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Chris Trotter: Three Waters. Three Mayors. Three Cheers!

THE THREE MAYOR’S proposed revision of Three Waters is timely, sensible, and ought to be accepted by the Labour Government. If Jacinda Ardern and her colleagues press on regardless, then the electorate will know just how little Three Waters has to do with securing an affordable upgrade of New Zealand’s water infrastructure, and how much the controversial scheme is now about mandating the co-governance of water.

Not that the Prime Minister will admit that co-governance is the driver of the proposed reforms. To do so would be to lay upon the table, for free and frank debate, the fraught issues of radical constitutional change, and the future of our democracy. Ms Ardern is, almost certainly, in possession of poll data indicating that any such debate would be lost by her Government – decisively.

No, the Prime Minister’s explanation for why the Three Waters project must proceed is already being aimed, unwaveringly, at the voter’s back-pocket. If Three Waters isn’t implemented, she is warning the electorate, council rates are going to go through the roof.

Caught in the grip of a serious cost-of-living crisis, citizens desperate to get their household budget under control will receive the PM’s message with relief. If Three Waters can prevent the average household’s rates bill from skyrocketing, then the average household will more than likely give “Jacinda” the big thumbs-up.

What the average household almost certainly doesn’t realise is that the Prime Minister is spinning them a yarn. Providing the nation with clean drinking water, dealing with its stormwater, and getting rid of its waste water, is already costly, and cannot help getting costlier. Three Waters, or no Three Waters, there’s a mighty big bill coming New Zealand’s way – and, for better or for worse, New Zealanders will have to pay it.

But, how will they pay it? That is the $64 billion (at the very least!) question. The most obvious answer: and the one Mayor Wayne Brown in Auckland, Mayor Phil Mauger in Christchurch, and the Mayor of the Waimakariri District, Ben Gordon, reached for with plain, old-fashioned, common-sense, was that the state should pay.

Nothing can borrow money more cheaply than a solvent, sovereign state. Why? Because states, unlike people, corporations, and even banks, are immortal. There was a time when investors thought of municipalities in the much the same way. If nation states weren’t going anywhere, then neither were their cities and towns. But then New York City went bust, and international investors had to think again.

States, too, thought it advisable to impose strict limits on their borrowing. That’s why, for the last 40 years, successive Finance Ministers have forced local government to borrow the money it needed on the open market. The problem with this “solution” is that a city’s credit-card is maxed-out a lot faster than a state’s. Ditto, its rate-payers’ willingness to pay more and more and more. The present government has heaped scorn and derision on local authorities for their failure to adequately manage municipal infrastructure. Unfair. Those responsible for starving a person, are not really entitled to then complain about their victim’s weakness!

The Three Waters project, with its four “entities” and their hideously complex financial and governance structures, was the Government’s answer to local government’s maxed-out credit cards. The water entities could borrow the money that New Zealand’s cities, towns and districts could no longer access.

There was, however, a catch. According to the international credit-rating agencies, the four entities had to be protected from politics. International investors do not like politics – it’s messy and destabilising. If the cost of drinking, storm and wastewater management rose sharply, said the credit-raters, then the entities responsible had to be protected from every kind of consumer backlash. Whatever else these big beasts might be – they won’t be in any way democratically accountable.

Small wonder, then, that iwi authorities, and the co-governance faction of the Labour Government, were so keen to hitch a ride on the Three Waters bus!

Labour’s big mistake was letting them climb on board. Because, by doing so, it turned the Three Waters project into the hottest of political hot potatoes. And what don’t international investors like? That’s right: putting their money into political hot potatoes.

If this government has a lick of sense, it will greet the Three Mayor’s solution to Three Waters with three cheers.

This essay was originally published in The Otago Daily Times and The Greymouth Star of Friday, 4 November 2022. Chris Trotter blogs here.

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