Government pushes ahead with Three Waters reform, will take water services from councils

The Government has decided to push ahead with Three Waters reforms, and take control of water services and assets from local councils, despite considerable opposition.

The proposed reform of the country’s three water services – drinking, waste and storm water – has caused outcry among across political parties and many local councils, which currently have ownership of billions of dollars worth in water assets, have loudly opposed it.

Local Government Minister Nanaia Mahuta on Wednesday said the Government would legislate in early December to create four new water entities that would take on the water assets currently owned by councils.

However, the question of future control and governance of the entities and the water assets remained unclear. Mahuta said the Government would establish a working group of local government, iwi and water industry experts to work on how the entities will be governed.

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“Our Government has been elected to address some of the very significant long-term challenges. They may not be popular but they are necessary and ... Three Waters is one of the issues that has languished for far too long,” she said.

“This is a hard issue ... I am not going to throw the baby out with the bathwater, so to speak, just because it is a hard issue.”

The Government expects the country’s water services will need $185 billion to fix and upgrade existing services in the coming 30 years, representing a considerable cost to ratepayers.

Highlighting the issue were a raft of statistics presented by Mahuta: More than 20 per cent of water supplies that serve more than 100 people do not meet national drinking water standards, and more than an estimated 34,000 people get sick from drinking water each year, and there were more than 3300 sewerage overflows in 2019-2020.

“The case for change is strong ... The issue is that the way in which councils are reliant on rates is inadequate to be able to service their own region.”

Mahuta said the new water entities would remain in public ownership and this was a “bottom line” for the Government.

Under the new scheme, the Government has promised that councils will retain ownership of water services through the entities and local communities will retain influence over how the assets are run through the councils.

Local iwi representatives will also be at the table of each water entity. Mahuta said there would be a 50-50 split on the water entities’ boards between council and iwi representatives.

“What we have is an opportunity for iwi to sit at the table in terms of decision-making around water. When we think about iwi aspirations, those aspirations see the improvement of freshwater, the ability to exercise their kaitiaki responsibilities for the community, their hapū,” Mahuta said.

The Government will create the working group before November, legislate in December, and start the select committee process early in 2022.

The four new water entities would take responsibility for water services in July 2024.

Councils will receive $2 billion in “better-off” funding in place of the water assets, over the course of the reforms, and $500 million in “no-worse-off” funding in the short-term to cover any financial loss from transferring water assets to new entities.

The $500m will be available to councils from July 2022 and the $2b will be delivered when the new entities take control in July 2024.

The Government will fund $1b of this support package and the new water services entities will fund the remaining $1.5b from their own balance sheets.

“At the end of the day, when we go for a holiday, what we want is to make sure that we get the assurance of clean drinking water, the ability to swim in our local lakes, streams and beaches, and the confidence of knowing that the burgeoning cost of funding infrastructure, that are so critical to our regional growth and development, can be met without the taxpayer having to fully fund [this],” Mahuta said.

She said the overhaul of water assets could create between 6000 and 9000 jobs, and boost the economy by between $14b and $23b.

National Party MP and local government spokesman Christopher Luxon said his party would repeal the Government’s water reforms, if elected.

“This move is tantamount to state-sanctioned theft of assets that ratepayers have paid for decades to own.

“Labour’s four-entity model is fundamentally broken ... By forcing the Three Waters plans on councils, Labour would be expressly ignoring every mayor who pleaded for a pause.”

ACT Party MP and local government spokesman Simon Court said his party would also repeal the Government’s water reforms, alleging that assets were being forcibly taken due to Mahuta’s failure to persuade councils.

“It does not occur to Nanaia Mahuta that if people don't like her plan, maybe they are trying to tell her something, like it is a stupid plan that does not stack up and won't work.”

Green Party MP and Three Waters spokeswoman Eugenie Sage said the Government should “hit pause” on the reforms to better respond to the concerns being raised before introducing legislation.

“From the beginning of this process local communities have not been given enough of a chance to have their concerns listened to and addressed.

“There is wide agreement that the status quo is not an option and change is needed ... The Green Party is calling on the Government to stop and listen to what councils are saying.”