
10. That there is a need for another Plan, but local government has been on the back foot with rushed deadlines set by DIA to actually create one.
11.  The quality of advice central government has been receiving from DIA is poor.
12. That this structure has been designed by private sector lobbyists without local government having a chance to offer alternative local solutions. Effectively local government have been just invited to an arranged marriage ceremony by their very distant parents and they haven’t even had a chance to say who the hell they are marrying, let alone whether marriage is the best choice. The parents want the marriage so that they can take the dowry.

I conclude with a question. What is the difference between early New Zealand Governments taking land off indigenous communities and a modern government taking water assets off another community?

During the last week the Whangarei District Council received an additional “incentive” to join the water reforms. In a report in Newsroom, it was reported:

In what could drive a big wedge between the country’s 67 local councils and the Government, if confirmed, Mayor Sheryl Mai says the Government has offered Whangārei – the loudest critic of the reforms – an extra $90m financial sustainability payment to sign up.

That is on top of $38m “better off” funding to improve its water, housing, and jobs infrastructure, and another $5m allocation to compensate for stranded assets.

If this is correct this is really bribery. Here’s the article: https://www.newsroom.co.nz/pro/govts-90m-offer-to-dissident-council

A previous Councillor for Whangarei, Frank Newman, a Chartered Accountant, commented on the unreliability of long-term financial projections, especially 30 years out. I share his opinion as I have little confidence in any numbers beyond 5 years out. Frank Newman wrote this week:

Let’s be clear what the Three Waters forecasting is attempting to do so. It is projecting expenditures and income streams over 30 years for the two scenarios. It then calculates the expected cost per connected household for each scenario, for each of the four entities. For example, for entity A (Auckland and Northland) the annual cost in the year 2051 is projected to be $800 if the amalgamation scenario is pursued or $2,170 is the status quo were to prevail. 

So, how much reliance should we place on the 2051 projections?

That leads to the obvious question: Is it possible to project numbers 30 years into the future with any degree of accuracy?  

Most people with experience in financial forecasting will say no. Projecting that far into the future is more theoretical than practical. Realistically, 10 years is the maximum one would forecast and even then typically the protected scenario bears little correlation to what actually eventuates. One has only to look at past Long Term Council Community Plans which forecast a council’s finances 10-years ahead to see how little correlation they have to what eventuates. That’s unsurprising given the impossibility of accurately projecting variables like inflation and interest rates, costs, growth, and of course political influences – all of which are likely to have a material impact of future cash flows.

In my view, basing a decision on a 30-year financial projection is fanciful. That limitation alone would relegate the weight given to the financial benefits (or otherwise) of reform, and lead one to place greater weight on other factors such as the quality of service delivery and retention of democratic accountability.