Three waters on the boil as elections loom

"I still sadly am of the view that a number of ratepayers do not really know what they're paying for their poor water service delivery," - Local Government Minister Nanaia Mahuta

Water management is shaping up as a major political battleground ahead of local elections next month - and the general election next year. 

Opponents and councils decry the government's unpopular proposal or urge caution and delays until the details are settled - but there's little agreement on alternatives, and experts are warning time is running short. 

Havelock North's 2016 campylobacter outbreak made more than 8000 people sick and killed at least three, prompting a review of drinking water guidelines from the then-National government.

It was a classic case of crisis prompting a response, but the review only highlighted what we already knew. 

Industry body Water NZ says just 64 percent of New Zealanders receive drinking water that consistently meets standards; only about a quarter of wastewater treatment plants are fully compliant; and there's no consistency or national standards for stormwater management. 

Any solution would, however, face major funding challenges. While we constantly rely on water for everyday life the infrastructure is, ironically, a dry topic we often think little of. 

The Labour government brought in Scotland's Water Industry Commission (WICS) to perform what's believed to be New Zealand's biggest ever assessment of water infrastructure so it could come up with a plan. WICS chief executive Alan Sutherland says there are about 3600 water pollution incidents across the 48 councils - plus Auckland - and the average New Zealand household pays about $1100 a year for three waters services. It's about 20 times the rate of pollution incidents at a cost of 40 percent more than Scotland. 

The government's solution, billed as the biggest shake-up in the sector since 1989, was announced by Local Government Minister Nanaia Mahuta last June: a massive reform programme to amalgamate 67 councils' water services into four large regional, standalone entities with strategic oversight and local voice provided by representative groups of council and iwi members. 

"The issue really came down to not just the number of regions but what level of aggregation would enable standalone entities to get the credit rating to be able to get finance into infrastructure," she says. 

Read more:

• Three waters Part II: What you need to know
• Rural water schemes should remain in private ownership - working group
• 35-year contracts 'de facto' privatisation, academic warns
• If not four entities, then what?
• Mahuta offers three waters co-governance defence
• Groundswell co-founders haven't read Bill they're vehemently against
• Three waters criticism part of the process, minister says
• Three waters IT system project could top $500m, warns National

It was always going to be a hard sell. Water is one of councils' primary responsibilities and mashing together regions with wildly inconsistent levels of prior investment could smack of unfairness. 

The government soon realised it would also need buy-in from all the councils to be effective. It would need to use legislative force, but kept plans to do so under wraps while it carried out consultation - giving the impression of a fait accompli. 

Councils raised concerns over representation, ownership, and the risk of privatisation - they wanted a bigger say than the government's economic goals were likely to allow. To get them on board, Mahuta brought together nine mayors and nine iwi representatives to find their own solutions, in the end accepting nearly all the group's 47 recommendations. 

The main features included: 

• Councils get non-financial shares to protect further against privatisation
• A "Crown liquidity facility" - an emergency fund which would provide further certainty over entities' finances, boosting borrowing limits
• Entity boards appointed by a subgroup of council/mana whenua representative group members, rather than an independent panel 

The first bill is set to pass before the end of the year, with the entities to begin operations in July 2024 - but there's an election before then, and National and ACT have both promised full repeal. 

National's Local Government Spokesperson Simon Watts cites several concerns: loss of local ownership rights, skepticism over the government's financial and benefits-of-scale modelling, the impact the loss of water management would have on councils. 

The Green Party's Eugenie Sage says the exercise is too big to fail and needs cross-party agreement - and the government should pause until it can get consensus. 

Their political polar opposite, ACT leader David Seymour says much the same - but the party also wants to allow public-private partnerships. His MP Simon Court has also been a strong critic of the 50-50 representation of Māori at the strategic Representative Group level, saying it is the worst aspect of the reforms. 

The government has denounced much criticism of the co-governance provisions as misinformation, and this week Mahuta said the topic was caught up in the February occupation of Parliament by anti-government protesters and conspiracy theorists. 

She says the co-governance arrangement came from councils' fear of the effect on their strong relationships with Māori, and the need to maintain Treaty of Waitangi settlement obligations. 

"It was important to ensure that Te Mana o te Wai aspirations could be achieved through this reform programme as well." 

Te Mana o te Wai is a mātauranga Māori approach to water which first prioritises the health and wellbeing of water as a whole system; secondly and as a consequence prioritising the health of people; and thirdly social, economic and cultural wellbeing. 

Te Pāti Māori co-leaders Debbie Ngarewa-Packer and Rawiri Waititi say they have been supportive of the government's plan, but it does not resolve core issues of water ownership under the Treaty and they will keep fighting until Māori rights and interests in water have been recognised.  

Councils - including the 31 members of the three waters opposition group, Communities for Local Democracy - largely support greater Māori influence and voice in the decision-making process. However - and despite the working group's changes - most oppose the government's model, with a recent survey of all 291 mayoral candidates showing over 75 percent were against the reforms. 

Timaru mayor Nigel Bowen says his council's main concern is the "economic enablement" control of water brings to the district, and backs calls for a bipartisan solution on such a significant matter.

Selwyn mayor Sam Broughton says with water improvements made in the past decade, the council does not want residents paying again to bring nearby areas up to standard.

Auckland's Phil Goff says the supercity already amalgamated its water assets, is contributing 93 percent of the asset value, and is responsible for 90 percent of the population of Entity A - but would only have 28 percent of the representation. 

He would prefer the government to provide a direct guarantee to council water debts, allowing them to borrow more. 

Porirua's mayor Anita Baker largely supports the reforms, but also has reservations about council voice and says there will be ongoing problems with staffing for the industry. 

"Even if we funded it a different way we don't have enough water technicians, we're not training enough water engineers so at the moment we all can't the amount of water infrastructure done just with our Wellington Water group as it is," Baker says. 

Mahuta says throughout the four-year project she always hoped she would be working in partnership with councils. She's backed by her second in command, the Associate Local Government Minister and MP for Wairarapa Kieran McAnulty.

He has been visiting councils around the country ever since - now more than 40 - to engage and get their input. RNZ has repeatedly sought an interview on the subject over the past three weeks, but he has refused until the tour comes to an end next month. 

He did however tell Parliament in August all councils he had spoken to had told him the status quo was unsustainable.

However, they also face a series of other large reform programmes - a replacement of the Resource Management Act, and a review of local government. 

Many details of the three waters plan are unresolved too: there are widespread calls to exclude stormwater systems at least until jurisdiction over things like culverts and rivers can be sorted out; and there's no detail yet about economic regulation and pricing. 

Industry group Water NZ's chief executive Gillian Blythe and President Helen Atkins warn however against delays, saying there's no right time for intergenerational change. 

They referred the select committee to a paper by the Commissioner for the Environment in 2000 which said the current model then - 22 years ago - had reached the end of its design life and incremental tinkering would only make the necessary changes harder and more costly. 

Whether the government's unpopular plan will achieve its aims is, however, yet to be answered. 

In today's Focus on Politics podcast, RNZ Digital Political Reporter Russell Palmer wades into the three waters debate, assessing the situation ahead of local and general elections. 

Listen free to Focus on Politics on Apple Podcasts, on  Spotify, on iHeart Radio or wherever you get your podcasts.