Most mayors are backing hastily away from the publicly-contentious Three Waters reforms – but a small handful argue forcefully for their critical importance and even that the Government should mandate them for the entire country.
When Porirua mayor Anita Baker talks about the waves of effuent she faces, it’s not just the hundreds of ideologically-driven form letters swamping her email inbox.
She’s been dealing with a burst main sewer, and wastewater running across SH1, forcing emergency services to close the road. Councils can’t afford to get their drinking water, wastewater and stormwater networks up to a safe standard she says, and it’s time this month for the Government to force the point.
She is one of a very small number of mayors who are now willing to publicly argue the cases for the Government’s Three Waters reforms, and to call on Local Government Minister Nanaia Mahuta to mandate the big new merged water authorities for the whole country. “A lot of the mayors were for it until six months ago, but say they can’t do it now because it’s election time,” she says.
“Well, if people want to get rid of me, they can get rid of me. But I’m pretty firm, the status quo can’t continue.”
Newsroom discussions with mayors and councillors around New Zealand suggest most accept the existing water investment and operations regime is broken, and are broadly supportive of aggregating the country’s 67 water authorities into a few big regional entities.
But they are concerned about just a few facets of the Government’s plans: in particular, the ownership and accountability of the new entities to local communities, and uncertainty about how the new entities would take responsibility for council stormwaters and tens of thousands of private water supplies.
The increased heat around these issues has created the very real danger that the baby will be thrown out with the dirty bathwater.
“The challenges facing our water system and services have been around for more than two decades and we need to address them now…. Communities will not have to put up with second rate water services.”
– Nanaia Mahuta, Local Government Minister
New Zealand’s 67 city and district councils provided feedback to Local Government Minister Nanaia Mahuta and Internal Affairs officials last week.
They are now waiting for her announcements this month on any changes to the model, including whether to stick with just four new regional water authorities to break up the country into smaller chunks, and specific vexed questions like whether the parameters of the South Island’s big “Entity D” will align with the Ngai Tahu tākiwa or district council boundaries.
She is expected to confirm details of formal consultation with local communities, as part of a law change allowing councils to transfer their water assets to the new entities. As the law stands at present, they are prohibited from selling or otherwise disposing of the assets.
Mahuta said more than 150 meetings and engagements had been held with councils, iwi, industry bodies and other stakeholders through August and September, to discuss the proposed reforms.
“The challenges facing our water system and services have been around for more than two decades and we need to address them now. We are taking feedback on board, while reaffirming the status quo will not continue.”
With the passing of the Water Services Act last week, monitoring and enforcement would increase. “Communities will not have to put up with second rate water services.”
Some of those working on the reforms acknowledge that the widest rift between Mahuta and the councils is not in their positions on ownership and local voice, but in a breakdown of trust. Both sides have been publicly sniping at each other, Mahuta in Parliament and various mayors through the media.
Newsroom reported one constructive step towards compromise: Mahuta and her officials have created a working group to consider the most vexed issue of governance and accountability, and have invited onto it critics like Auckland Mayor Phil Goff.
Mahuta has confirmed the work to refine the model, within the Government’s bottom lines of good governance, partnership with mana whenua, public ownership and operational and financial autonomy. “I have been receiving reports throughout this process and expect a final report in the coming weeks, including any advice on changing aspects of the proposals,” she said
With the added incentive of $2.5 billion in compensation payments, the Government had been optimistic of building a consensus – but in the past eight weeks of discussions, that hope of consensus has disintegrated as opposition has emerged in the communities that elect the councils.
“It’s because it’s one year out from an election. I’ll say that in your article, just like I said it at the Mayoral Forum the other night.”
– Anita Baker, Porirua mayor
Mahuta has indicated that if councils cannot reach a consensus by December, the Cabinet may remove the “opt out” provision and impose the reforms from one end of the country to the other.
Over the past months, Newsroom has reported the views of dozens of mayors and chief executives who oppose the Three Water changes.
Now, independently of each other, seven mayors have spoken out to Newsroom in support of the reforms. Some argue that the Government should mandate the reforms across all 67 councils.
The seven mayors are Paula Southgate from Hamilton, Max Baxter from Ōtōrohanga, Don Campbell from Ruapehu, Anita Baker from Porirua, Campbell Barry from Hutt City, Rachel Reese from Nelson and Jamie Cleine from Buller.
With groups including National and Act, Federated Farmers and the Taxpayers’ Union all rallying opposition to the reforms, the vast majority of elected local officials are now speaking out against the reforms.
“You know why they’re doing that don’t you,” said Anita Baker. “It’s because it’s one year out from an election. I’ll say that in your article, just like I said it at the Mayoral Forum the other night.”
‘Improve health and safety’
Councils and central Government have been aware for many years that money from the depreciation of water assets was being diverted into other capital and operation spending – but it took the four or five deaths caused by the 2016 Havelock North bad water outbreak to force politicians into action. About 5,500 of the town’s 14,000 residents were estimated to have become ill with campylobacteriosis, and 45 were hospitalised.
For Baker, the biggest impetus to change is being able to finally fund infrastructure that will provide safe and healthy drinking water and wastewater for her grandchildren.
“We’ve got infrastructure we can’t afford to replace. I’ve got 57,000 residents and I’ve got 19,000 ratepayers. You do the sums. People are on fixed incomes and to keep having rate increases at 7.98 percent or even higher – we just can’t do it. We have large families, and a lot of our population is aged under 20.”
She said Porirua was putting $800m aside over the next 30 years, and that was not even half of what was needed.
“And we’ve got wastewater lines breaking,” she said. We’ve got one that just went, it went into the harbour and stopped the motorway into Wellington. We stopped the traffic because we had sewage pouring over the motorway and into the harbour. That was our main line that comes from the north and goes to the sewage treatment plant.”
The first estimate to replace that pipe had been $2m; now, with supply chain problems and rising prices, that had soared to $20m.
“If you’ve only got 140 connections to a water supply that costs $120,000 a year just to run, in terms of chlorination and power and monitoring and all the rest, the numbers are pretty simple in terms of what it’s going to cost those people for compliant water. And that’s just their drinking water.”
– Jamie Cleine, Buller Mayor
“The prices are tripling,” she said. “The cost of pipes has gone up 100 percent, and they can’t even get pipes in the country. Every time we get a quote, it’s never accurate because a month later it’s gone up. We’re still working on it, all we’ve done is the geotech, so we haven’t actually replaced it, all we’ve done is a patch on it.”
Different parts of the country had different water of differing quality, she said, but these reforms should improve matters. “The best thing? I think the fact that the whole of New Zealand will actually have safe drinking water.
“We’ve got to bite the bullet. We’ve got say, for the next generation, we need to do it right.”
‘Take politics out of technical decisions’
That expense of upgrading the Three Waters infrastructure is part of a more fundamental problem with financing the expensive infrastructure required to deliver water services for both today’s ratepayers, and the next generation.
Buller mayor Jamie Cleine, 44, gives the example of a new drinking water supply for the small West Coast township of Waimangaroa. The 250 people who live there gave an untreated water supply sourced from Conns Creek, which runs down from the hills into the Tasman Sea.
According to a report to council last month, Waimangaroa has a permanent Boil Water Notice due to the public health risk posed by drinking the water, and it is also vulnerable to
loss of supply, poor water quality and maintenance hazards.
There are currently about 140 households connected to the Conns Creek supply, which does not meet the criteria for a safe, reliable and adequate water supply. “The existing Conns Creek supply requires upgrade works to provide enduring and fit-for-purpose infrastructure which delivers compliant drinking water for current and future ratepayers.”
The thing it, this report is nothing new. Everybody has agreed for the past 12 years that Waimangaroa needs a new water supply, but the council and community have spend all that time debating how to pay for the new supply.
“If you’ve only got 140 connections to a water supply that costs $120,000 a year just to run, in terms of chlorination and power and monitoring and all the rest, the numbers are pretty simple in terms of what it’s going to cost those people for compliant water,” said Cleine. “And that’s just their drinking water.
“The information vacuum left by the Government has been filled by misinformation from people and groups pushing their own agenda…. We have councillors who intend to stand in next year’s local body elections who believe, because of this, that publicly supporting the reform proposals at this stage would be ‘political suicide’.”
– Don Cameron, Ruapehu mayor
“Because of politics really, nothing more, it’s gone round and round in circles for 12 years where no council is prepared to make a decision, because they keep going back to the community with new alternatives, and every single one of them is unpalatable because of the massive increase in water rates that would require. And so the community quite rightly says, we can’t afford it.
“So last month I said, look, this is just ridiculous, actually no option is palatable here, if this community wants good water we’re just going to have to invest in a solution.
But what that means is if the Three Waters reforms don’t happen, or some other funding mechanism doesn’t change, he said the small, low-socioeconomic community would end up paying more than $2000 a year, and that’s just for the drinking water.
‘Change governance structures’
One of the few things on which every council seems agreed is the need for better governance and accountability structures for the new water entities. The Government’s reform model, as it stands, creates tier after tier of separation between elected councillors and the executives who will manage their communities’ water supplies.
That is very deliberate: the Department of Internal Affairs wants to create balance sheet separation between the councils and the new water authorities, to ensure that neither the councils’ nor the water entities’ borrowing headroom is constrained by the debt of the other. That means both the councils and the water authorities can borrow more to invest in upgrading their infrastructure, rather than having to levy all the costs on today’s ratepayers.
Internal Affairs officials have asked international credit rating agency Standard & Poor’s about how to achieve that balance sheet separation. In a response released under the department’s proactive disclosure obligations (but not published on the Three Waters reform website), S&P says that to achieve that to free up that debt headroom, they must remove all ability for elected officials to “interfere” in the hiring, firing and management on the new water entities.
“The proposal as it stands needs a lot of work. Leadership is about the willingness to speak up for the community and fight hard to get the best outcome for Hamilton.”
– Paula Southgate, Hamilton mayor
Hamilton mayor Paula Southgate has been one of the biggest champions of reform but, even so, she is calling for community consultation on “significant changes” to the reform proposals, especially around enhanced governance and accountability.
“We know there are some pressing issues that need addressing,” she said. “But we are certainly not happy with the model that’s been proposed.
“Council is willing to keep talking to government but that is as far as we have gone. We have not committed Council to anything. The ball is now in the Government’s court to sort out the many concerns expressed by councillors on behalf of the public,” she said.
Mahuta is expected has established the working group on governance and accountability, though its terms of reference won’t go so far as tightening councils’ ownership controls. The minister is to announce details of the community consultation this month.
“Our feedback requires an absolute assurance from government that formal, effective and transparent consultation with our community will be undertaken before any proposal is on the table,” Southgate said. “Hamiltonians simply must have a say about the future of fundamental water services for this city; that is a bottom-line for all councillors.”
The guarantees of local voice were not yet strong enough, she said. “Nor are we satisfied with the Government’s proposed governance structure which we think has some serious shortcomings.”
“I am not going to pretend for one moment that the status quo is acceptable, because it isn’t. For our drinking water to be healthy, waterways to be cleaned up, and underinvesting to be an unacceptable option, the system needs to change.”
– Campbell Barry, Hutt mayor
Southgate said water reform had been discussed for decades and largely nothing had happened until a review into the tragic events of the Havelock North water contamination issue, and until the incidents of pollution into waterways became too much to ignore, she said. While Hamilton had very good water services, that was not the case all over New Zealand.
“We know there are some pressing issues that need addressing,” she said. “The proposal as it stands needs a lot of work. Leadership is about the willingness to speak up for the community and fight hard to get the best outcome for Hamilton. Our Council decided we would we more likely to get the best result for our city by making our feedback crystal clear.”
She has written to Mahuta, expressing the council’s support for the reform goals, but also its disappointment that no alternative ownership and governance options are on the table, thus far. “Hamilton City Council encourages government to continue its reform programme by collaborating with us and the local government sector to agree on an ownership and governance model that will be acceptable to us, and meet the expectation of our communities.”
‘Stop kicking the can down the road’
A big part of the problem is that water infrastructure is underground, out of sight and out of mind. Anita Baker says one of her predecessors as mayor of Porirua recounted that whenever they were running for re-election and wanting to build a new park or playground, they’d dip into the cyclical funding set aside from the depreciation of their ageing water and wastewater networks.
Across the hill in Hutt City, mayor Campbell Barry says the same is true. “It should never be an option to underinvest in your three water assets,” he said. “The current system allows for this, as investment decisions are inherently political where councils are always under pressure to deliver more but at the same time keep rates down.
“It’s the underground assets our communities can’t see that often take the biggest hit, and as a result, many are now having to accept water boil notices and regular discharges into waterways.”
Barry has an additional insight, as chair of Wellington Water, a grouping of city, district and regional councils, which contract Wellington Water to manage their networks.
“We know from the Wellington Water experience that scale can and does bring efficiencies across the board,” Barry said.
Those councils still own their water assets – meaning they don’t get the balance sheet separation that would enable them to borrow more to upgrade their infrastructure. It is under Wellington Water’s management (and those councils’ under-investment) that drinking water and sewage has been spouting into the streets of Wellington and Porirua.
Barry accused some elected councillors around New Zealand of “spreading misinformation” into the information void left by government.
“Elected representatives who are shouting ’no’ to everything are serving no one but themselves. It will be ratepayers hung out to dry when new regulation is introduced from April next year, and historic underinvestment comes home to roost in cities and districts across the country.
There would be “significant” savings under the Government’s reform proposal, he said, though like the other mayors in this article, he baulked at being described as a champion of change.
“It’s not about championing the reform, it’s about acknowledging that change is needed and working together to achieve the best outcome for our people and our environment.
“I agree that the current proposal needs more work on several fronts — particularly governance arrangements, local accountability, and investment decisions. But I am not going to pretend for one moment that the status quo is acceptable, because it isn’t. For our drinking water to be healthy, waterways to be cleaned up, and underinvesting to be an unacceptable option, the system needs to change.
“The challenges we face with our three water infrastructure have been decades in the making — for a range of reasons. The challenges aren’t going to disappear. We need to challenge the government on a number of aspects of their proposal, but we also need to stop kicking the can down the road for future generations to fix.”
‘Finance across the generations’
In the historic coastal village of Kawhia, the last stop of the Tainui waka, they need sewerage to take away the waste of 400 residents and their seasonal influx of tourists.
The council has no external debt and has brought forward $8m of capital works to get ahead of the curve but, even so, mayor Max Baxter said they couldn’t afford to do half the things they needed, like replacing the seaside community’s septic tanks with reticulated sewerage. “If we’re going to meet the level of environmental protection that the Government is going all-out to achieve, we can’t do that on our own. To bring the benefits the Government is promising, we need to be all in this, as one.”
And in nearby Ruapehu, mayor Don Cameron said ratepayers had supported Council undertaking an accelerated capital works program to meet the new water quality compliance standards within five years, but they were very uncomfortable with the debt implications. Without further financial support, meeting the new compliance standards would cause ratepayer debt to balloon over $100m. That is debt they cannot afford.
“Council accepts that reform is needed and that we cannot afford, from a debt perspective, to pay for the required investment in Three Waters without government assistance,” Cameron said.
Until now, Ruapehu District Council has supported the reform process in return for funding that allowed it to upgrade water systems in line with the new compliance standards, while keeping debt levels under control.
But that could not continue, he said. Relying on today’s ratepayers to fund such capital spending was the clearest example of what was wrong with the existing system: “It is ratepayer funded and small councils like Ruapehu cannot afford to pay for the water infrastructure we need.
The proposed reforms would provide a solution to the funding issues, by taking the assets and their revenues off councils’ balance sheets, but also taking any associated debt. For most councils, that would free up debt headroom to borrow for other local infrastructure, like parks and libraries.
The trouble was, the Government had failed to explain this to the public.
“The information vacuum left by the Government has been filled by misinformation from people and groups pushing their own agenda which has made maintaining the focus on the central issues extremely difficult,” Cameron said.
“In our community that misinformation has created what I perceive to be a massive opposition to the Three Waters reform and a view that this Council’s proud and successful history as a Unitary Authority is at risk.”
– John Leggett, Marlborough Mayor
“We have councillors who intend to stand in next year’s local body elections who believe, because of this, that publicly supporting the reform proposals at this stage would be ‘political suicide’.”
Nonetheless, he said Ruapehu remained committed to working with the Government to provide a successful model of reform that was “palatable to all stakeholders”.
“As the implications of the reforms are so significant we support the call for Government to take whatever time is needed to properly address the concerns of councils and their communities. There is a lot more work to be done, and a lot better communication needed, if successful reform outcomes are to be achieved.”
‘Mandate reform for all councils’
The fear of “political suicide” that Cameron describes has been clearly enunciated to Minister Mahuta, as well. Marlborough Mayor John Leggett – who is certainly no public champion of the reforms – wrote to her last week.
What he described was a community that felt its very existence as an independent and autonomous district was under threat. “In our community that misinformation has created what I perceive to be a massive opposition to the Three Waters reform and a view that this Council’s proud and successful history as a Unitary Authority is at risk,” Leggett said.
“Unless the Government addresses the matters we propose above, our Council will be under huge pressure to opt out of the reform. That is the basis for our request for a pause. We believe this should be Central Government led and that there is a great deal more work to be done if successful reform is to occur.”
“If the Government doesn’t make it mandatory, it won’t get across the line…. And I’m not sure they’re brave enough to do that, to be honest.”
– Anita Baker, Porirua Mayor
Jamie Cleine supported making the reforms mandatory, but said he and his council were coming under political pressure, too. Theirs is an island of support for the reforms, surrounded by vociferous opponents at Westland, Grey, Hurunui and Kaikōura councils.
“There’s no doubt it doesn’t win you any friends at this end,” he said.
“But again, what we just keep reiterating is let’s wait and see what the deal is on the table. You don’t tend to kick the salesman off the front porch until you’ve heard what he has to say.”
Nelson mayor Rachel Reese is on the steering group of mayors and chief executives working with the Department of Internal Affairs to craft the reform package.
She cautiously agreed that a Parliamentary mandate would be necessary if councils couldn’t reach agreement – and, she acknowledged, such agreement looked increasingly unlikely.
Anita Baker did not support Cameron and Leggett’s calls for a “pause”, but she did agree that Mahuta had to own the decision – in Cabinet, in Government and in Parliament. The reform programme would never get unanimous support from councils – but neither would it work to set in place a patchwork of local and regional water authorities.
“I want them to do it now,” Baker said. “If they don’t do it now, they’re never going to have the numbers again. So let’s be honest, if they don’t do it now, it won’t happen. That’s what it’s about, the numbers in Parliament.
“If the Government doesn’t make it mandatory, it won’t get across the line…. And I’m not sure they’re brave enough to do that, to be honest.”
