As National passes a bill to repeal the former Labour Government’s Three Waters governance restructure, the practical questions are: was Labour’s plan all that bad, and will National come up with a better one for fixing water infrastructure?
And then there are political questions about why Labour’s proposal was unpopular, and whether National runs similar political risks, but from another direction.
Labour leader Chris Hipkins told the AM Show that ‘some political parties chose to play the race card over water issues’ – meaning that Labour’s local authority/mana whenua co-governance model came under attack. Arguably, Labour’s own ‘race card’ was first on the table; the others just played one in a different suit. But what was Labour’s big restructuring of water governance supposed to produce?
No one seriously doubts that New Zealand has some problems with delivering clean water, processing waste water and draining stormwater. And the estimated bill for fixing it all is eye-watering. But many local authorities struggle to raise capital for these expensive jobs. If you’re a council in a provincial town that’s ageing and not really growing, surrounded by farmers who aren’t on town supply, then you have difficulty convincing ratepayers to stump up for state-of-the-art water filtration and environmentally friendly sewage processing. Just suggest charging the townies for the capital and operating expenses directly and see what response you get.
Can central government come to the rescue? Labour said ‘yes we can’. They proposed four (later ten) Water Services Entities that would take ownership of the relevant assets from the councils over large areas, and then use that asset-base to borrow the large sums needed, but on better terms than the councils could have negotiated. That would relieve ratepayers of the liability, but wouldn’t make it disappear. NZ Inc would shoulder the debt, and the borrowing would push up interest rates, and hence mortgages. There’s no free glass of water.
The proposal ran into a few objections:
Many councils objected to the seizure of their assets by central government.
Councils that had invested wisely and kept their systems up-to-date would subsidise others that hadn’t been so prudent.
The proposed system would remove water services from local democratic accountability.
It separated stormwater drains from other assets (such as stopbanks and wetlands) needed for flood mitigation plans.
It mixed geographically distinct catchments, with their distinct issues, under single organisations.
It introduced a controversial co-governance model that added complexity but may not have contributed much to effectiveness.
That last point attracted most of the political fire. It got to the stage where some left-wingers on social media were saying that anyone who objected to the 3 Waters plan must be a racist. Gosh. That made it hard to have a rational conversation about the actual merits.
And there was some illogical stuff. In support of Labour’s changes, the fatal water contamination that happened in Havelock North in 2016 was cited as evidence. But that particular problem had already been addressed – without needing a nation-wide overhaul of water services governance. The Regional Council and the District Council both took a share of the blame, as they could have and should have prevented it from happening. Adding another entity to the mix wasn’t needed, however.
We can’t deny that there is a wider problem, but the case in favour of Labour’s proposed solution wasn’t well argued. The people of Aotearoa weren’t convinced.
Labour’s original proposed governance structure, even if you overlook the co-governance aspect of it, was a complicated beast: it had unelected ‘representative’ bodies that appoint board-appointment committees that appoint boards that then appoint advisory panels that monitor the boards and report to the representative body. Confused? And then one asks how these boards would get along with the several local councils in their areas when needing to agree on and coordinate developments like a new suburb’s pipes or an upgraded treatment plant. Just fixing a damaged stormwater drain would get more complicated than before. There was bound to be conflict. And the households dependent on these services would have less voice than ever.
Now the National government is proposing ‘a new range of structural and financing tools, including a new type of financially independent council-controlled organisation’. We’ve yet to see details, but it looks like councils will be able to band together. This would make sense especially if they share a catchment.
A model solution dates back to 1991 (yes, more than three decades ago!) with Auckland’s Watercare, established as a local authority trading enterprise (LATE) owned proportionally by the then six councils. After the Auckland water shortage of 1993, water meters and charges were implemented and a pipeline from the Waikato River was installed. When Auckland governance was unified in 2010, Watercare became a council-controlled organsation (CCO) under the new council’s group governance.
It’s no wonder that Auckland’s mayors (both Phil Goff and Wayne Brown) opposed Labour’s plan.
National’s sequel will now take time to pass into law (by mid-2025) and to be implemented. It doesn’t dump all responsibility back onto councils, as central government would have regulatory powers to ensure financially sustainability and public health.
Mr Hipkins has said, somewhat defensively, that National still ‘have to find a way of recognising the Māori interest in water which has been established by the courts’. We’ll see what the new government does about that, but Mr Hipkins must know that parliaments make laws and courts apply them, not the other way around. In the meantime, people of all races just want a clean glass of water, please.
Three Waters helped to sink the Labour government at the 2023 election. Setting aside the ‘race card’ accusation, their proposed governance structure was unwieldy and full of opportunities for bureaucratic delay and conflict. It was another own goal by the Labour team as one more ‘solution’ turned into one more political problem.
National’s proposal will retain ownership and control in the local councils, but give them some tools to address the problems in concert. What that means for local rates remains to be seen. It’s now National’s turn to annoy the whole country over this – or not.
What was the 3 Waters governance model anyway?
Labour’s initial plan was to create four Water Services Entities across the whole country, see below. (Later this became ten WSEs.) Each of these entities would have a Regional Representative Group (RRG) with 12 or more regional representatives, made up of an equal number of territorial authority and mana whenua representatives. This group would appoint a committee that would appoint the WSE’s board. The WSE Board was to be the entity’s governing body with 6 to 10 members appointed on merits and expertise. There was no requirement for co-governance on the boards. But each WSE board would establish one or more regional advisory panels that each had to have an equal number of territorial authority and mana whenua members. Each panel would provide advice to the RRG about that group’s performance. All of that was in addition to existing councils.
According to Hipkins, those who question that multi-level model are ‘playing the race card’. Someone needs to tell him that what people really need is clean water in and dirty water out. No wonder Labour loses support over this. Public utilities such as water services should be matters on which a Labour party leads – not loses.
That bunch of woke rainbow people that was Labour govt could never fix our water supply, cos they couldnt work out the difference between male and female. They needed teams of subcontractors, cos none of them could tell if a plumbing fitting was male or female. So they spent millions of dollars on theories about gender equity, but never got a pipe in the ground.
The Havelock North campylobacter contamination of water could have been prevented if the systems in place had been sufficiently robust to anticipate the risk as problems emerged and deal to them before an outbreak occurred. That wasn't the case and the outbreak demonstrated that new approaches of management locally between local and regional councils and oversight by the Ministry of Health were needed.