The Government will announce its Three Waters replacement today.
OPINION:
“Affordable Water Reform” - sounds great, doesn’t it?
With inflation at 7.2 per cent, it’s refreshing to think of anything as being affordable - even if it’s something most of us think of as free.
How about Three Waters?
Years of bitter squabbling, often tinged with unpleasant racism, have tarred that label, which was confusing to begin with (what are the three waters anyway?).
The reforms became toxic, and Prime Minister Chris Hipkins pushed pause on the reforms when he took over earlier this year, asking his new Local Government Minister Kieran McAnulty to review them.
That review is now complete and this morning, like a butterfly emerging from a chrysalis, Hipkins and McAnulty will launch Affordable Water Reform - Three Waters (freshwater, stormwater and wastewater - to answer the previous question) rebranded.
Credit to Hipkins and McAnulty - this runs deeper than a cosmetic refresh. Three Wat- pardon, Affordable Water Reform will now be far more localised - under former Local Government Minister Nanaia Mahuta’s proposal, councils’ water infrastructure would have been compulsorily amalgamated into one of four massive water entities.
Councils would have an ownership stake in these entities, but not meaningfully control them.
Sources close to the matter have told the Herald the number of water entities under the new proposals will increase from four to 10.
On Monday, Businessdesk also reported the number of entities would increase to 10.
The boundaries for these entities would be based on New Zealand’s regional council boundaries - although there are strictly 16 regional council areas in New Zealand, meaning some areas will be merged to get to the 10 entities.
This gives local communities a greater degree of control over their water, and neuters the criticism that the entities would be detached from the communities they cover. Under Mahuta’s policy, water for Napier, Wellington and Blenheim would have been under the control of the same entity.
The rest of the policy, including the vexed issue of co-governance, is said to remain much the same. Councils will still be forced into the scheme and not have the ability to opt out - a point of contention.
The entities will have a similar structure to Mahuta’s proposal, meaning councils and local Māori will sit on a regional representative group which is responsible for selecting board members who will govern the entity and report back to the regional representative group.
Given the unpopularity of co-governance, questions will no doubt be asked about why it remains, and whether this is a symptom of Hipkins’ inability to stare down backers of the policy from within the Labour caucus. Environment Minister David Parker’s RMA reforms envisage a similar level of amalgamation to Three Waters, but exclude co-governance arrangements - instead opting for Māori representation that falls short of the 50-50 model used in water.
Given the Government’s clear desire to refresh the policy as much as possible, it seems unusual that one of its most contentious elements appears to have survived unscathed, particularly when Parker’s model might have provided a suitable middle ground. The Government will need to find a way of making the case for why Māori require 50-50 representation on these committees - something the previous administration ran away from.
Hipkins and McAnulty will also have to confront the irony that their “affordable” reforms may be less affordable than what they’re meant to replace.
Mahuta defended her unpopular four-entity approach from the likes of the Greens, who wanted seven entities, by saying that her model provided the best cost savings thanks to the benefits of amalgamation.
Modelling, commissioned from the Scottish water authority by the Department of Internal Affairs, looked at different amalgamation scenarios and found that the benefits of amalgamation decreased as the number of entities increased.
Mahuta’s proposal estimated that household bills for water could be kept at $800 to $1640 a year with reform (down from $1900 to $9000 a year without reform).
With eight water entities, the Water Industry Commission for Scotland (WICS) reckoned average household water bills by 2051 could be $710 to $2,590 - with an average bill of $1,150.
Worryingly, one council’s household water bills, Napier, would be 14 per cent higher under an eight-entity model than they would be if the Government sat on its hands and did nothing,
This gets even worse if you move to a 13-entity model, in which Napier’s bills would go up 14 per cent, and Nelson’s would go up 15 per cent.
Average household water bills would range from $670 to a staggering $6150 under that scenario, averaging $3,560.
The Government may well have tweaked the settings of its policy to avoid this disaster, but there’s no escaping the fact that more entities - under the Government’s modelling, at least - means more cost (other modelling disputes this). This creates a political problem for Labour, in that it erases a key distinction with National, whose water policy would likely involve more water entities.
However, those costs are a problem for the future - 2051 to be precise, when if our emissions trajectory is anything to go by, there’ll be no shortage of affordable water to go around.
The problem Hipkins is trying to solve is a more immediate one: will this detoxify Three Waters - apologies, Affordable Water Reform - to the extent that it won’t hurt Labour’s chances on polling day?
That’s a difficult call. Polling from 2017 showed that 35 per cent of Americans either believed Obamacare and the Affordable Care Act were different policies or they didn’t know whether they were the same or different.
Simply claiming Three Waters is dead and replaced by the much more appealing Affordable Water Reform might go a long way to detoxifying Labour’s water problem among people who have better things to do with their lives than blog about co-governance.
But there are risks, too. Voters hate having the wool pulled over their eyes, and might be unimpressed if it looks like the Government is trying to pull a fast one on them. The risk of this is particularly heightened for this issue, which has stirred up a level of paranoia.
The controversial bill was introduced in Parliament yesterday.