The Prime Minister has spoken to the country’s mayors in an attempt to broker peace, as her officials retract an ‘ill-informed’ TV ad campaign raising public fears of water contamination

The Government has announced $2.5 billion for local jobs, housing and water infrastructure, seeking to assure divided council leaders of its commitment to working with them on water reform – not riding roughshod over them.

Prime Minister Jacinda Ardern spoke to the Local Government NZ conference in Blenheim, accompanied by her deputy Grant Robertson, Local Government Minister Nanaia Mahuta and a delegation of senior members of the Government.

As they gathered in Marlborough, mayors from around the country told Newsroom the Government had a lot of work to do to reassure them of the benefits of the $120b-plus expropriation of their drinking water, wastewater and stormwater assets. 

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Despite an intensive engagement process involving council-specific information, webinars and in-person meetings around New Zealand, the council leaders have expressed unhappiness about the quality of official consultation, and concern at the threat that the Cabinet will compulsorily merge their water assets into four big public entities.

Newsroom has talked and emailed with 54 of the country’s mayors and chief executives – and they seemed almost evenly split. Twenty-one indicated they tentatively supported the reforms; 19 were dubious to the point of considering opting out. The remainder were undecided, or did not reply. Even Whangārei, the one council that has already voted to “opt out”, has given itself wriggle room to return to the table if the Government can offer a better deal for ratepayers.

Over the past week or two, there has been a series of “short and intense” meetings between central and local government leaders, attempting to broker a compensation deal that would get as many of the country’s 67 mayors and councils onside as possible. 

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The ministers’ visit to the Local Government NZ conference is a peace mission. They come with a big carrot of infrastructure spending; they speak softly but carry a big stick. This is the last chance for the Government to implement these water reforms by consensus – before it resorts unhappily to compulsion.

That’s a last resort that would jeopardise a solution to the actual problem. That problem is the inability of small councils to guarantee safe, affordable and environmentally-sustainable water infrastructure. That is, perhaps, the one thing on which all agree.

“New Zealand’s water systems are facing a significant crisis and will continue to do so without major transformation,” Ardern said. “Overhauling our drinking, waste and stormwater services will benefit all New Zealand communities, no matter where they are in the country.”

The $2.5b support package would ensure no council was worse off as a result of the reforms, she said, with $500 million set aside to support councils through the transition process, and to manage the financial impacts.

Many councils will lose 20 to 50 percent of their balance sheets when they hand off their water assets, and Ardern acknowledged that significant change. So the $2b balance would be set aside for councils to invest in urban development, and the wellbeing of their communities.

Bonita Bigham, the chair of Te Maruata grouping of Māori councillors, welcomed Ardern to the podium with am emphatic call: “No more deaths from turning on the drinking water tap in Aotearoa,” she repeated.

And Newsroom has learned that unhappy mayors were offered a small olive branch on Tuesday, in preparation for the ministerial delegation to Blenheim.

The Department of Internal Affairs is rewriting advertisements for the Three Waters reforms that warned families of the dangers of “nasties in the water”. Image: Supplied

Many had been unhappy that the Department of Internal Affairs had promised to work collegially with councils on the $120b-plus Three Water reforms, then had paid $3.5m for a TV scare campaign, telling ratepayers of the danger of “nasties” in their rundown drinking water and wastewater services.

Mayors had responded angrily through Newsroom.

“Propaganda,” said South Wairarapa Mayor Alex Beijen; “abysmal,” said Grey Mayor Tania Gibson; “outrageous,” said Waimakariri Mayor Dan Gordon; “ill-timed, ill-informed and ill-mannered,” said Timaru Mayor Nigel Bowen; “a slap in the face,” said Clutha Mayor Bryan Cadogan.

“I personally believe it was delivered as intended to discredit us in local government. I don’t expect anything different – pretty much sums up how this whole reform has been presented.”
– Ash Tanner, Matamata-Piako mayor

Now, email correspondence obtained by Newsroom reveals the Department of Internal Affairs has agreed to withdraw the contentious scare campaign and to rewrite the next tranche of ads to highlight the benefits of reform, rather than the nasties implicit in the status quo.

But that has failed to assuage some concerns. In Tuesday’s email (somewhat clumsily cc’ed to every mayor in the country, and many others as well) the department’s deputy chief executive Michael Lovett acknowledged their unhappiness but stopped short of apologising.

“It is safe to say that the department never intended for the campaign to cause the discomfort it has with the local government sector,” he admitted.

AucklandBuller | Carterton | Central Hawke’s Bay | 
Central Otago | Chatham Islands | Christchurch | Clutha | Dunedin | 
Far North | Gisborne | Gore | Grey | Hamilton | Hastings | Hauraki | 
Horowhenua | HurunuiHuttInvercargill | Kaikōura | Kaipara | 
Kāpiti Coast | Kawerau | Mackenzie | Manawatū | Marlborough | 
Masterton | Matamata-Piako | Napier | Nelson | New Plymouth | 
Ōpōtiki | Otorohanga | Palmerston North | Porirua | Queenstown Lakes | 
Rangitikei | Rotorua | Ruapehu | Selwyn | South Taranaki | South Waikato | 
South Wairarapa | Southland | Stratford | Tararua | Tasman | Taupō | 
Tauranga | Thames-Coromandel | Timaru | Upper Hutt | Waikato | 
Waimakariri | Waimate | Waipā | Wairoa | Waitaki | Waitomo | Wellington 
Western Bay of Plenty | Westland | Whakatāne | Whanganui | Whangārei

Matamata-Piako Mayor Ash Tanner hit ‘reply all’.

“Sorry,” he responded, “I personally believe it was delivered as intended to discredit us in local government. I don’t expect anything different – pretty much sums up how this whole reform has been presented.”

Amid the furore, Local Government NZ and law firm Simpson Grierson have surveyed mayors and regional council chairs. The findings, published on the first morning of the conference, show uncertainty about the impact of Three Waters and other major reforms.

“The case for change painted a significant increase in jobs in the regions, as a result of the investment that’s going in. But there’s a bit or nervousness – the devil be in the detail of what it means for remote corners of small districts like ours.”
– Jamie Cleine, Buller mayor

Simpson Grierson partner Josh Cairns said respondents mostly accepted the Government’s case for the benefits of change, but were less confident that their communities would still have a voice in the management of the four big regional water entities.

Local Government NZ chief executive Susan Freeman-Greene said financial pressure and funding were perennial issues for council leaders, especially on infrastructure, rates and housing affordability.

In the survey findings, the mayors and chairs say there needs to be a fundamental change in the way local authorities access funding, which more closely reflects the economic activity in their areas. They suggest a share of GST revenue generated in their districts should be returned to local government.

Matamata-Piako mayor Ash Tanner replied sharpy to a government official’s email admitting concerns about water reform advertising. Photo: Supplied

Some of the mayors spoke with Newsroom about their expectations from the Government’s infrastructure support package, on the eve of conference.

Buller Mayor Jamie Cleine was already supportive, and hopeful the 67 councils could agree to the reforms without them being mandatory. He welcomed the support spending package, but said he still wanted reassurance about the transition for the district’s services and the nine engineering staff who worked for them.

“The case for change painted a significant increase in jobs in the regions, as a result of the investment that’s going in. But there’s a bit or nervousness – the devil will be in the detail of what it means for remote corners of small districts like ours.”

His small district has seven separate drinking water supplies, with seven different cost structures – and most of them aren’t connected to wastewater at all. 

Inangahua Junction, north of Reefton, has just 32 households hooked up to a bore water system first put in by the Ministry of Works in the 1960s.

And Punakaiki’s water network has been the subject of a long-running property dispute which culminated in a resident sabotaging the pipes with a handsaw. About 150 people live in Punakaiki, but more than 500,000 tourists visited the region each year pre-Covid, including 6500 a day during peak season.

If the Government didn’t manage water reforms and mergers, then Cleine said councils like his would have to. Buller’s status quo was unsustainable. “You’ve either got to come up with a different way of funding it, or you’ve got to accept a lower standard of water. No one things that is a good idea, for obvious reason of public health and environmental health.”

“For us in Timaru, it’s always been about economic enablement and the industrial use of water. I don’t see Grant Robertson coming with enough money for it to be an incentive for us to opt in.”
– Nigel Bowen, Timaru mayor

But Timaru Mayor Nigel Bowen did not believe the Government’s support package would be enough to win over him, his council and his constituents. “As an incentive package for us to take to the community, it would have to be tens of millions of dollars – because this is about a long-term review,” Bowen said.

Timaru has high levels of debt on its water infrastructure: $88m now, increasing to $100m over the coming year as the council invests in big water projects. So with the Government’s stated plan to shift councils’ water debts to the four new water authorities, Timaru stands to be one of the bigger winners.

But Brown said the debt levels were not a concern; what was a greater issue was maintaining local control over their own water.

“For us in Timaru, it’s always been about economic enablement and the industrial use of water. I don’t see Grant Robertson coming with enough money for it to be an incentive for us to opt in.”

Ash Tanner reiterated the concerns he had expressed in his all-points email. His view was that water services in Matamata-Piako and nationwide were, on the most part, world-class. He questioned the justification for taking those assets off councils.

By the Department of Internal Affairs’ numbers, Matamata-Piako has relatively low levels of debt on its waterworks: $22m, on $18m revenues. And Tanner said the council’s long-term plan set aside $50m to invest in the council’s Three Waters assets over the next 10 years, to ensure they stayed top notch.

“Look, there are some councils that need a bit of help and that’s no problem, [the] Government should step in and help them out, because democratically they may be challenged as well. But don’t throw a blanket over everybody.”

He was critical of the spending to be announced in today’s support package, which he saw as a charm offensive.

“That’s what they’ll do, they’ll try to buy Auckland over the line, to buy Whangārei over the line, to buy Christchurch over the line,” he said. “I told them, just come clean, just say it mate, I’m not one to play head games. I don’t tolerate it, I’m the wrong mayor.”

He argued the Government should set in place a water regulator, as the reforms propose, but not take the assets and their management of the councils. The councils should be given six years to show they could manage their Three Waters well, under the new regulatory framework.

“When we speak with the ministers, my constituents will want me to keep it real. If I believed it was good for ratepayers, I’d be the first one hopping up on the soapbox, saying hey, this is a good deal. I do not believe it. All I’ve seen is fake figures built on assumptions.”

Newsroom Pro managing editor Jonathan Milne covers business, politics and the economy.

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