top of page

Subscribe Form

Thanks for submitting!

Search

Thomas Cranmer: Three Waters passes but at what cost?

The government has paid a huge political cost in pushing through the Three Waters legislation, and in doing so has exposed rifts within Cabinet and damaged the reputation of Minister Mahuta.


It shouldn’t come as a surprise that a government with a reputation for profligacy resolved to spend so much of its political capital to push through the deeply unpopular Three Waters bill into law yesterday. The full cost is yet to be tallied but from the look of their shell-shocked faces as they sat in Parliament this week, Labour MPs are starting to realize that a good number of them will be paying with their jobs when the general election arrives next year.


Even the once imperious Minister Mahuta has been damaged by the passage of this Bill into law. Ignoring many valid concerns raised by opposition parties, councils, iwi and the public, the Minister pushed too hard in the closing stages of the legislative process. First, by expanding the scope of Te Mana o te Wai to cover geothermal and coastal waters, and then in the breathtakingly brazen attempt to entrench a point of policy into law. Both issues were not understood by the Minister’s Cabinet colleagues which left them woefully exposed when they were questioned by the media and opposition parties.


The effect is that the Minister looks less like an experienced lawmaker and more like a reckless chancer who pulled a number on her own parliamentary colleagues. Undoubtedly this has damaged Mahuta’s reputation at what could be a difficult time for her to navigate.


It is anticipated that the Public Service Commission review into the awarding of government contracts to the Minister’s husband will be published at the end of next week. There are indications that departments have already received advanced copies and that several ministries will be heavily criticised for not following their own procedures. The review was never authorised to investigate the actions of the Minister but in any event the majority of the inconsistencies involved government agency officials. The fact that established rules and procedures were not followed by several ministries when dealing with the husband of the Minister or his company will, inevitably, reflect badly on Mahuta. It will reinforce the impression that the Minister has become too powerful. Too powerful for the Prime Minister. Too powerful for her Cabinet colleagues, and too powerful for agency officials who seemingly feel compelled to overlook rules when the Minister’s husband applies for government contracts.


There were suggestions earlier this year, that once the Water Services Entities Bill became law, Mahuta would be moved out of the Local Government ministry to take some of the heat out of the reforms. That still seems to be the likely outcome of the upcoming reshuffle.


The effect of Mahuta overreaching on her signature legislation is that it passed into law with only the support of Labour. Even the Greens and Te Pāti Māori could not muster the enthusiasm to support the Bill in its third and final reading yesterday.


Chris Bishop best summarised National’s objections when he stated, “There's no dispute that we need to upgrade water infrastructure in this country. There's no disagreement about that. What there is a disagreement about is this legislated all-in solution that confiscates local assets and puts them into four unaccountable mega-entities with 50:50 co-governance that gives extraordinary powers to mana whenua through Te Mana o te Wai statements to control those entities.”


However, the objections of Greens and Te Pāti Māori were also interesting as they highlighted areas that warrant further examination.


The Greens objected to the Bill because of their concerns about a potential privatisation under a future government. Of note however, Eugenie Sage rightly raised the risks that the proposed financing might create:


This bill is all about improving three-waters infrastructure: stormwater, waste water, and drinking water. But there seems to be a view that if you separate out balance sheets and that if you establish the entities, rates won't rise and there'll be an ability for the entities to borrow more and meet that huge infrastructure deficit of over $100 billion.


But I think care is needed here. We have seen small councils refuse to invest. We've seen a lot of deferred investment. We've seen rates money going into civic buildings instead of into pipes under the ground. We've seen councils like Kaipara get itself into financial strife because it has relied on expert consultants and they haven't provided affordable solutions.


These bigger entities will certainly have the technical capacity to manage water services, but there's no magic money tree to provide for that infrastructure deficit. The credit rating agencies will be looking very carefully at how much the Government will impliedly support the entities when they go out to borrow, and we've seen overseas big private equity firms investing in companies in the UK which have been privatised creating debt mountains because of the large degree of profit that goes back to their shareholders.


The most immediate privatisation risk is not so much in the long-term contracts that providers such as Veolia has got to provide water services in Papakura, nor the risk of a future National/Act government selling shares in the water entities to third parties. The most immediate privatisation risk is created by the highly leveraged debt financing that Minister Mahuta is proposing to utilize. If the Greens and other opposition parties continue to examine the use of debt in the English water utility companies, the current state of their balance sheets and the effect that this has had on water quality, they will discover that financings of this nature should be avoided at all costs.


Seemingly every week there are new reports of concerns about excess debt in the English water sector. Last week the Guardian published an article revealing that customers are paying on average £80 or 20% of their water bill towards servicing debt and rewarding shareholders.


The article stated, “With rising interest rates and a cost of living crisis, the scale of debt is raising alarm about the financial fragility of some water companies. Anglian, Northumbrian, Severn Trent, Thames and Southern have interest cover ratios below the 1.6 threshold that indicates a strong credit rating, according to Ofwat’s most recent financial resilience report.”


Until now Minister Mahuta has studiously avoided giving straight answers to some very basic questions regarding the amount of debt that will be raised and when it will be repaid. Hopefully the new year will allow for closer examination of the financing.


For Te Pāti Māori, Debbie Ngarewa-Packer highlighted the failings of the current governance structure. Although one doesn’t need to agree with her conclusion that the Bill does not go far enough to “implement the inherent customary, proprietary, and decision-making rights of tangata whenua over fresh water”, her objection was that “there will be improvements to the ability of mana whenua, particularly larger iwi, but our concerns are that this will have a cost, particularly for those smaller iwi and hapū.”


That is similar to the objection raised last month by Ngāti Whātua Ōrākei Trust deputy chair Ngarimu Blair, who stated, “Anything that gives us more voice in issues on our land in central Auckland, we are all for that. Three Waters hasn't done that for us. So we are open to these new ideas from the mayors.”


Put another way, this is the Tainui model for Three Waters. It benefits the tribal elite at the expense of Māoridom as a whole. Even Te Pāti Māori acknowledges this fact.


For now Labour can claim the passing of the Water Services Entities Bill into law as a victory but this must surely rank as the most pyrrhic of victories.



Thomas Cranmer is a pseudonym. You can read his work here.

3,773 views111 comments

111 Comments


Al Bourne
Al Bourne
Dec 11, 2022

Why the hell cannot one party or another introduce legislation with such a high % needed for entrenchment that all fears of the privatisation of water, sewage or stateroom management would be removed forever,..

Interesting that while many labour MPs were unhappy about the 3 waters debacle not one of them like most of NZrs today lacked the testicular fortitude to vote against it..

Like
basilwnz
basilwnz
Dec 12, 2022
Replying to

Yep, and where were the two Green Party leaders as Eugenie Sage linked them with this mess?

Happy to pose for their photos later and talk about how they are saving the planet by taxing our food producers.

A word to James Shaw: the people who provide our food matter to us - politicians not so much.

Like

Aaron Shanahan
Aaron Shanahan
Dec 11, 2022

Started a petition. Called fed up to the back teeth. My ugly mugs there to change org . And fuck the trolls.

Like

lifetimepromotions
lifetimepromotions
Dec 11, 2022

NZ taxpayers, you are being robbed by this bunch of incompetent arseholes. Over the past 5 years, the Maori elite have been given about $4 Billion dollars. I can recall two grants of $1 Billion given in a short period.

Most people have an idea of what $1 Million dollars is, as they can relate that to the cost of a home, but a very few have any idea of what a BILLION dollars is, it’s just a term that gets thrown around like confetti! In order that everyone can comprehend what a BILLION is, look at it this way. We all know what a second is – well, 1 Million seconds = 11.5 days. 1 Billion seconds = 31.7…

Like
JW
JW
Dec 17, 2022
Replying to

What a load of balderdash! Charitable entities are required to make their financial positions available publicly and iwi do too if you even bothered to look instead of pulling figures out of your ashtray e.g. Tahoe , Ngai Tahu . There you will also see how Treaty settlements have been used to benefit all Maori belonging to the recipient iwi.

Like

For the Crime Minister and any of her gangsters to claim they did not know what was in the Bill is, as expected, a perpetuation of their intrinsic proclivities for sustained blatant litany of lies. They huffed, puffed, bullshitted, feigned back track and revision, but still all voted for it. Did they not?


Putting aside what Nanaia Mahuta has achieved, and how she might have achieved it (which as previously noted would not have been without the knowledge of her colleagues – they all have plentiful highly paid advisers, and bloated ministries of over paid public servants), she has done one thing which none of the other “so called” representatives of parliament have done. What is that you ask?


She…


Like

Labour has put its stake in the ground regarding Water Infrastructure reform. Thomas Cranmer has provided a thorough critique of them.


The ball is now in National's court to announce their policy. The ratepayer's wallet is waiting with interest.


Mr Watts, National's spokesperson for Local Government provided this little teaser in the House last week.


"National would come up with its own solution that would “achieve the desired outcomes for our communities without the loss of control and complexity that this Labour water services entities model brings”.


I expect Thomas Cranmer will provide the same critical analysis of National's policy whenever it is announced to what he has done with Labour's. The ratepayer's wallet is on the line here.

Like
Replying to

" an astute politician that will hedge around it when politically expedient"

Is that how you see his stance on compulsory medication?


' he's not prepared to take a stance that gets us off side with our trading nations".


I very much doubt that China would sanction NZ for holding such views. We have a robust FTA.

The EU , which seems unlikely to exist for much longer , and could be ignored, will lock us out for any reason they can think of . Or for no reason at all.

The U.S. has never been open to NZ dairy products except in token amounts; Canada locks us out completely.

And given that we are arguably the greenest , our…

Like
bottom of page