We wrap up the 12 days of Christmas with our final question about financing Three Waters. Is this just an argument about whether taxpayers, ratepayers or consumers are liable for the debt, and which generation picks up the tab?
In some ways, yes. It’s all about how we pay much the same bill.
We’ve reached the end of the 12 days of Christmas, and the 12 drummers are a-drumming, the twelve piupius are a-swinging, and it’s time to read the writing on the hymn sheet. We need the infrastructure and it has to be built and financed by both current and future generations.
Whoever pays for the water – taxpayers, ratepayers or consumers – they are largely the same people.
But how the costs are shared is important. For instance, there is an argument that residents in smaller regions should be subsidised because they do not have the population and economic base to manage water assets over large geographical areas.
WHO PAYS FOR THREE WATERS?
1/ Paying for Three Waters: the local pūkeko v the imported partridge
2/ Who would actually manage the borrowing for Three Waters infrastructure?
3/ Three Waters’ magical kete with room to borrow more and more
4/ On the 4th day of Christmas, what’s so good about four water companies?
5/ Achieving the gold standard of balance sheet separation
6/ Driving through water reforms in new special purpose vehicles
7/ Govt sticks to ‘bottom line’ of balance sheet separation – but why?
8/ If councils retain Three Waters, how much will they have to raise rates?
9/ The silly Ministry of Water Works – and its serious side
10/ On the 10th day of Christmas, should Three Waters become two?
11/ Too big to fail – calls for Govt to guarantee Three Waters debts
12/ Paying for Three Waters: ‘It’s always gonna come back to you in the end’
And to a degree, the distinction between taxpayers or ratepayers being responsible for Three Waters debt overlooks an important feature of the reforms: the defining shift to a commercial utility model.
So there’s something more. These reforms are not just about who picks up the tab; fundamentally, they’re about ensuring critical work is actually done. Because in many parts of the country, for many years, it hasn’t been.
The promised cost savings are secondary to the main event: improving the safety and quality of New Zealand’s drinking water, wastewater and stormwater.
“It’s a lack of preparedness to charge sufficiently for the cost of delivering services, and a tendency to shift the cost of infrastructure upgrades onto future generations.”
– Hamiora Bowkett, Internal Affairs
Hamiora Bowkett, the executive director of the Three Waters reform programme at the Department of Internal Affairs, says reform is intended to address a range of issues including the large number of small water service providers, which limits opportunities for efficiencies of scale, and political incentives and governance structures that are not conducive to long-term decision-making.
“These issues won’t be solved only by improving access to finance,” he warns. “It’s a lack of preparedness to charge sufficiently for the cost of delivering services, and a tendency to shift the cost of infrastructure upgrades onto future generations.”
Amelia East, the head of HKA New Zealand, says extensive overseas experience shows that the utility model enables operating and investment efficiencies, and opportunities to spread the burden of debt among customers, that are not readily achievable under a council-operated model.
So to reduce the Three Waters debate to a question of who services the debt would, she says, completely overlook the fundamental need to provide better, safer, more efficient water services.
“Somebody’s paying for it, and it’s always gonna come back to you at the end of the day.”
– Anthony Walker, S&P Global
Watching, not entirely disinterestedly, from over in Australia at S&P Global ratings agency, Anthony Walker is forthright.
“There’s no magic pool of money,” he says.
“At the end of the day, ratepayers are paying through their taxes, through their council rates, or through water levies. Somebody’s paying for it, and it’s always gonna come back to you at the end of the day.”