National's Three Waters plan fails to impress mayor

One of the mayors opposing Labour's Three Waters plan says National's alternative also falls short when it comes to the major funding problem facing councils.

New Plymouth mayor Neil Holdom told RNZ both parties needed to come together and develop a better solution before the election.

"Realistically I don't think they're far apart," he said. "Why can't they both agree and just sort something out?"

Under its policy announced on Saturday, National would leave councils in control of their water infrastructure but would also leave them with the question of how to fund it.

Councils would be required to invest in their pipes and could do so by hiking rates, increasing borrowing, or pooling together to form their own regional bodies.

Holdom told RNZ that ignored the fact that many councils were at their credits limits and so could not borrow any more.

"How does National's model allow these other [regional] businesses, if the councils set them up, to borrow cheaply to fund the work? That's not really clear."

Labour put its Three Waters policy under review this year as part of its policy reset, but its initial plan would have created four mega-entities and given them control of water infrastructure. They would then borrow the funds required to bring pipes up to scratch, achieving cost-savings due to their size.

An updated policy was expected to be unveiled in March, but that is likely to be delayed due to Cyclone Gabrielle.

Holdom said both Labour and National could improve their proposals by providing a guarantee to the regional entities, allowing them to borrow cheaply.

"Whether it's four entities, or ten, or a dozen ... if the government wants to solve this quickly, and the National Party, they'll agree to credit-wrapping [the entities] ... and then regulate them hard to make sure that the money is spent and these organisations are efficient."

Buller District mayor Jamie Cleine told RNZ he was worried smaller rural regions, like his, would be left out in the cold under National's plan.

He said larger centres like Canterbury would be unlikely to volunteer to team up with the West Coast or Buller.

"At the end of the day, the investment required is huge ... somebody still has to pay, and ultimately, it'll be ratepayers."

Tararua District Council mayor Tracey Collis was more optimistic. Her council is one of the 30 which banded together as Communities 4 Local Democracy in opposition to Labour's plan.

She said National's proposal may not have all the answers, but it paved the way for councils to find them.

"It may not just be Tararua District Council going it alone... as long as communities understand what is required ... and then we sort out how that's funded and how many generations that's funded across."

National Party local government spokesperson Simon Watts said some councils were already working with smaller local authorities, such as Hawke's Bay Regional Council.

"They've already put a model on the table in terms of forming one of these entities," he told Morning Report.

"They want to work together as four councils of different sizes and scales because they see the opportunity to do that across their region."

National's plan has a investment regulator, and if that failed a regulatory backstop, to ensure councils took decisions necessary to meet water quality requirements.

The backstop would allow the minister to step put in a commissioner should the council not be meeting water quality or investment standards.

The plan requires councils to ring fence money for water infrastructure. Watts said rates would not go up under National's model, with the provision for long-term borrowing taking the pressure off councils.

"They have to stand on their own two feet and they also have to deal with future growth."

Water New Zealand chief executive Gillian Blythe told RNZ time was of the essence when it came to investing in water.

"We've got to address the infrastructure now and that's going to require significant funding. To achieve efficiencies and the delivery of water infrastructure, we're going to need to be able to access economies of scale and scope."

Blythe declined to say whether that could be achieved with more than four regional entities.