Standard & Poors says it will probably wait until after the general election before making any changes. Photo: AFP
Global ratings agency Standard & Poors says it does not yet have enough information about the government's Three Waters policy to change its credit ratings for New Zealand or local government bodies.
The credit agency said the unknowns included clarity over the government's future course of action, such as what assets were to be transferred and when.
For example, the transfer of the Three Waters assets, which include drinking water, waste water and stormwater, would not necessarily be straight forward, given difficulties some councils could have in splitting off stormwater assets.
The agency said the financial aspects of the reforms were also unclear, such as whether the councils would receive any payments in return for the transfer of their assets and how large any payments would be, or how much debt councils would be left to carry.
In addition, it said it was unclear how the reforms would be implemented, such as whether everything would change on 1 July, 2024, or be gradually implemented.
S&P director of sovereign and public finance ratings Anthony Walker said the agency was taking a wait-and-see-approach pending more information from the government about its plans.
While the changes were unlikely to change the government's credit rating, he said it was not possible to be certain given the information available.
"That's a very difficult question, because even if they go ahead, we're still not sure exactly how that will look. We do know that from past information we've been provided by the government that there will be some winners and some losers."
Walker said some councils would be left holding a high level of debt without a revenue line to cover that expense.
"We know that under the current proposals, big cities like Auckland will be better off.
"So we may say the bigger larger borrowers are going to be better off and some of the smaller district councils may actually be worse off."
He said the agency could change its outlook as new information emerged, but it was unlikely to make any upgrades or downgrades to the credit ratings ahead of the upcoming election.
"So we may change the rating from a stable outlook to a positive which indicates we may upgrade them once implementation occurs, but we're unlikely to actually upgrade or downgrade before we actually see that election outcome because that will be vital," Walker said, adding the opposition had said it would scrap three waters if it won.
"We don't want to upgrade a council today, if the response was scrapped, and then have to downgrade them in a year's time."
In the meantime, Walker said the agency was awaiting to see the government's bill on Three Waters, which was expected to be tabled in Parliament next month.