The Government is dangling $2.5 billion in front of local councils to incentivise them to support a proposal to centralise the management and ownership of the country’s drinking, storm and wastewater assets.
Prime Minister Jacinda Ardern, Finance Minister Grant Robertson and Minister for Local Government Nanaia Mahuta have descended upon Blenheim to make the offer at a Local Government New Zealand conference.
They’re promising the country’s 47 councils they would be “no worse off” transferring ownership of their water assets to four new water entities that will collectively be owned by local councils.
The Department of Internal Affairs has used a formula that considers each council’s situation, to figure out how $2 billion of funding would be distributed between councils.
It proposes Auckland, which opposes the reforms, will be allocated $508.6 million. Wellington is due to get $66.8 million, Christchurch $122.4 million, Hastings $34.9 million and Horowhenua $20.2 million - just to name a few examples.
Mahuta said: “Councils will be able to use this funding to support the three waters service reform, and focus on other local wellbeing outcomes associated with climate change and resilience, housing and urban design and planning, and community wellbeing.”
A further $500 million has been set aside to “address the costs and financial impacts that councils would incur such as the transfer of water assets, liabilities, revenue and staff to a new water services entity”.
“The funding also ensures councils will be able to continue to sustainably perform their non-water related roles and functions,” Mahuta said, labelling the $500 million a “no worse off” package.
The $2.5 billion comes on top of $761 million committed to the programme in 2020, and $296 million announced in Budget 2021 to cover the cost of setting up the entities.
The Department of Internal Affairs and Local Government New Zealand will spend the next six to eight weeks engaging with councils on the issue before the Government meets again to decide the next steps.
The idea is for councils’ participation in the water entities to be voluntary, but Mahuta hasn’t ruled out forcing them to join.
The waters services entities are scheduled to begin operating in July 2024.
Mahuta’s argument is that amalgamation will result in efficiencies. Entities will also be able to issue debt more easily than councils and won’t face the same pressures councillors do when it comes to keeping their books in the black.
Research done for the Government suggests $120 billion to $185 billion of investment is needed over the next 30 years to maintain, replace and upgrade ageing assets and to provide for growth.
Auckland Council opposes the reforms because it doesn’t want to subsidise other councils that haven’t invested as much as it has in maintaining its water assets.
Councils also fear they’d be ceding power and the changes could result in job losses.
Here is a Q+A provided by the Government:
Is the Government buying the councils’ water assets?
- No. The assets are currently owned by communities through their councils. Under the reforms, communities will continue to own the assets through the water entities. These entities will be collectively owned by local councils for the communities they are serving.
What happens next?
- It has been agreed to have a six to eight-week period following this conference during which officials from the Department of Internal Affairs will work in partnership with Local Government New Zealand to further engage with the sector, after which the Government will meet again to discuss next steps for the reforms.
- This will assist sector members to understand the reform-related information, and explain the policy proposals, the benefits of reform, and the details of the support package.
When will the entities exist?
- The waters services entities are scheduled to begin operating in three years’ time on 1 July 2024.
How will the Government act to prevent privatisation?
- Continued public ownership of Three Waters services and infrastructure is a bottom line for the Government.
- Most water infrastructure is already publicly owned by communities through their councils. The water entities will be collectively owned by local councils for the communities they are serving.
- The Government will develop legislation specifying that local authorities will be the owners of the entities and any future privatisation proposal must be put to the community through a referendum requiring at least 75 per cent agreement for change.
- The entities will be structured in a way that prevents them from paying dividends or offering other financial rewards. This will make them unattractive to potential alternative owners.
How will communities retain influence over water services?
- Oversight will be shared through a local Representative Group made up of local councils and mana whenua. This group will set expectations for the entity and select an independent panel to appoint an entity board.
- Each entity will be required to engage with communities in a meaningful and effective manner on all key documents and report on how consumer and community feedback was incorporated into decision-making.
How will transition be managed?
- Local Government will be supported through the transition process to ensure business as usual operations are not disrupted.
- A sum of $296 million has been set aside to help manage the costs of transitioning to the new entities.
What impact will the reforms have on the workforce?
- Developing a sustainable workforce, which can deliver on the increased activity, is critical to the success of the reforms.
- This includes developing the existing workforce to adapt to the reforms, as well as creating a pipeline of an appropriately skilled workforce through education, training, immigration and substitution initiatives.
- Modelling and research suggest the water sector workforce will need to grow significantly over the coming years.
- Transition planning is being developed to ensure much needed certainty for the workforce.
28 Comments
A pertinent question: What happens in the event we find ourselves paying money to a centralised government agency, but see no benefits or stagnating business cases holding back infrastructure, which we continue to pay for, while our decaying infrastructure fails to keep up with a population being foisted upon us from the very same central government?
Signed, 1.65m potential light rail users.
I dunno, I'd like to see something a bit more solid than "let's see because neolibs = bad" when it comes to councils having asset stripped from them and when getting it wrong means water shortages.
I seem to recall many of the current ministers decrying selling down stakes in SOE to 51% being some sort of evil neoliberal hellscape, but here we are taking away ratepayer funded infrastructure and telling ratepayers in Auckland they'll be underwriting infrastructure in parts of the country that throw a tantrum when anyone suggests they use water meters to boot. Not exactly the deal of the century for my mind.
Bernard Hickey puts it far more succinctly than I can - https://thespinoff.co.nz/business/16-07-2021/bernard-hickey-a-solar-pan…
Taking one example, Carterton is in the middle of upgrading its wastewater system. Final cost expected to be $10m for a facility expected to last 50 years. The amount announced today for Carterton is $6.7m. The shortfall will be on the backs of ratepayers still. I can't figure out whether this is a bad thing or not, or whether this represents a subsidy of some sort to other councils which haven't invested in their system.
I am not buying this. Their proposal seems totally disproportionate to what problems there are. It looks more as if they have totally unrelated agenda like handing it over to Maori as some sort of way of satisfying the Maori claims of water rights. Or some other nefarious objective. I don't trust this proposal.
If their sincere objective is improving water then targeted and ring fenced help where it is required would achieve the same objective.
We have seen examples of government centralization of local functions. Remember the Rabbit Boards.
A few locals managing the problem with some help from government. They had the problem totally under control. A couple of rabbits only had to show their noses and the response was quick, directed and effective. However our wondrous leaders in Wellington thought that they could do better from their office desks in Wellington. Result was we pretty quickly had a rabbit explosion which prompted a few frustrated farmers to start start circulating the Calici smoothy.
@ Chris-M
I think you have nailed it
"Their proposal seems totally disproportionate to what problems there are. It looks more as if they have totally unrelated agenda like handing it over to Maori as some sort of way of satisfying the Maori claims of water rights"
Note this Govt has embarked on a program of centralising everything into Wellington as a control and power grab, Soviet style. A total disaster in the making.
I simply do not trust these types of arrangements to be free of local biases.
Here is an example.
Our kids went to the Abbotsford Kindergarten in Dunedin. It was housed in an old single room hall or school building. It was so dilapidated and rotten that you could see daylight through the large holes in the walls. Every year we would hold raffles and fund raise our required share of the cost to replace the building. Finally we thought that we had raised sufficient for this. Unfortunately the word came back that we had not for some mysterious reason. This went on for a number of years, but there was always some reason that we could not get our new building. We were disheartened and could not understand what was going on so finally we took our problem to Clive Mathewson, our local MP. Suddenly we got our new building. It transpired what was going on was that we were under the management of a government department office in Christchurch. Funding was being preferentially directed to projects in Canterbury.
Another example and to add balance. Look how shockingly the Otago hospital treated the colorectal cancer suffers of Southland.
When the Governments health reforms are in place I expect that the funding for the major part of the South Island will be managed out of Christchurch so I expect to see a lot of very strong favoritism to medical expenditure in Canterbury. I would not be surprised if within 10 years, the Otago Medical School is down graded to a secondary clinical school and the main campus transferred to Christchurch
Hows the Wellington / Auckland water infrastructure situation looking?
One word. Ugly
You cant just import people to cream house prices without a kicker.... and theres years of neglect everywhere
The reality is cities are pits of consumption served by resources from regions... regions with low population density & ugly economies to scale for infrastructure ... but sort of necessary if the cities want stuff to consume & trade...
Which is why city folk screaming over the likes of water degradation etc are in a state of delusion ... its the resource degradation that pays their/NZ wages ... all to feed consumption pits here and abroad
The blind leading the ignorant.
It is reasonable to assume that in the resource draw-down period, planetarily, all the moves we made were in a direction. It is reasonable to assume that in the dwindling side of the resource pile, those trends will reverse.
The trend has been to lesser and lesser Bodies, covering wider and wider geographical areas. This historical trend is being overtaken by events; reducing EROEI and reducing resource quality/quantity, along with increased demand.
The pressure will cause this trend to reverse: to smaller and smaller control, and as the pressure (:) really comes on, to local cobbling-together. So it's a 'wrong move' by those blind to the predicament facing humankind, and being rebuffed by those wanting to hold onto their power in a dying system.
All water under the bridge, methinks.....
Gobbledygook for layering and rights dilution. The entire exercise looks like it's about paying current rightful owners some incentives in the form of funding in exchange for their rights and to develop a new bureaucratic red tape to prevent future exercise of those rights from the current owners.
"... assets are currently owned by communities through their councils. Under the reforms, communities will continue to own the assets through the water entities. These entities will be collectively owned by local councils for the communities they are serving... Oversight will be shared through a local Representative Group made up of local councils and mana whenua. This group will set expectations for the entity and select an independent panel to appoint an entity board... Each entity will be required to engage with communities in a meaningful and effective manner on all key documents and report on how consumer and community feedback was incorporated into decision-making."
We have waaaay too many councils etc in this country managing things differently (47 local councils???). IMO anything to bring some of that together gets my vote. For instance Wairarapa has 3 different councils managing almost the same things, all doing it differently. In addition we have Greater Wellington regional council covering them for some stuff. Talk about bureaucracy, just put them all under a single Wairarapa council with some local boards if necessary. Thank god they did that for Auckland, same should be done for Wellington (Hutt Valleys + Porirua + Wellington) and various other places around the country. Thank god some services (like Resource Consents through simpl) are being centralised.
"... wellbeing outcomes associated with climate change and resilience, housing and urban design and planning, and community wellbeing.”
Stretching the definition of 'wellbeing' is going to cost the NZ taxpayer a lot more than $2.5b I think?
She will have to drop a few more billion dollars into the bucket to prevent this centralisation-nationalisation program from becoming an election issue in 2023.
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