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Bruce Smith

The Three Waters Journey – Part 2

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Here is Part 2 of the Westland District Council Mayor’s Three Waters journey
– as of 21 July 2021.

On the 3rd of March I published my journey to date with the three Waters reforms being proposed by Government. You can see this summary on YouTube HERE.

Now with the 2021 local government conference behind us where we listened to the Prime Minister and Minister Mahuta and had discussions with a number of Mayors and CEs it’s time for a further update. Some call it a bribe I prefer incentive.

At the LGNZ conference a $2.5 billion incentive was announced by the Prime Minister to encourage councils to opt into the government three water proposals.

Westland District Council was to receive $11 million which we were advised could be used on any project and not confined to three waters. Its stated purpose was to ensure Councils were no worse off after their three waters functions and assets were removed by government.

Nothing was mentioned about strings attached by the Prime Minister in her speech.

On the second day of the conference, we were informed the money would become available in July of 2024.

It could be spent on projects consulted and approved by iwi and was not confined to three waters investment.

It was subject to councils joining the government masterplan for three waters reform.

This included the transfer of Councils three water assets to one of four companies to be established to control the allocation of water, the assets transferred by Councils, and the funding of the current and future three water supplies.

It was clarified that Maori would be granted membership and voting rights of 50% of the governance groups that controlled the three water activities and future strategic direction of each of the four entities.

The voting would be 50% Maori and 50% councils who had transferred 100% of the assets to the operating companies.

This government proposal gives Maori who makeup at June 2020 10.4% of the West Coast population and 16.7% of the New Zealand population according to statistics NZ.

Maori in commercial terms gets the right of Veto in perpetuity from government.

This is an unorthodox proposal where 100% of the population have paid for the existing assets and will be paying 100% of all future water costs.

Amongst the conversations it was observed how undemocratic this proposal was. It was noted that the proposal would create a real backlash in our communities. An unintended consequence or is it a further implementation of the HE PUAPUA report.

You can see the report HERE.

The proposed governance structure sits over the operating companies which have no ownership structure as defined in the companies act, have no shareholding and what appears to be an ad hoc distribution of voting rights.

The Mayors were informed by Minister Mahuta that councils have until the end of September 2021 to advise government if they are in or out of the proposed three waters reform structure.

Mayors were also informed that information which has not been received at present would be supplied by government via the Department of Internal Affairs and sent to councils for consideration during August/September.

Councils are required by the Local Government Act to consult with its ratepayers when strategic asset purchases or disposals are being considered.

I can’t speak for other councils, but Westland will need at least 3 months upon the receipt of the information to engage experts and receive their advice on the merits and risks of the transfer of assets as proposed by government.

This will then go to ratepayers for consultation and seeking of submissions.

My view is that because of the implications of transferring over a quarter of Council’s total assets at below valuation there is only one safe road to take.

I will be advocating for a binding referendum to go out to the people of Westland seeking direction on in or out. It’s called democracy.

It’s hard to imagine how any council in New Zealand will be able to make a decision without the clear direction a referendum will bring.

Discussion occurred about what information ratepayers would require, to make a decision as at present they are 100% in the dark and will only know what has been read in the media, much of which is spin doctor sourced.

The first information required from any ratepayer that has not been in the papers:

What do I pay now? 

What will I pay if this proposal is mandated?

I can only talk about Westland.

At present a household pays $527.40 pa water rates.

A commercial business pays $927.12 pa water rates.

If the proposal is mandated households will pay $1,640 to the water supplier for their water.

We have not been told what a commercial user will be charged by the water supplier.

Households need to know if the $1,640 is plus GST or inclusive of GST as 99% are not registered for GST.

Another question that ratepayers will need answered is will the $1,640 dollars account they received from the water supplier come off my current rates bill?

The answer is a firm NO.

If your WDC household rates are say $3,000, the $527.40 for water you pay at present will come off your rates from Council.

Your rates will drop to $2,472.60 and at the same time you will receive an account from the water supplier for $1,640.

Your cost today is $3,000 which includes water.

Your total cost if the proposal is mandated will be $4,112.60 and that’s an increase of 37%.

The mayors talked a lot about democracy and the loss of localism which needs to be considered.

Perhaps we should consider how much influence coasters have with say NZTA.

All Councils have had the NZTA roading contribution this year reduced by a minimum of 10% due to a government directive to put road user charges into rail networks and cycleways.

Health services on the coast now have no direct local input. Its government controlled.

The Tai Poutini Polytechnic now has no direct local input. Its government controlled.

Education is 100% completely controlled from Wellington. Its government controlled.

Social housing is 100% controlled out of Wellington. Its government controlled.

The coast has a serious shortage of social housing and no sign of this being rectified.

Now the proposal is to take all three water assets from the people of Westland, to have them transferred to one of four water supply companies.

There will be no tangible compensation. Households will pay much more for water with no control of future costs.

The government keeps repeating the PR team’s key message “we have proven the case for change”.

Government keeps referring to the one event where a failure that occurred in Hastings which had never occurred before or after in New Zealand and is no-where near a justification for change.

There is discussion going on around New Zealand about the removal of control and assets for three waters from councils. Assets which generations of families have paid for with hard earned cash.

What’s proposed seems to fly in the face of our New Zealand democracy and way of life.

I will try and summarise as at 24th of July my journey to date.

The case for change has not been proven.

The water quality bar has been set at a level unaffordable to New Zealanders – this is evidenced by the increased cost they will be invoiced by the water regulator to every household.

One size does not fit all.

The loss of local control and influence feels like a step too far.

Confiscation of assets paid for and built up over generations with no compensation will struggle to gain public support.

Some say the proposal to give a right of VETO to Maori who make up 16.7% of the population is undemocratic and will find little support. It follows closely the objectives set out in the HE PUAPUA report.

The borrowing of up to $160 billion by the new proposed entities using the assets transferred from our councils and paid for by generations of New Zealanders as security feels reckless.

If it’s aimed at increasing borrowing in New Zealand away from government’s balance sheet it is going to struggle to get support.

The time frames being urgently pursued by government suggest this is not about three waters. If it was why the urgency?

What other councils do around New Zealand is up to them however a public referendum in every district would allow our residents and ratepayers who have along with their families over generations paid for these three water assets and on that basis the decision to opt in or out must come directly from them.