The outgoing government created a plan which involved the idea of saving money through creating more bureaucracy with new water rating entities.
It also proposed saving money by using government borrowings which can be done more cheaply. And issues were raised around the ability of some communities to arrange or afford good water.
Without reform, it said, average costs per household were estimated to be heading for $3900 to more than $10,000 per year in some districts. After reform the average costs were projected to be $1460 to $4430 per year.
With reforms all post codes would have good water. There was no mention of what the effect of the $2 billion to $3 billion setup costs would be.
The solution proposed however did nothing to achieve any of the stated objectives. The proposal was doomed from the start, because the underlying assumptions were flawed.
Saving money is unlikely to be achieved by setting up 10 new quasi-local authorities extra to those we already have.
As regards cheaper government borrowings, that could happen without the new structures. The government could simply on lend the money to councils.
The issues around some communities failing with provision of water services was to be dealt with by removing the democratic systems for all communities.
Some communities will struggle because the rating base is small and economies of scale are unavailable. Some will struggle because the number of non-ratepayers being serviced is high, often because of tourism pressures.
Some are ill-equipped to run such services, and have failed to do so well in the past, such as Havelock North, Wellington and Clutha.
None of this requires the government to intervene for all water provision in New Zealand.
A carrot was offered to councils by the government saying it would take over the assets and the liabilities relating to water, thereby freeing up councils which are heavily indebted to borrow more money for other plans.
Any debts will not of course disappear. They will shift to the government.
And if councils did not think clean water was a priority for rates spending, giving them more leeway to spend on other vanity projects may not be helpful.
There are three ways of paying for water. You can charge those who use it. You can have some ratepayers cross subsidising others. Or you can have the taxpayer make a contribution.
There is no-one else.
Some communities will need government input, likely expertise and funds, to provide quality water. This help can be provided regardless of the structure involved.
A New Zealand-wide approach will not change that.
The only obvious chance of reducing the cost of whatever services are provided is through the use of cheaper money. The opportunity to borrow money at a cheaper rate is available already.
The government can guarantee water service debt on behalf of local councils.
The attraction of somehow communities not paying for their water services would only be delivered through cross subsidisation locally or nationally.
If this happened locally, ratepayers who have had higher rates for many years to pay to keep their water services in good condition would be paying for those within their authorities’ boundaries who had been living with lower rates.
If it happened nationally, taxpayers would pay for areas which had chosen not to look after their water assets.
Wellington for example has been investing about $230 million per year on its water. The cost of a proper programme for replacements and renewals is about $1 billion per year.
The average income of Wellingtonians is significantly higher than for Dunedin. There seems no principled reason why the rest of us should pay for Wellington’s lack of focus on water in its rating programme.
Achieving improved water services is not necessarily rocket science. All the government needs to do is arrange for cheaper government guaranteed money for councils, help out with funding where councils can’t reasonably meet the local needs and take over in whatever fashion required the management of water services for those who are unable to run their own.
The unstated objective to have unelected Māori at the top of the structures was written into the Three Waters proposal.
This allowed the incoming government easy runs on the board by criticising the co-governance model without needing to get into the detail.
Already some councils are coming to the new government with suggestions as to how an alternative to this could happen.
They say these suggestions would maintain local ownership, control and accountability.
Only the benefit of hindsight will tell us whether the new government can do better.
- Hilary Calvert is a former Otago regional councillor, MP and DCC councillor.
