The 3 Waters Debate
Some of you will have read that Kaipara District Council voted to express concern about the government’s 3 waters proposal. The decision followed a long and detailed debate and the resolution was not taken lightly.
I want to delve into my thinking in the space and stress that this is my point of view, at this point in time. We are in the middle of a long and detailed process here. I am hopeful that more information, analysis and options will come to light, providing detail which may shift the debate and my thinking along.
First and foremost, I want to stress that our understanding is that the 3 Waters proposal does not affect those on tank water and septic systems. The advice that we have received so far is that only Council owned supplies are proposed to be transferred to the larger Entity A, which means that only those connected to such a supply would be affected by the changes or charged for the service.
As a footnote, those who run their own systems, or perhaps supply others, should be aware that Taumata Arowai, the government’s water regulator, may impose standards that apply to such systems, but that is another matter.
For clarity, the 3 Waters proposal suggests that there would be significant economies of scale and funding benefits for transferring the 3 waters (wastewater, drinking water and storm water) assets from Councils to a larger ‘entity’ which would take over the provision of the 3 waters services to our communities. For Northland this would be a combined Northland and Auckland entity, known in the proposal as Entity A.
My view is that the suggested structure for 3 Waters is flawed as it currently stands. But as anyone who has ever negotiated a contract knows, there is a process of offer and counter-offer that tends to iron out those flaws before the contract is finalised.
In this case, I feel there are six key areas that need ironing out:
1) Governance and representation
The current suggested model would be made up of 50% from our iwi and hapu and 50% made up from local government on either a population or asset value basis. In my view, with Entity A being suggested to be made up of Northland and Auckland, by either measure Northland isn’t going to be strongly represented and would be lucky to have one seat at the table. This is problematic.
2) Financial modelling
The modelling that has been done by the government (which, to be fair, has been reviewed by a number of auditors and other agencies) lacks transparency for local governments. We have yet to understand the assumptions that the modelling is based on, which makes it hard for Councils to have confidence in the rationale for such a drastic change.
However, in Kaipara’s case, a very simple ‘back-of-the-envelope’ analysis shows that meeting the standards needed for 3 waters in our communities, would be challenging at best. Kaipara’s own Infrastructure Strategy shows we would need $20m every year for the next 20 years to fund the capital works required, over and above the existing $11m per year that we collect which covers operations and depreciation on our existing systems.
When you consider that 1% of rates is equal to round $330,000, the rates increases required would be eyewatering, even if the capital costs were spread over 50 years. Such a big decision needs real clarity on the financials, clarity that I have yet to have confidence in.
3) Local representation
One of the real benefits of local democracy is the ability to include all affected people in the planning decisions around what infrastructure is needed and how that should be funded. With Entity A being so large and dominated by Auckland Council, I have a significant concern about how local voices from our communities are heard.
There is a suggestion in the government’s proposal that the Entity will be required to consult by sharing its proposed plan with communities and taking on board feedback. My experience is that few people have the time, technical expertise or energy to wade through big plan documents. So, I remain concerned about how the Entity would engage in a meaningful way with communities.
The government’s initial response to these concerns is the establishment of a consumer forum but I can’t help wondering whether setting up additional organisations when the structure is already quite complex, is helpful. So, this remains a major live issue for me.
4) Integration of local planning
As currently proposed the Entity A will be required to give effect to the plans of local authorities for their communities, eg installing wastewater systems, drinking water infrastructure and stormwater infrastructure for new development areas. But to my thinking there is a devil in the detail here.
A community of say 5000 people (which describes Kaipara’s two largest towns) could become lower priority than an Auckland suburb of say 200,000 people. The term ‘give effect to’ does not clarify how to prioritise that work. To my mind, it is vital that this is sorted out before we can be in a position to proceed.
5) Impacts on Council organisation
There is no question that removing the 3 waters infrastructure from Councils would have a serious impact on staffing and revenue models. In New Zealand, Councils have become very focussed on the provision of infrastructure. However, in many other countries, Councils are much more focussed on delivering services that provide for the wellbeing of their communities (eg Civil defence, planning, housing, health and education) and working closely with communities to plan for that wellbeing.
The government is suggesting that a possible response to the removal of infrastructure could be an increase in this ‘softer skills’ area. I’m open to that suggestion, so long as it is based on a genuine desire to improve outcomes for all our communities.
However, this ‘softer skills’ discussion is being undertaken through the Reform for Local Government review, which has a slower timeframe than the 3 Waters review.
The issue of ownership of the waters assets has been brought up by many who see this proposal as the removal of Council ownership. The structure that government is proposing leaves Councils as owners of the assets in name but with limited ownership rights. To be clear the proposal also includes measures that try to prevent future privatisation of the assets.
To my mind, this is not necessarily an issue. If the model is right, then it shouldn’t matter who owns the assets; the community has access to all the benefits they bring, has input and influence on the planning for developments and maintenance and can benefit from the economies of scale that are proposed in the changes.
As an example, in Northland we have the Northpower Trust who own our power lines infrastructure. The governing body is a democratically elected body. Democracy isn’t constrained to local and central government.
The debate at our Wednesday Council meeting covered most of these issues. I supported the resolution as I feel there is still a long way to go in the negotiations. I remain open minded to the idea of change as there are possible strong benefits for our communities. However, until the issues above have been resolved it is challenging for local government to have confidence in the proposal.
I look forward to the discussions continuing and to being part of those conversations whenever I have the opportunity.
27 August 2021