In brief

• National’s plan scraps co-governance and the proposes local councils remain in control.
• Strict rules will be set for maintaining water quality.
• S&P Global says the real issue of affordability isn’t being properly addressed. 

Four key points

National has released its own plans regarding Three Waters reforms. The four point plan includes the following: 

• Repeal Three Waters and scrap the four co-governed mega entities.
• Restore council ownership and control.
• Set strict rules for water quality and investment in infrastructure.
• Ensure water services are financially sustainable.

National wants to encourage local councils to work together. They’re calling for Regional Council Controlled Organisations (CCO). They say CCOs are a way to scale up and be better positioned to borrow money in international markets to fund water related infrastructure over the long term. 

Also, councils will be required to plan for and maintain their own local infrastructure. Should that not be the case, the National Party is proposing the central government will intervene when necessary to ensure water services are delivered. How that looks is still unclear.

What about co-governance? 

In a policy document entitled Local Water Done Well, the party says that, as envisaged by Labour, co-governance is antagonistic, undemocratic and needlessly divisive. “These are community assets and local communities should determine how they are governed.”

Labour says National’s plan is “status quo”

Labour Party members including Prime Minister Chris Hipkins have called National’s proposals “status quo”. According to National’s policy paper, their plan is status quo in that ownership and management of the assets would stay with local councils and co-governance would not be mandated. 

Though there are some differences. National’s plan would keep Labour’s central Water Service Regulator (Taumatu Arowai) in place. National’s plan is also calling for a beefed up Water Service Infrastructure Regulator and the imposition on councils to prove “financial sustainability”. The party also wants a requirement that local councils “ring fence” water infrastructure funding. That way councils can’t divert necessary infrastructure funding into other projects that may be more politically popular.

Troubled waters ahead

A recent webinar by the international credit ratings agency Standards & Poor (S&P Global) is signalling trouble no matter how Kiwis approach water reforms. While co-governance and local councils’ roles have been hotly debated, the critical issue of affordability has been shunted to the side. 

According to S&P Global, NZ is small and simply lacks the resources to pull off the major investment required. Therefore, investmenting tens of billions in water infrastructure is likely to result in increased costs to ratepayers. Perhaps Kiwis can’t shoot for the moon in terms of water infrastructure upgrades? 

Also, S&P Global is suggesting that smaller councils are “gaming the system” by opting for “gold plated” water infrastructure upgrades knowing that they’ll be relieved of the debt once their assets are transferred to the larger water service entities. The high costs involved in funding infrastructure and the related obstacles are shaping up to potentially downgrade the credit worthiness of smaller local councils. This may lead to higher borrowing costs.