Three Waters rebrand: Bitterness remains despite refresh

"I think we've nailed it. Honestly, there's a balance to strike here" - Kieran McAnulty

Labour's new PM and new minister this week dumped the contentious Three Waters policy in favour of a rebranded "Affordable Water". 

A not-so-subtle attempt to take the heat off and reclaim the narrative, they drove home the message of cheaper rates - but critics have continued to attack the plan as a new veneer of paint over the same unpopular plan.

It's nearly three years since Labour first unveiled its Three Waters Reforms. Subsequently bogged down in fierce debate over co-governance and asset theft and hampered by a failure to clearly communicate why the reforms were needed, the government this week set out to sell their renewed vision. 

Local Government Minister Kieran McAnulty - appointed less than three months earlier by incoming Prime Minister Chris Hipkins - was tasked with reviewing the plan to take water services management away from councils, and hand it to four mega-entities. 

His solution was a more fragmented and regional approach with 10 entities, and a start date pushed back by two years to mid-2026. With it came the long-awaited explanation of why change was needed. 

"Here's the guts of it," McAnulty began, in his trademark blokey style, "up to $180 billion local councils need to find and they can't do it by themselves because councils individually are at their debt cap - or if they're not, their communities can't afford to pay any higher rates.

"If they try to work together through a CCO (council controlled organisation) like Wellington Water, there's a limit to that because the debt that councils hold on their balance sheet still stays there, and if they try and do shared services it doesn't allow councils to be able to borrow the money they need to be able to fund this."

Read more: 

• Govt's Three Waters revamp: 10 entities, two year delay
• Political editors panel: Three Waters gets a revamp
• Labour and National continue to debate the numbers
• 'Backward step' or 'pragmatic approach' - Local leaders react
• Watch: National Party leader Christopher Luxon responds
• Watch: Hipkins, McAnulty unveil revamped Three Waters strategy

It would be costlier for ratepayers than the previous four-entity plan - to the tune of about $2800 a year - but McAnulty stressed it would still save them between $2700 and $5400 a year compared to the status quo. 

He pitched the change as a middle ground, giving councils more voice while retaining "balance sheet separation": the independence from council control and debt which ensures a good credit score and access to cheaper lending. 

But while the goverment made a song and dance about the money voters would save, it quietly ditched the majority of the $2.5m sweetener payments promised to councils. 

While $500m to keep councils from suffering financially would go ahead, along with another $500m already allocated, the remaining $1.5m would not. These details were not included in the initial announcement or documentation, but buried in the details of documents released after the fact.

Questioned later about the move, McAnulty explained $1m of it would have come from the entities - and with more groupings they would be more constrained - and "making changes so late in the piece is going to cost money". 

More unpalatable aspects of the policy remained untouched however. This included the 50-50 membership for councils and mana whenua on strategic oversight groups, who would appoint the corporate-style boards.

National calls it divisive, while ACT's David Seymour called it undemocratic. Labour had called it co-governance for years, but Hipkins was adamant it was not really that, arguing it was merely a way for mana whenua to have a say. 

Māori had warned Hipkins against cutting the policy, and mana whenua like Te Rūnanga a Rangitāne o Wairau general manager Corey Hebberd were pleased it was retained. 

Despite the fishhooks, McAnulty was confident the changes would persuade enough councils to claim majority support. 

As it turned out, at least 18 of the 30 councils in the Communities 4 Local Democracy group - formed in opposition to the original proposal - were unswayed. Six said they were still digesting the detail, and six did not answer requests for comment - so not exactly a ringing endorsement. 

Some of the remaining 37 mayors outside that core opposition group were more persuaded, some not, while others were disappointed the changes would mean higher rates than the previous plan. 

With an election on the horizon, it comes down to a choice for voters between Labour's Affordable Water plan and National's Local Water Done Well. 

The latter includes repealing the current legislation, enforcing ring-fencing of water rates to be spent on water infrastructure, and encouraging councils to voluntarily form groupings to help keep costs down. 

The two major parties dispute each others' plans. National says the government's numbers don't add up. Labour says its numbers are based on council data and have been peer reviewed twice and National has not presented its own costings. 

National's Simon Watts rejected McAnulty's criticism their plan amounted to the status quo. 

"The status quo does not have stricter regulation on water quality, it doesn't have stricter regulation around economic regulation, it doesn't have a requirement as a bottom line by law that these entities have to be financially sustainable."

RNZ and NZ Herald's deputy political editors Craig McCulloch and Thomas Coughlan assessed the differences between the two, with Coughlan saying National's boils down to less certainty but more freedom for councils. 

McCulloch says the two policies are closer than they've ever been: both have the same objective, the simply have different ways of getting there. 

It's now up to each party to promote and defend their plan; voters will make the final decision. 

In this week's Focus on Politics, Political Reporter Katie Scotcher dives into the government's latest Three Waters refresh and the responses to it. 

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