Infrastructure: Water - Dealing with a long-standing deficit

Deputy Prime Minister Grant Robertson. Photo / Getty Images

Finance and Infrastructure Minister Grant Robertson says the Government is "very committed to the Three Waters reforms".

"They offer us a chance to not only deal with a very long-standing deficit in water infrastructure in New Zealand, but also, for consumers, to ultimately put them in a position where they will be paying far less than they would be if we weren't doing this."

Robertson says a lot of work has been done on these reforms over a four-year period.

"Obviously a lot of people are probably just catching up with it now. But this goes right back to last term, where we've been talking about what we need to do.

"We needed all councils to be involved to make it work. We worked very hard to try to keep them altogether but in the end we had to go for the mandated approach."

One area where the Government is doing more work is around the governance arrangements for the four regional water entities.

"We've got what I think could be well described as a high-powered group, when you take a look at the mayors and the iwi representative groups that are on that.

"That group is setting about looking at whether there is a way that the governance arrangements can be tweaked.

"One of the issues there is, in order to maximise the value of what we are doing and giving the new entities the strongest possible ability to borrow and do their job we need balance sheet separation."

Robertson stresses it is important. "We do recognise some of the concerns around governance.

"It is very important they stay public assets. Councils are the collective owners."

He relates that Scottish Water — which took an outside-in look at the project — said "you have got to sort this out or there will be more Havelock Norths or Wellingtons".

Robertson says the Government is trying to give Manu Whenua a seat at the table but he wouldn't characterise this as "rights to veto" or special royalties.

Herald: Can you bring the Opposition with you on this?

Robertson: "I really hope so and to be frank in the past they have been."

At the heart of the reforms is the chronic under-investment in these water, stormwater and wastewater (sewerage) assets over at least the last 20 years. As one advisor pointed out, "there are no votes or photo ops for pipes under the ground and unlike roads which one can see deteriorating as they are used pipe and networks are fine until the day they are not — as Wellington has recently seen. "Capital markets will finance water assets at significantly higher levels than they will finance overall Council balance sheets and that is what this is trying to unlock so that effectively you can achieve far greater levels of investment for the same cost to the consumer."

Three Waters reforms pushback

The Three Waters reforms have been embroiled in controversy.

Some local government leaders have kicked against central government's decision to establish four new water authorities and some National party politicians have chimed in.

But the reality is that these reforms had their genesis in work that got under way in mid-2017 under the National Government led by Sir Bill English.

Internal Affairs working papers say the Government's reform was chosen to address four key challenges with the status quo:

• Limited opportunities for efficiencies of scale in delivering Three Waters services
• Incentives and governance structures that are not conducive to long-term decision-making for three waters asset management and investment
• Affordability challenges associated with addressing a growing infrastructure deficit
• A lack of effective system stewardship and oversight.

The Government says it is a bottom line that water services entities continue to be publicly-owned, have operational and financial autonomy to make much needed investment, and have oversight from local authorities and mana whenua.